After a three-week trial, the former chief executive officer of Syosset-based Synergy Brands, Inc. was convicted on March 14 by a federal jury of operating a $1-billion check-kiting scheme and defrauding investors by overstating the value of the company.
While 54-year-old Mair Faibish was president of the food products company located on Underhill Boulevard, investigators say he funneled approximately $1.3 billion worth of bad checks through Signature Bank, Captial One Bank and various Canadian banks.
“Their representations and assurances were not worth the paper the checks were written on,” said United States Attorney Loretta Lynch in a statement.
Faibish had those checks deposited into bank accounts of associated food manufacturers and distributors in Canada.
The Canadian companies then sent bad checks in corresponding amounts back to Faibish-controlled third-party companies.
Because the banks deposited funds that were immediately available for withdrawal, the check scheme artificially inflated the companies’ account balances.
Faibish and his co-conspirators used Synergy’s fraudulently inflated bank account to book millions of dollars in fictitious accounts receivable and revenue, according to Lynch.
Following the scheme’s collapse, Synergy was taken into bankruptcy and its publicly-traded stock became essentially worthless, causing hundreds of thousands of dollars in investor losses.
Trial evidence further established that Faibish falsely inflated the values of Synergy’s sales, cost of goods sold and pre-paid expenses in filings with the United States Securities and Exchange Commission for the quarter ending June 30, 2008.
Faibish faces a sentence of up to 30 years imprisonment for bank fraud and securities fraud conspiracy.