LI check cashing businesses to lose licenses after violating banking rules, state agency says

The state Department of Financial Services said it plans to revoke the licenses of a group of related Long Island-based check cashing businesses that it said violated state and federal banking regulations.

The DFS said the charges stem from an agency investigation that showed "serious deficiencies" concerning regulations tied to check cashing and money laundering.

The agency said the businesses are all owned equally by president Lisa Lentini and vice president John Drago.

The companies are Kayla Check Cashing of Farmingdale, South Island Check Cashing Corp. in Wyandanch, East Island Check Cashing Corp. in Hauppauge, Bay Shore Check Cashing Corp. and Brentwood Check Cashing Corp.

The DFS said Monday it found a lack of management oversight that included inaccurate records, cashing postdated checks and inadequate risk-assessment procedures.

Separately, Drago was arrested in August 2018 on an eight-count indictment, charging him with allowing customers to avoid having to report currency transactions over $10,000 to the federal government.

Drago pleaded not guilty and was released on $500,000 bond by Magistrate A. Kathleen Tomlinson.

U.S. District Court Judge Sandra Feuerstein in September ordered the suppression of evidence obtained during a 2013 search of Drago's businesses the court found was conducted with an unconstitutional warrant.

Drago's attorney, Anthony Capozzolo of Manhattan-based Lewis Baach Kaufmann Middlemiss, said "we are very disappointed to learn that only now has DFS decided to take action when Mr. Drago’s related federal matter is at the precipice of trial and when Mr. Drago’s businesses have been open and serving the public for many years. The authorities have been investigating these matters for more than nine years and we look forward to engaging DFS in this matter."