Mair Faibish, former Syosset CEO, sentenced for check fraud scheme

The former chief executive of a Syosset-based food company that prosecutors said went bankrupt because of his financial frauds was sentenced to more than five years in federal prison Thursday, officials said.

The 63-month sentence handed down to Mair Faibish, 55, of Huntington Station, who used to run Synergy Brands, Inc., comes two years after he was convicted of bank fraud and conspiracy to commit bank and securities fraud. Specifically, prosecutors said, Faibish ran an elaborate check fraud scheme on Canadian and U.S. banks that caused one institution, Signature Bank, to lose $26 million.

“The defendant played fast and loose with the truth and with federally insured money, kiting checks back and forth across the Canadian border to defraud auditors, banks, and investors,” said Robert L. Capers, U.S. Attorney for the Eastern District of New York, in a statement announcing the sentence.

Faibish’s attorney could not be reached for comment.

Capers said Faibish made false statements to the federal Securities and Exchange Commission and defrauded investors by overstating the value of the company. Synergy was delisted from the Nasdaq index in December 2008, and filed for Chapter 7 bankruptcy in January 2011.

Prosecutors said Faibish and co-conspirators engaged in check kiting, a scheme where they took advantage of banks that immediately release funds from deposited checks with the expectation that the funds are present in the accounts against which they are drawn.

They “funneled approximately $1.3 billion in checks that were not backed by sufficient funds through Signature Bank, Capital One Bank, and various Canadian bank accounts,” the prosecutors said. “The Canadian companies then sent checks in corresponding amounts, which were also not backed by sufficient funds, back to Faibish-controlled shell companies. Because the banks made deposited funds immediately available for withdrawal, the scheme artificially inflated the companies’ account balances.”

Faibish then exploited the inflated balances by directing millions of dollars in fictitious accounts receivable and revenue, prosecutors said.