CENTRAL ISLIP, N.Y. – The owner of a Long Island bus company was sentenced Wednesday to 18 months in federal prison for participating in a bank fraud scheme that obtained millions of dollars to keep his financially failing businesses operating.
John B. Mensch, 55, of Quogue, was also ordered to pay $9,326,366.03 in restitution during his sentencing before U.S. District Judge Nusrat J. Choudhury in Central Islip federal court.
Mensch pleaded guilty to bank fraud conspiracy in October 2024.
Federal prosecutors said Mensch owned and operated East End, a Medford-based transportation company that provided school bus services on Long Island and in other areas.
Between 2017 and September 2018, East End maintained multiple accounts at banks in Suffolk and Orange counties. The company had expedited check-clearing privileges that provided access to deposited money before the checks had fully cleared.
Prosecutors said Mensch and other company executives exploited those privileges through a check-kiting scheme involving accounts at two financial institutions.
The executives allegedly wrote checks from accounts that did not contain enough money to cover them and deposited the checks into accounts at another bank. Because the second bank provided immediate access to the deposited funds, East End was able to withdraw and spend money before the checks bounced.
To prevent the earlier checks from being returned, additional checks without sufficient funds were transferred in the opposite direction, according to federal authorities.
The repeated transactions created the appearance that East End had enough money in its accounts while the company continued operating at a deficit.
The scheme continued for several months before it was discovered in September 2018. By then, East End had obtained nearly $10 million from the two banks and spent the money on company obligations, prosecutors said.
“John Mensch kept a failing business afloat by manipulating the banking system and exploiting the trust that financial institutions place in their customers,” U.S. Attorney Joseph Nocella Jr. said.
Officials said the scheme also affected the company’s creditors, customers and employees.
The investigation was conducted by the FBI’s New York Field Office and the U.S. Secret Service. Assistant U.S. Attorney Adam R. Toporovsky prosecuted the case with assistance from Paralegal Specialist Janelle Robinson.
