Quogue Man Who Ran LI School Bus Company Sentenced for Nearly $10M Bank Fraud

The owner of a now-defunct Long Island school bus company received an 18-month federal prison sentence Wednesday after pleading guilty to running a check-kiting operation that drained nearly $10 million from two banks over the span of about a year.

John Mensch, 55, of Quogue, the former head of East End Bus Lines, was additionally required by the court to repay $9.3 million to the financial institutions he defrauded. U.S. District Judge Nusrat Choudhury imposed the sentence in Central Islip.

According to prosecutors, Mensch and fellow company executives spent roughly a year — from October 2017 through September 2018 — shuffling bad checks back and forth among business accounts held in Suffolk and Orange counties. East End Bus Lines had secured expedited check-clearing privileges at several banks, which allowed the company to withdraw cash before the underlying checks were returned as worthless at other institutions, effectively pocketing money that never existed.

Approximately $8.6 million was drained from the former Bridgehampton National Bank, a lender since absorbed by Dime Commercial Bank. An additional nearly $750,000 was taken from Wallkill Valley Federal Savings & Loan in upstate New York. The fraudulently obtained funds were funneled into keeping the bus company running as it transported students on Long Island and elsewhere in the state.

Eastern District of New York U.S. Attorney Joseph Nocella Jr. said Mensch had abused the confidence that banks extend to their account holders. "By cycling worthless checks through multiple bank accounts, the defendant obtained millions of dollars in funds that did not exist, creating the illusion of financial stability while concealing the company's insolvency," Nocella said.

Defense attorney Robert Anello contended that his client had been preyed upon by unscrupulous lenders and resorted to the fraud only after a 2016 contract dispute with the William Floyd school district saddled East End Bus Lines with a $2.2 million loss. "He made the biggest mistake of his life when he was desperate," Anello told the court.

Prosecutors pushed back on that characterization, arguing the scheme was rooted in greed rather than necessity. They pointed out that Mensch collected a salary exceeding $368,000 in 2017, then boosted that figure to more than $383,000 in 2018 — the very year East End Bus Lines sought Chapter 11 bankruptcy protection — and simultaneously moved substantial assets into his wife's name.

Judge Choudhury said she was not persuaded that greed was the central motive but determined that the breadth and length of the fraud nonetheless warranted a custodial sentence.