If you can handle payouts, fully conforming to IRS and PATRIOT act requirements, for several hundred people from dozens of countries when the payouts aren't known until the day the checks are cut, bearing in mind that there are "sponsors" who also need reimbursement, without any inaccuracy in half an hour, please send me your resume.
That said, I do agree that they should have been able to get this done over the weekend, and had checks for the players before they left.
However, it seems unlikely that
1) the money was held to generate interest. as memikey says, the risk/reward is out of wack. That seems unlikely.
2) Kiting also seems unlikely- KT's not depositing many checks right now. Strictly speaking kiting (aka hanging paper) is done by depositing fraudulent checks, and pulling the funds out before the bad checks are discovered.
I think the most likely problem was related to accounting: system not in place, couldn't reconcile the accounts, broke the check printer, etc. But if one looks for impropriety, my bet is that there simply isn't enough money to draw on, and I imagine KT and the IPT do not have a large line of credit to use. I would certainly not extend much credit to them. If that's the case, holding the checks might be to *avoid* a federal crime.
How was the IPT funded? How is it structured? I can't imagine there's much revenue - certainly not enough to cover the costs. I just don't see much opportunity for fraud here. As I understand it KT is fronting a lot of the cash. If he's laundering money, this seems really inefficient (not to mention brazenly public).
Regardless, it seems the answer is bad accounting: either in processing payments, or in budgeting.