The head of the Justice Department's criminal fraud division said E. F. Hutton bilked banks out of "tens of millions" of dollars during the more than two years the brokerage firm kited checks on its bankers.

But Robert Ogren said the $8 million the firm has set aside to make restitution to the banks may be sufficient because some of the financial institutions may not make claims against Hutton.

Scott Pierce, president ofE. F. Hutton & Co., said in a statement that the big brokerage firm "has no reason to believe that its reserves of $8 million for full restitution to any banks injured by Hutton's banking activities . . . is inadequate."

Last Thursday, Hutton pleaded guilty to 2,000 felony fraud counts, agreed to pay a $2 million fine, reimburse the government for the $750,000 it spent on the investigation and make restitution to the banks. The government said that Hutton regularly wrote checks in excess of the amounts it had on deposit and that by honoring those checks, banks were -- in effect -- making interest-free loans to Hutton.

The company pleaded guilty to two basic illegal practices: regularly writing checks that exceeded the amounts the company had in available deposits and transferring checks through a number of banks hoping to take advantage of delays that sometimes occur in the nation's check-clearing system.

Ogren said that a companion civil injunction is a crucial part of the case. The civil injunction enjoined Hutton from practices that were not contained in the criminal charges and, as a result, tells all companies the standards the government plans to enforce for firms that regularly move funds from remote locations to central bank accounts, where the money becomes available for general corporate use.

Hutton, for example, agreed not to write "criss-cross" checks that artificially inflate balances in two or more accounts, Ogren said.

Ogren said that a company might have $100 in each of two accounts. But it could write $1,000 checks on each account and deposit one in the other. As a result, each account temporarily would have $1,100 in balances -- until each check cleared. Ogren said such criss-crossing was not clearly illegal until new banking legislation passed late last year.

He also said that Hutton was enjoined from writing checks in excess of its available balances (cash and checks that have cleared the bank on which they were written) unless banks knew and agreed to the practice. Hutton often wrote checks that exceeded the so-called collected balance -- and by paying the checks the banks, usually inadvertently, gave Hutton interest-free loans.

Hutton also was enjoined from using "targeted balances" in its cash management. In its targeted balances approach, Hutton decided the appropriate level of collected funds it should keep in account to compensate the bank adequately. Banks can only invest funds that are collected from other institutions -- and although they might not have known whether all the deposits in an individual Hutton account had cleared, they did know the total funds in all accounts the bank had available to it.

If Hutton determined one night that a bank had more funds the night before than Hutton's compensation formula called for, the brokerage firm would write a bigger check that night to "average" out the bank's balances. Hutton was enjoined from using such a formula to write checks against nonexistent or uncollected balances.

Ogren said the prohibitions in the injunction against Hutton should be viewed as the government's standards. A number of industries regularly move funds from remote to central locations -- including brokerage firms and retailers.