Restaurant Owner Admits to $19 Million Fraud

New court documents have revealed the details of a significant $19 million check-kiting scheme perpetrated by Katherine Mott-Formicola, a restaurant owner from Pittsford, New York. The filings also shed light on the current status of the long-vacant Crescent Beach property in Greece, New York.

Details of the Check-Kiting Scheme

Katherine Mott-Formicola pleaded guilty in 2024 to federal charges of financial institution fraud and money laundering. She admitted to running the elaborate scheme across multiple accounts at Five Star Bank and Kinecta Federal Credit Union.

Scheme Timeline and Growth

The fraudulent activity began on November 29, 2022, and continued until March 11, 2024. The scheme involved circulating hundreds of checks between accounts to artificially inflate balances. Initially, transactions were around $400,000, escalating to $900,000 over the 15-month period.

Receiver Mark Kercher noted the daily float grew from $10 million to $22 million. The scheme ultimately collapsed in March 2024 when Kinecta Bank rejected checks drawn on their accounts.

Crescent Beach Property Faces Uncertainty

The report also provides an update on the Crescent Beach property, formerly owned by Mott-Formicola. Currently, no sale has been finalized, and there are no funds available for property maintenance.

Property Concerns and Unpaid Taxes

This lack of funding puts the property at risk of deterioration. Unpaid property taxes for February further complicate the situation. The receiver’s report indicates the property is at risk without a solution for ongoing expenses.

Concerns Raised by Five Star Bank

Attorneys representing Five Star Bank have expressed concerns regarding the receiver’s final report. They object to the failure to fully trace the missing funds and found the report’s conclusions disappointing.

Receiver's Response

Receiver Kercher responded, stating the investigation stalled before his appointment and that comprehensive forensic services were beyond his available resources. He emphasized that the shareholders of Five Star Bank were the primary victims of the fraud.

Upcoming Sentencing and Potential Ramifications

Katherine Mott-Formicola is scheduled for sentencing on April 30, facing a potential maximum sentence of 30 years in federal prison. The sentencing could impact the recovery of lost funds and the distribution of assets.