Prominent restaurateur admits to running elaborate check kiting scheme, faces prison time
PITTSFORD, N.Y.- On Tuesday, 54-year-old Katherine Mott-Formicola of Pittsford pleaded guilty to financial institution fraud and money laundering, which carry a maximum penalty of 30 years in prison and a fine of $1 million.
Mott-Formicola, a well-known restaurateur, owns Monroe’s, The Wintergarden, the former Crescent Beach Hotel, and The Divinity Estate and Chapel.
Assistant U.S. Attorney Nicholas Testani is handling the case and said that Mott-Formicola was a controlling member of several business entities, operating 10 business accounts at Five Star Bank and seven business accounts at Kinecta Federal Credit Union.
Between November 29, 2022, and March 11, 2024, she carried out a “check-kiting” scheme by sending hundreds of checks between the various bank accounts to fraudulently increase the balance of the accounts. Mott-Formicola would write a check from one account for a dollar amount greater than what the bank account contained. Then, she would deposit the over-valued check into another bank account that she controlled at a different bank, knowing that banks typically place funds into a depositing account before confirming the funds in the withdrawing account. During this delay, she would increase the cash balance in her accounts at various financial institutions by writing over-valued checks that were still honored even though the originating account had insufficient funds.
Mott-Formicola intentionally kited over 500 over-valued checks between her various bank accounts to increase her accounts. Because the inflated account balance would only last until the depositing institution discovered that the withdrawing account had insufficient funds, Mott-Formicola would kite additional checks into the withdrawing accounts to allow the scheme to continue without detection.
In March 2024, Kinecta would not honor Mott-Formicola’s latest round of over-valued checks to her Five Star Bank accounts and charged back the amounts. Because she had already spent about $20,907,000 from her various Five Star accounts that she did not have, the charge-back resulted in a $20,907,000 overdraw balance.
Mott-Formicola spent $20,907,000 on her various business ventures and personal items, such as real estate. Five Star Bank was able to recover some funds but ultimately lost $18,979,005.79.
Sentencing is scheduled for May 1, 2025.
See the full plea agreement here:
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