UPDATE: Court records show that Katherine Mott-Formicola forfeited the Crescent Beach property on Edgemere Drive to the U.S. government as part of her plea agreement to federal fraud and money laundering charges. The court also imposed a $1.85 million penalty that, if not paid, will become a lien against her other property.
Worsening financial challenges are likely to result in the sale of three prominent restaurant and event spaces, including Monroe’s restaurant and bar in Pittsford.
But the Crescent Beach lakeside bar and restaurant is no longer on the market.
All of this is according to the latest filing in the court case involving the venues' operator, Katherine Mott, which paints an increasingly dire outlook for her catering and event businesses.
Mott is accused in a check-kiting scheme that allegedly defrauded Five Star and Community banks of millions. Court-appointed receiver Mark Kercher took control of the finances of Mott’s businesses back in April.
“I have made clear ... the businesses are simply not sustainable under the present structure,” Kercher wrote in his latest activity report filed last week.
He warned, though, that a continued sell-off “will not succeed in ‘righting the ship,’ but rather will only temporarily forestall the inevitable” depletion of Mott’s business portfolio.
Mott’s businesses also operate The Wintergarden in downtown’s Legacy Tower and The Divinity Estate and Chapel at the former Colgate Rochester Crozer Divinity School campus at South Goodman Street and Highland Avenue. Both also are in discussion for sale.
Five Star Bank sued Mott in March, claiming that she had been passing checks between numerous business accounts at Five Star and elsewhere, including Community Bank, artificially inflating balances then withdrawing the money before the fraud could be detected. Five Star put its losses at $18.9 million.
Mott, in turn, has sued Community Bank, which froze funds on deposit, contributing to the financial strain on the businesses, records show.
Mott, through a spokesperson, has suggested this "may well be a series of business misunderstandings." She would need to sign off on any sale. Her attorney declined to comment.
“We are doing everything we can to keep things afloat and keep the lights on,” said Kercher’s attorney John Horn — describing the sales as being “in various stages of completion or culmination.”
Included in all sales discussions is an intent to maintain all event bookings and business contracts.
“The plan with all of this is there will be as little disruption as possible,” Horn said, adding: “I would not say the businesses are being sold for scrap by any means.”
Horn said his understanding is there is not a single buyer for all of the entities.
Monroe’s would be sold “as a going concern,” meaning it would include all debts, and existing contracts, meant to ensure no business disruption, including to previously booked events, court records show. Similarly, with the Wintergarden, the buyer would have to make good on future events and $200,000 owed to building owner Buckingham Properties.
The Divinity Estate and Chapel lease is not sustainable, Kercher wrote, but a buyer would assume the obligation for future events.
"The only other option in my view,” Kercher wrote, “would be to ‘go dark’ and let the current and potential claimants litigate what would almost certainly be a very minimal recovery for anyone.”
While able to make payroll with limited reductions and keep up with vendor payments, lease, insurance and other obligations, Kercher wrote that sales tax payments as well as federal and state payroll taxes are all past due.
It is unclear why the sale of Crescent Beach is not on the table.
Kercher stated in his September report that he intended to oversee the sale of the business. But he wrote last week that, “for a variety of reasons, a sale of the Crescent Beach property is not currently under consideration.” Horn declined to elaborate.
Mott is owed outstanding debts as well.
That includes the 100 or so members of Ridgemont Country Club who have allegedly stiffed Monroe’s at Ridgemont of a combined $30,000 in “unpaid balances from undisputed food and beverage charges,” Kercher wrote.
Those allegedly were left outstanding when the county club contract with Monroe’s was terminated. Kercher told the court he has written to the members directly, and the club owner has encouraged them to pay.
“I am disappointed to report that these collection efforts have not been successful,” Kercher wrote last week, adding: "I have authorized Monroe’s at Ridgemont to pursue these balances through whatever legal means are available.”
