Local restaurant and event space operator Katherine Mott-Formicola pleaded guilty to fraud and money laundering charges Tuesday, federal officials said.
U.S. Attorney Trini Ross announced the plea in a news release.
The operator of Crescent Beach in Greece, Monroe’s restaurant in Pittsford and The Wintergarden in downtown Rochester admitted to financial institution fraud and money laundering, officials said.
The plea comes as discussions are underway to sell several of the businesses supported by the admitted crimes. Mott-Formicola, 54, of Pittsford, faces a maximum of 30 years in prison and a $1 million fine.
According to the release:
"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 Nov. 29, 2022, and March 11, 2024, she perpetrated a ‘check-kiting’ scheme by sending hundreds of checks between the various bank accounts for the purpose of fraudulently inflating the balance of the accounts.”
The way check-kiting works is that a person writes a check on one account for an amount greater than what it holds and deposits it in another account, counting on the processing delay to then artificially inflate what is available in the second account. The person then repeats that practice in something of a round-robin exercise.
Prosecutors said Mott-Formicola “kited” more than 500 such checks.
But that all fell apart in March when the banks discovered the scheme. By then, she allegedly had spent nearly $21 million from various Five Star accounts “that she did not actually have,” prosecutors said. That money went to her business ventures and personal items, such as real estate. Five Star Bank recovered some of the money and has sued Mott-Formicola, seeking $18.9 million.
The FBI, IRS Criminal Investigation, and the New York State Department of Financial Services investigated the case.
Sentencing is set for May 1, 2025.
