Mott-Formicola pleads guilty to defrauding Five Star Bank

Listen to this article

Katherine Mott-Formicola, the restaurateur accused in a civil lawsuit of defrauding Five Star Bank out of millions of dollars, has pleaded guilty in federal court to financial institution fraud and money laundering.

UPDATE: Co-defendant in Mott case accuses her of breach of contract in real estate transaction

On Monday, Mott-Formicola waived indictment and pleaded guilty before U.S. District Court Judge Frank P. Geraci Jr.

Mott-Formicola, four business associates and nine of her hospitality ventures are named as defendants in a lawsuit filed in March and expanded in May by Five Star Bank.

She has a stake in numerous business entities including: KRM Events LLC; Monroe’s Restaurant; the Divinity Estate and Chapel LLC, located at the former Colgate Divinity School; The Wintergarden by Monroes, located at the Legacy Building in downtown Rochester; Monroes at Ridgemont LLC, an event venue at the Ridgemont Country Club; and Crescent Beach at the Lake LLC, a restaurant being renovated.

Five Star accuses the parties of operating a check-kiting scheme that allegedly cost the publicly traded financial institution $18.9 million.

The bank, in court papers, contends Mott and the defendants executed a financial juggling act and never had funds sufficient to cover the checks being written against their accounts.

According to the plea agreement, the maximum penalty for financial institution fraud is 30 years in prison and a $1 million fine, plus five years of post-release supervision.

The maximum penalty for the money laundering charge is 20 years in prison and a $500,000 fine, or twice the value of the property involved in the transaction, whichever is greater, plus three years of post-release supervision.

According to the plea agreement, Mott-Formicola admitted that she perpetrated a check kiting scheme involving more than 500 checks that defrauded Five Star out of $21 million.

Five Star was able to recover some funds from Mott-Formicola’s other holdings and ultimately suffered a loss of about $19 million, according to the plea agreement.

According to sentencing guidelines, Mott-Formicola’s sentence range would be 78 to 97 months in prison a fine of $25,000 to $250,000 and one to five years of post-release supervision.

Geraci won’t be bound by the guidelines at the sentencing scheduled for May 1. And Mott-Formicola cannot withdraw her plea based on the sentence he imposes.

But, under the law, Geraci must require restitution of $18,979,005.79.

Under the plea agreement, Mott-Formicola also has forfeited property, including the Crescent Beach at the Lake. The other venues are not owned by Mott-Formicola, but serve as event sites for her customers.

This story has been updated.

Kevin Oklobzija contributed to this story.

[email protected] / (585) 232-2035