Five Star Bank says discovery vs. Mott co-defendants needed to trace $20M

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Five Star Bank wants a federal judge to consider allowing, on a limited scale, resumption of the discovery process in the Katherine Mott-Formicola check-kiting civil case to determine if any of the at least $19 million in losses is recoverable.

Attorney Richard S. Hartunian of Barclay Damon LLP, in a letter dated Dec. 5, asked U.S. District Court Judge Frank P. Geraci Jr. to convene a conference to determine if limited discovery can resume. Hartunian was recently added to the defense team.

Because of the stay order that halted discovery, “plaintiff has been unable, for nearly one year, to engage in asset-tracing efforts to attempt to recover any portion of the approximately $21 million that was stolen,” Hartunian wrote.

Mott, 55, pleaded guilty a year ago in U.S. District Court in the Western District of New York to financial institution fraud and money laundering in the criminal case.

The restaurateur had operated Monroe’s Restaurant, The Wintergarden event venue and Divinity Estate & Chapel, and was in the process of rehabilitating the former Crescent Beach Restaurant when civil charges were filed.

She was accused of using various bank accounts connected to her business ventures to shuffle more than 500 over-valued, essentially-worthless checks between accounts, federal authorities said.

The elaborate check-kiting scheme took place between November of 2022 and March of 2024 and eventually led to Mott’s accounts at Five Star Bank to be overdrawn by $20.9 million. The bank, which filed a civil case on March 11, 2024, suffered a loss of just shy of $19 million, federal authorities said.

But Hartunian’s letter says the financial institution actually has been able to recover only $594,000. The bank believes resumption of discovery against the co-defendants in the civil case may provide clarity on what happened to the remainder of the money.

Geraci ordered a stay in the discovery process on Jan. 8, apparently because federal authorities continue to investigate in the criminal case. Since entering the guilty plea on Dec. 3, 2024, Mott’s sentencing has been adjourned four times. Sentencing is now scheduled for March 18, 2026, according to the Hartunian letter.

Hartunian wrote that while Five Star understands and respects the reasoning behind the stay, he is asking that discovery be allowed to continue with regard to co-defendants in the civil case, Robert Harris, Taylor Pagano, Kristina Bourne and Timothy Larocca.

“The individual co-defendants — who we believe received millions of dollars in proceeds from Ms. Mott — have not had to answer any questions, provide any information or otherwise account for the funds they ostensibly received from Ms. Mott,” the letter says. “To date, these individuals have not been criminally charged and have not had to provide any information to plaintiff.

“This has left plaintiff unable to understand how the stolen funds were moved or dissipated.”

Hartunian said it now appears Mott “lacks sufficient assets to satisfy even a small fraction of the plaintiff’s loss,” especially after the recent failed sale of the Crescent Beach Restaurant property.

“It is respectfully submitted that these circumstances demonstrate that continued delay (in discovery) will materially prejudice plaintiff’s ability to identify, preserve and pursue claims against the co-defendants, and warrant a limited lift of the stay to allow targeted discovery directed to those parties.”

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