A NY Restaurateur Used a ‘Catch Me If You Can’ Banking Trick to Pull Off a $20 Million Fraud

Katherine Mott-Formicola, who pleaded guilty to financial institution fraud and money laundering, is scheduled for sentencing April 30 after a scheme that drained millions from Five Star Bank.

BY AMAYA NICHOLE, NEWS WRITER

Illustration: Inc.; Photos: Adobe Stock

A former restaurant owner is about to be sentenced on federal charges of fraud and money laundering a year ago stemming from a technique that was popular in the era of analog banking.

Katherine Mott-Formicola was the owner of several upscale restaurants in upstate NY including Monroe’s Restaurant, Rare 3001, and most recently Crescent Beach Restaurant in Greece, NY.

However, just four months after closing on the Crescent Beach purchase, Five Star Bank discovered that Mott had been running a check-kiting scheme, depositing over $62 million in fraudulent checks and withdrawing more than $20 million before they caught on.

What Is Check Kiting?

Check kiting exploits the delay between when a check is deposited and when the money is transferred between banks. It begins by an account holder writing a check from an account with insufficient funds and depositing it into a second bank. To prevent it from bouncing, they write a check from the second account to cover the first.

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The cycle repeats, using the gap in time for banks to process the checks to create a fake balance, allowing them to withdraw cash or make payments using money they don’t actually have. It was one of the many schemes used by Leonardo DiCaprio’s character, Frank Abignale, in Catch Me If You Can.

Mott had accounts at both Five Star Bank (FSB)—a consumer and commercial banking and lending services to individuals, municipalities, and businesses throughout Central and Western New York—and Kinecta Federal Credit Union—a credit card service company. 

Between December 2022 and March 2024, Mott juggled hundreds of phony bank transactions. According to the civil complaint filed by FSB in the U.S. District Court in the Western District of New York, in a typical kiting transaction, Mott would take advantage of the banking delay by writing checks on her Kinecta FCU account for an insufficient amount and depositing that check into an account at FSB. In doing this, Mott was able to temporarily inflate the cash balance in her accounts at FSB to create the appearance of additional cash despite insufficient funds. 

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