Crescent Beach owner sues bank over $593K dispute amid check-kiting allegations

In late March local restauranteur and event planner Katherine Mott walked into a branch of Community Bank, seeking to take out about $593,000 that her businesses had recently deposited.

An official at the bank refused, possibly aware of a recent lawsuit by Five Star Bank accusing Mott and her varied businesses of a check-kiting scheme totaling nearly $19 million. "Sue us," the bank official said, according to court papers.

So she did.

Now that lawsuit, filed in June, is yet another bit of the ongoing litigation focused on Mott's businesses. Mott owns Monroe's Restaurant in Pittsford and Rare 3001, a high-end steak house within Monroe’s. She had planned to open the lakefront Crescent Beach restaurant in Greece, but the Five Star lawsuit has derailed the plans.

Community Bank had transferred the money to Five Star Bank, the operation that initially sued Mott in March. And now, months later, Mott is still trying to secure the money from that transfer while working to keep her businesses afloat.

Businesses staying steady for Katherine Mott

The good news for Mott: According to a recent report from a court-appointed financial receiver , Mott's businesses have "been able to accommodate all events previously booked without difficulty."

"Operating cash flow improved from increased summer activity in the restaurant venues and special events, such that the (businesses) were able to meet payrolls without reducing workforce and to keep all critical food and beverage vendor payments current assuring no disruption in supply," the receiver, certified public accountant Mark Kercher, said in a recent report.

"Additionally, all lease obligations, insurances and payroll were kept current during June," he wrote.

Mott's attorney, David Rothenberg, said the report shows that the businesses are still active.

"The receiver's most recent report confirms that the restaurants and the wedding venues have remained open and continue to operate," he said. "And not only that, I understand that they've been quite busy."

Katherine Mott still facing debt

The not-so-good news for Mott: Her businesses still confront significant debt and payments for some construction. Restructuring or more revenue will be needed, the receiver said in the recent report.

For several months, Mott's lawyers have been fighting to secure more than $284,000 that was paid by customers in March. That is part of the money transferred from Community Bank to Five Star.

The receiver has encouraged payment of the money to Mott to help with her businesses.

"I continue to be hopeful that the $284,000 will be returned to the (businesses) in order to provide thereceivership with needed working capital," Kercher wrote in his report. "That said, the litigation (against Community Bank) was just commenced, which means that, unless there is an early settlement, a near-term recovery of these funds is unlikely."

Mott, a Greece native, also owns and runs two wedding venues: The Wintergarden by Monroe’s wedding venue downtown and The Divinity Estate and Chapel wedding venue at the former Colgate Divinity School near Highland Park.

Last year she took over food, beverage and events at Ridgemont Country Club in Greece. However, that relationship will end in late August with the expiration of Mott's lease, records show. The receiver said he doesn't think the loss of the business will significantly impact Mott's revenues.

In its lawsuit, Five Star accused Mott and a business partner of check kiting. With the alleged fraud, Five Star contended, the business opened multiple accounts then rapidly shifted money between the accounts. This allowed payments of nearly $19 million that was not covered by money because of the time that could lapse after a deposit and before the bank saw the money was unavailable.

Lawyers for Five Star declined comment.

This article originally appeared on Rochester Democrat and Chronicle: Crescent Beach owner sues bank over $593K dispute amid check-kiting allegations