What is check-kiting? Legal experts weigh in on crime in Crescent Beach allegations

Check Fraud Scheme

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ROCHESTER, N.Y. — News10NBC is taking a closer look at the allegations made against the owner of the historic Crescent Beach Hotel in Greece.

Katherine Mott owns the historic Greece space, and several other businesses in the area. These include the Wintergarden downtown, and Monroe’s in Pittsford. Monday, Five Star Bank accused Mott of defrauding the bank out of $19 million.

News10NBC was able to reach mott by phone Tuesday, but she declined to comment.

According to the complaint, Mott opened several business accounts with Five Star Bank in 2022. About three weeks ago, she “exploited and abused the privilege of doing business in the corporate form” with a check-kiting scheme.

Check-kiting occurs when you write a check from one account, using money that isn’t actually there. The check is then deposited into another account, and you withdraw the funds.

The complaint alleges that Mott deposited 68 checks since February 23, totaling over $62 million. She then withdrew over $20 million via checks, which Five Star Bank said she did not actually have. The complaint says while she paid back more than a million dollars, she still owes nearly $19 million.

Adam Willman and Teo Siguenza are both Rochester attorneys that cover white collar crimes, among many other areas. News10NBC asked what kinds of punishments convicted check-kiters can face.

“The ‘punishment’ — if you will — varies, it depends on various factors,” Siguenza said. “Some of those would be the amount of money involved, it would be whether or not there were victims in the case, whether or not there are individuals aside from the bank entities which suffered a pecuniary loss, so it could range from a fine to a term of probation and even incarnation.”

The complaint says Five Star Bank is seeking nearly $19 million, plus any interest and legal fees occurred.

A spokesperson for Mott gave the following statement Tuesday, saying that the issue “may well be a series of business misunderstandings”: “As has become all too common in today’s world, allegations that are released to the media are seen as facts. As the legal process plays out, we want to assure our customers, those that have events booked with us, and the community we love and serve that we will continue, as we always have, to be who we always have been…great employers, community partners, and a company that has always valued it’s customers as they deserve to be treated.

As the legal matters move forward and through the process the company will continue, not only to operate and continue to provide high quality products and services but will do so as we always have…at a higher level than any group has ever done in the area.

Many are questioning the feasibility of businesses continuing as normal. Crescent Beach was supposed to open this spring after being closed for years. But with incomplete renovations and an incomplete legal battle, many are airing concerns on social media.

News10NBC reached out to Greece Town Supervisor Bill Reilich on what the plan is for Crescent Beach. So far, we have not heard back.