Receiver will oversee finances of Crescent Beach owner in alleged $18.9 million fraud case
The Crescent Beach restaurant in Greece pictured in 2018. Photo courtesy of Will Cleveland.
Written by Gary Craig, Newspaper Guild of Rochester
A federal judge has ordered a receiver to take over financial control of the bank accounts of restaurateur Katherine Mott, who is accused in a civil lawsuit of an $18.9 million check-kiting fraud.
U.S. District Judge Frank Geraci Jr. on Thursday ruled that a receiver is necessary.
“The evidence of fraud strongly militates in favor of appointing a receiver,” Geraci wrote in his ruling. Five Star Bank, which is suing Mott and business partner Robert Harris, alleged in the lawsuit that Mott swiftly made deposits and withdrawals between multiple banks, giving an appearance that money was available in some accounts when it truly was not.
By doing so, the bank attorneys allege, Mott defrauded Five Star Bank, or FSB, out of $18.9 million. The bank asked for a court-appointed receiver to oversee the finances at Mott’s various businesses, which include Crescent Beach restaurant in Greece, the long popular waterfront establishment that has been shut down and which she planned to reopen.
She also owns Monroe’s Restaurant on Monroe Avenue in Pittsford and two wedding venues. Mott’s attorneys challenged the need for a receiver but did not respond to the claims of fraud in that opposition. Instead, they argued that the bank needed to show solid evidence of racketeering, or multiple acts of fraud, for federal court to have jurisdiction over the civil lawsuit.
“As it currently stands, the location of the $18.9 million owed to (the bank) is unknown,” Geraci said in his ruling.
“Absent identification of where the specific funds withdrawn from FSB are being held, those future revenue streams are likely the only sources available to satisfy the liabilities owed to (the bank),” Geraci ruled. “Appointing a receiver to perform an accounting, trace the withdrawn funds, and to protect those future revenue streams is necessary to ensure that (the bank) has a means of recovery.”
Lawyers for the bank have made clear that they do not want a receiver to intrude on Mott’s restaurant operations, but instead to monitor the finances of the business. In the ruling Geraci said the receiver will have “control over all cash, financial assets, and books and records” of the Mott-owned businesses. Attorneys for the bank have proposed that the receiver either be Eugene Pigott, Jr., a retired New York Court of Appeals judge, or Mark Kercher, a certified public accountant and a court-appointed administrator in a case involving Eastern Niagara Hospital.