ROCHESTER, N.Y. — A Western New York woman has pleaded guilty for her role in a 'check-kiting' scheme.
Katherine Mott-Formicola, 54, of Pittsford, NY, pleaded guilty Tuesday to financial institution fraud and money laundering.
Assistant US Attorney Nicholas Testani, who prosecuted the case, said Mott-Formicola participated in a 'check-kiting' scheme by sending hundreds of checks between several different bank accounts in an effort to inflate the balance of the accounts.
Investigators said from Nov. 29, 2022 to March 11, 2024, Mott-Formicola would write a check from one account for more money that what was in the account and deposit that check into another account she controlled at another bank, knowing the deposit would be in the new account before the bank confirmed the funds in the account the money was originally withdrawn from.
Because of this delay, investigators said, she would inflate the cash balance in her accounts by writing over-valued checks that were still honored, despite having insufficient funds.
Officials said Mott-Formicola intentionally kited more than 500 over-valued checks between several bank accounts to over-inflate her accounts. Bcause the inflated balance would only last until the bank discovered the insufficient funds, Mott-Formicola would kite additional checks into the withdrawing accounts without detection, investigators said.
Mott-Formicola was caught in March after one of the banks, Kinecta, would not honor her latest round of checks to her Five Star Bank accounts and charged back the amounts totaling $20,907,000. The charge back resulted in a more than $20 million overdraw balance. Investigators said Mott-Formicola spent the money on various business ventures and personal items, including real estate.
Five Star Bank was able to recover $18,979,005.79 of the money taken.
Mott-Formicola will be sentenced in May. She could face up to 30 years in prison and a fine of $1 million.
