A real estate developer has admitted to operating a years-long Ponzi scheme that included properties in Westchester.
Michael D’Alessio, 53, has pleaded guilty to one count of committing wire fraud and one count of concealing assets from a bankruptcy court. He faces up to 20 years in prison and hundreds of thousands of dollars in fines when he is sentenced on March 22 next year. The elaborate scheme involved defrauding investors of luxury real estate developments in Manhattan, the Hamptons, Westchester and other locales.
D'Alessio is the former president and CEO of real estate development firm Michael Paul Enterprises in White Plains.
A career real estate developer and contractor, D’Alessio was the CEO of an investment and development firm specializing in the design, construction and management of residential and commercial real estate properties.
According to Geoffrey Berman, the United States Attorney for the Southern District of New York, D’Alessio “typically followed the same pattern in each real estate project.” He would seek investments by offering shares of a newly formed company, named after the location of the parcel of real estate to be developed and sold. In exchange for a purchase of shares in the company, D’Alessio promised a guaranteed monthly interest payment and a share in the profits from the property.
The scheme began in 2015 and lasted until April of this year. D'Alessio defrauded investors out of approximately $58 million.
In soliciting investors, D’Alessio made several representations to potential investors, including that investor funds would be used only to develop the property and cover related expenses. Instead, for years, D’Alessio misappropriated his investors’ money for his own use.
Berman said that D’Alessio channeled the money through a series of bank accounts that were listed in the name of shell companies that he owned and controlled. He then used the investors’ money to pay off debts and to fund gambling and other expenses. He also took additional steps to conceal his fraud by deceiving investors about the development of real estate projects and “raising money from new investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme.”
D’Alessio was arrested last month. Berman noted that earlier this year, D'Alessio went into involuntary bankruptcy. In connection to that bankruptcy proceeding, D'Alessio also submitted forms that fraudulently omitted money and property belonging to his estate, making a false declaration under penalty of perjury concerning his money and property.
“Real estate developer Michael D’Alessio admitted today to misappropriating investor funds intended for specific luxury development projects by funneling them into shell accounts he controlled. In typical Ponzi-like fashion, D’Alessio comingled over $58 million of investor funds and used them to cash out early investors, cover debts, and pay his own personal gambling debts," Berman stated. "When D’Alessio eventually went into bankruptcy, he perpetrated yet another fraud by trying to conceal assets. Today this fraudster has taken responsibility for his actions and faces time in a considerably less luxurious property – federal prison.”
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