Michael D’Alessio Also Pled to Making False Claims and Concealing Assets in Connection with His Bankruptcy Case
New York – Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL D’ALESSIO pled guilty today to operating a years-long scheme to defraud investors in his luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere, and to making false claims and concealing assets in connection with his bankruptcy case. D’ALESSIO pled guilty before U.S. District Judge Jesse M. Furman.
Manhattan U.S. Attorney Geoffrey S. Berman said: “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. 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.”
According to the Indictment, Superseding Information, and statements made in court:
MICHAEL D’ALESSIO, a real estate developer and general contractor, served as the president and chief executive officer of a real estate investment and development firm specializing in the design, construction, and management of both residential and commercial real estate properties (“Company-1”). D’ALESSIO and Company-1 developed, and purported to develop, luxury residential real estate properties in Manhattan, the Hamptons, Westchester, and elsewhere.
D’ALESSIO typically followed the same pattern in each real estate investment project: he sought investments by offering for sale shares in a newly formed limited liability company (“LLC”) named after the location of the parcel of real estate to be developed and sold (the “Target Property”). In exchange for a purchase of shares in the LLC, D’ALESSIO promised a guaranteed monthly interest payment and a share in the profits from the sale of the Target Property. In soliciting investors, D’ALESSIO made numerous representations to potential investors, including that investor funds would be used only to develop the relevant Target Property and to cover related business expenses of the relevant LLC.
However, in reality, from at least in or about 2015 through in or about April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit, and made other material misrepresentations. Upon receiving investor funds, D’ALESSIO typically channeled those funds through a series of bank accounts held in the name of shell companies owned and controlled by D’ALESSIO. D’ALESSIO then used much of those investor funds for his own benefit, including to pay off debts and prior investors, and to fund significant gambling and other personal expenses. D’ALESSIO took steps to conceal his fraud, including deceiving investors regarding the progress of various real estate projects and using money raised from investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme. D’ALESSIO defrauded investors out of approximately $58 million.
In 2018, D’ALESSIO went into involuntary bankruptcy under Chapter 7 of Title 11 of the United States Code. In connection with this bankruptcy proceeding, captioned In re Michael D’Alessio, No. 18-22552 (Bankr. S.D.N.Y.), D’ALESSIO submitted forms that fraudulently omitted money and property belonging to his estate, and made a false declaration under penalty of perjury concerning his money and property.
D’ALESSIO, 53, of New York, New York, pled guilty to one count of committing wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and one count of concealing assets from a bankruptcy court, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. Sentencing is scheduled for March 22, 2019, at 10:00a.m.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Amanda Kramer and Daniel G. Nessim are in charge of the prosecution.
SOURCE: news provided by JUSTICE.GOV on Thursday, November 8, 2018.