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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, August 30, 2018

Real Estate Developer Charged In Manhattan Federal Court For Operating Years-Long Real Estate Investment Scheme In And Around New York City

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging MICHAEL D’ALESSIO with wire fraud in connection with his years-long scheme to defraud investors in luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere. D’ALESSIO was arrested this morning in New York, New York, and will be presented this afternoon before Magistrate Judge Barbara C. Moses in Manhattan federal court.  The case is assigned to U.S. District Judge Jessie M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael D’Alessio, former president and CEO of a real estate development firm, allegedly sought investments to develop specific real estate projects. In reality, D’Alessio allegedly comingled investor funds and used them to pay his own debt, fund his own gambling, and pay personal expenses. Michael D’Alessio has lost his alleged gamble to swindle his investors, as he now faces significant time in federal prison.” 

Assistant Director-in-Charge Sweeney said: “Investors believed they would get a return on their money, so they put their faith in Mr. D’Alessio.  Instead of growing those investments, he allegedly used the money for his gambling problem and to pay off his debts.  Even though he attempted to use money from one project to pay monthly installments to investors in another project, investor funds were not used for their stated purpose. Now he will face justice, and the FBI New York will work tirelessly to get investors’ money back.”

According to the Indictment unsealed today in Manhattan federal court:[1]

A career real estate developer and general contractor, D’ALESSIO 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. 

In truth and in fact, and contrary to the representations that he made to investors, from at least in or about 2015 through in or about April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit.  Upon receiving investor funds, D’ALESSIO 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 those investor funds for his own benefit, including to pay off debts, and to fund significant gambling and other personal expenses.  D’ALESSIO took additional steps to conceal his fraud, including deceiving investors regarding the progress of development on 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, 52, of New York, New York, is charged with committing wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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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.

The charge contained in the Indictment is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.

 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Press Release Number: 
18-298
Updated August 30, 2018