Developer Defrauded Investors In Hamptons Projects: U.S. Attorney

SOUTHAMPTON, NY — A real estate developer who defrauded investors in luxury real estate development projects in the Hamptons was indicted Thursday, according to 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.

Berman and Sweeney announced the unsealing of an indictment in Manhattan federal court charging White Plains developer 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, a release from the U.S. Attorney for the southern district said.

D'Alessio was arrested Thursday in New York City and faced Magistrate Judge Barbara C. Moses in Manhattan federal court; the case is assigned to U.S. District Judge Jessie M. Furman, Berman said.

D'Alessio, 52, of New York, NY, was charged with committing wire fraud, which carries a maximum sentence of 20 years in prison, 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 co-mingled 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," Berman sad.

Assistant Director-in-Charge Sweeney added: “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 in Manhattan federal court, 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.

A call for comment to D'Alessio's firm, Michael Paul Enterprises LLC in White Plains, revealed that the number has been disconnected.

D'Alessio, the indictment said, typically followed the same pattern in each real estate investment project, seeking investments by offering for sale shares in a newly formed limited liability 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 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, Berman's release said.

"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," the indictment said. "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, Berman said, "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."

The 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.

An attorney for D'Alessio could not immediately be reached for comment.

Patch file photo.