Developer behind $58M Ponzi scheme sells Manhattan properties at auction

Michael D’Alessio could lose more than $50M in assets to the Feds

TRD New York /
Feb.February 06, 2019 02:00 PM

Michael and Yvonne D’Alessio with 184 East 64th Street and 227 East 67th Street (Credit: Benjamin Zeitlin via YouTube)

Westchester developer Michael D’Alessio, who pleaded guilty to fraud charges in November, sold multiple development projects at bankruptcy auctions over the last few months, court records show.

Among them are two boutique Manhattan condominium buildings on the Upper East Side. A development at 227 East 67th Street, where D’Alessio’s Michael Paul Enterprises and its broker, Ryan Serhant, originally planned to sell five units for $28.5 million, sold for $15 million at auction. And 184 East 64th Street, where D’Alessio put five apartments up for sale totaling $42.5 million, sold for $17.5 million to an anonymous LLC, records show.

Both sales closed last month and hit public sales records this week. California-based Preferred Bank began foreclosure proceedings on 184 East 64th Street in August.

A third Manhattan property, an eight-unit, rent-regulated building at 145-147 East 62nd Street, sold at auction on Jan. 22. Maltz Auctions, the company sponsoring the sale, declined to share any information, but bankruptcy records show it went into contract for $6.6 million. D’Alessio bought the building in 2016 with the intention of converting it into condos.

At least three other D’Alessio properties outside of New York City — two in the Hamptons and one in Scarsdale — have also sold at auction, according to bankruptcy filings. D’Alessio’s attorney, Benjamin Brafman, declined to comment, citing ongoing litigation.

Across bankruptcy proceedings, civil lawsuits and a federal indictment, dozens of parties have made monetary claims against D’Alessio totaling more than $140 million. After D’Alessio pleaded guilty in November to charges described by prosecutors as a “Ponzi-like” investor fraud, the same prosecutors said they would go after as much as $58 million of D’Alessio’s assets through forfeiture.

However, every property that sells to pay off creditors in bankruptcy court may shrink the pool of potential assets for federal prosecutors to forfeit. Non-government claimants include real estate companies MacQuesten Cos., Mautner-Glick and Eli Tabak’s Bluestone Group.

A spokesperson for the United States Attorney’s Office for the Southern District of New York told The Real Deal in December that prosecutors would “attempt to retrieve the money from all of his assets, since he does not have the cash to cover the forfeiture order.”

Law enforcement already seized $44,000 in cash from D’Alessio’s home in August, including a gym bag containing $30,000 and a gun, according to a December forfeiture order. (D’Alessio was subsequently ordered to surrender a number of firearms to law enforcement.) A court hearing following D’Alessio’s August arrest revealed the developer had also told a friend he planned to relocate to the Dominican Republic, where he had already been traveling following his April declaration of bankruptcy.

In a November statement, U.S. Attorney Geoffrey Berman accused D’Alessio of taking investor funds and moving them into accounts that had nothing to do with the investments, in part to fund an expensive gambling habit. Berman further accused him of trying to conceal his assets from creditors in bankruptcy court.

D’Alessio is out on bail until his March sentencing hearing. The charge of wire fraud he pleaded guilty to carries a maximum sentence of 20 years.


Related Articles

arrow_forward_ios
Alex Rodriguez (Photos by Guerin Blask)

A-Rod is coming for NYC and SoFla real estate

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

There will be 70 agents based at the new office (Credit: iStock)

Compass opens Long Island City office as new-development sales surge

The Daily Digest - Tuesday

New life for Toys “R” Us, Masa Son is “embarrassed” with the Vision Fund: Daily digest

Nooklyn CEO Harley Courts (Credit: iStock)

Brokerage slashes agent commissions, delays payments after rent law change

The Daily Digest - Tuesday

NYC apartment prices hit 4-year low, Pacific Park developers reveal new plans: Daily digest

LeBron wanted it and California’s governor signed it. What the college athlete compensation law means to real estate

Racial inequality in homeownership across US is sharpest in New York: report

arrow_forward_ios