Federal authorities secured guilty pleas in cases involving a city building inspector, a house-flipping Brooklyn attorney and Eric Malley, pictured, CEO of a property investment firm (Getty, iStock)
When City Department of Buildings inspector Francesco Ginestri visited a Queens construction site last summer, he was there to make a deal. The contractor had been issued a stop-work order, but Ginestri promised that in return for a cash payment — a bakery would be the dropoff point — a hefty fine could be avoided. Instead, federal authorities in February charged Ginestri with soliciting a cash bribe.
On May 19, the now former inspector pleaded guilty to solicitation and receipt of a bribe, in federal court in Brooklyn. Ginestri’s case was one of three guilty pleas involving real estate-related crimes that the Department of Justice secured this month in New York.
Here are the cases:
Cooking up a scheme
As part of his plan, authorities said Ginestri told a contractor at the Queens site in July that the company could face a $25,000 fine for violating the stop-work order. Or, they could come to an agreement. Ginestri asked the worker to deliver $1,200 cash to a bakery owned by a friend, according to federal prosecutors. The worker asked if he could pay on a later date, and he and Ginestri discussed the bribe over a series of phone calls. The employee had by that time alerted authorities, and the calls were being recorded.
Ginestri resigned from his position the day he was arrested in February. His attorney did not immediately return a request to comment following the guilty plea.
The house flipper
Brooklyn attorney Shimon Rosenfeld promised investors big returns for a home-flipping scheme. But prosecutors say instead, Rosenfeld used investor money to buy securities through his brokerage account. The DOJ charged him with defrauding investors of at least $6 million.
Acting U.S. Attorney Mark Lesko said Rosenfeld “swindled his investors,” adding, “the only thing he flipped was their millions of dollars in investments into his own personal bank accounts.”
Rosenfeld pleaded guilty to fraud in federal court in Brooklyn on May 20. His attorneys did not immediately return a request to comment.
Fund fraud
The CEO of a New York real estate investment firm pleaded guilty on May 20 to one count of securities fraud in a case federal prosecutors say defrauded scores of investors out of $58 million.
Authorities say Eric Malley had lured investors by promising a stake in “debt-free” Manhattan residential properties. Their money would be invested through two successful funds he was running.
But Malley actually used investor cash to establish those funds, prosecutors said. Malley told investors his company, MG Capital Management, would buy debt-free luxury units, then rent them to corporate tenants. Instead, Malley used the money to mortgage properties with individual tenants. The fund proceeded to incur millions of dollars in losses, which Malley did not disclose for two years. As a result, many of the investors lost their retirement savings, authorities said.
Malley’s attorney did not immediately return a request to comment.