Developer pleads guilty to $58M ponzi scheme involving projects in Manhattan and the Hamptons
He allegedly used money to pay off gambling debt, early investors
A White Plains real estate developer pleaded guilty on Thursday to defrauding investors in his development projects in Manhattan, the Hamptons and Westchester.
Michael D’Alessio, former CEO and president of Michael Paul Enterprises, funneled more than $58 million of investor money to shell accounts he controlled, which he then used to pay off his gambling debt, cash out early investors and cover other debts, according to U.S. Attorney Geoffrey Berman.
D’Alessio allegedly offered shares in limited liability companies named after the development project. Investors were promised monthly interest payments and a cut of the profits once the property was sold, Crain’s reported.
But in 2015, D’Alessio allegedly started directing the money to bank accounts owned by shell companies he controlled. Earlier this year, he filed for Chapter 7 bankruptcy and is accused of excluding money and property belonging to his estate from the bankruptcy filings. In April, Preferred Bank began foreclosing on Michael Paul Enterprises’ condominium building at 184 East 64th Street. D’Alessio pleaded guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison. [Crain’s] — Kathryn Brenzel