Real-estate developer Michael D’Alessio will begin serving his sentence of six years in federal prison by Wednesday June 5th. The ‘friendly’ NYC developer was known by his clients as the portrait of generosity and kindness. He was said to be quick to lend a hand, or a chauffeur to a friend. He frequently hosted guests at his $13 million home in Water Mill, LI. But, alas, that was all before he pleaded guilty to embezzling $58 million from his wealthy clients. “People who commit Ponzi schemes lead you to think they’re your best friend before stabbing you in the back,” said one real-estate professional who was scammed by D’Alessio.
D’Alessio’s clients were shocked. When investing with him, his checks had arrived like clockwork. He successfully renovated apartments and homes in the most well-to-do neighborhoods. D’Alessio paid investors standard annual returns of 15 to 18 percent, but he also went out of his way to personally guarantee the dividends. Now in hindsight, investors say they should have seen his extra efforts as a sign of his fraud.
As reported by the NY Post, in late 2017, D’Alessio emailed his investors telling them that due to escalating development costs and an unstable real-estate market, there would be no payments for some time. By early 2018, 14 individuals and four companies filed civil suits accusing D’Alessio of swindling them. According to court documents, one couple lost $100,000 that was set aside to help a sick relative. Another lost a $500,000 college fund.
In May 2018, the White Plains-based developer filed Chapter 7 bankruptcy, foreclosing eight of his properties. On August 30th, he was arrested in his Upper East Side home for wire fraud, where police found a firearm and $44,000 in cash. D’Alessio was charged with funneling roughly $58 million in funds that should have been used for renovations, through a set-up of more than 200 bank accounts. As per prosecutors, D’Alessio was operating a Ponzi scheme in which he used money from new investors to pay off older ones. Between 2015 and 2018, he also reportedly spent the money in the investment funds to afford his own lavish lifestyle and to pay off millions of dollars in losses from casino gambling.
D’Alessio, 53, was sentenced to 72 months in prison for defrauding investors in real estate projects located in Manhattan’s Upper East Side, the Hamptons, Westchester and elsewhere. His incarceration also includes making false claims and concealing assets in his bankruptcy case. D’Alessio was also ordered to pay restitution of $58,090,047 and was forced to forfeit all the holdings purchased with funds from the scam.
