Add the federal government to the long list of people and entities that want whatever is left from the real estate development ventures of Michael D’Alessio.
The former White Plains developer was arrested on Aug. 30 and accused of wire fraud. He allegedly swindled investors in luxury real estate projects in Manhattan, the Hamptons, Scarsdale and elsewhere, according to a news release from U.S. Attorney Geoffrey S. Berman.
The indictment includes a demand that D’Alessio forfeit any property or money connected to the alleged crime.
He was already facing numerous accusers and creditors who want pieces of his empire.
At least 29 individual investors have filed lawsuits in Westchester, Manhattan and the Hamptons, accusing D’Alessio of fraud in connection with failed real estate projects. He has filed two dozen bankruptcy petitions, and three area banks filed a bankruptcy action to force him into liquidation.
The involuntary liquidation case lists 228 pages of creditors, and he has declared $23,350 in assets and $165 million in liabilities.
D’Alessio began building and managing commercial and residential real estate projects 25 years ago. His Michael Paul Enterprises was based in White Plains until recently. That office has closed, and he now operates from an office on Tremont Avenue in the Bronx. A year ago, he moved from Westchester to East 66th Street in Manhattan.
The indictment mirrors allegations made in the lawsuits and a bankruptcy case. One lawsuit, for instance, stated that D’Alessio solicited investments for a $46.8 million project at 163-165 East 62nd St. in Manhattan, where three townhouses were to be demolished and replaced with 10 condominium units. Investors were promised a 16 percent annual return.
Late last year, that project stalled and D’Alessio stopped making payments to investors.
According to the criminal case, he sought investors for real estate projects from 2015 to early this year. He promised guaranteed monthly interest payments and a share in profits when the properties sold. Investors were told that their money would be used only for specific projects.
Instead, the U.S. Attorney’s Office claims, D’Alessio commingled funds and channeled the money through a series of bank accounts held by shell companies. Then he allegedly used the funds for his own benefit, including paying off significant gambling debts.
One of the creditors listed in a bankruptcy filing is the Borgata Hotel in Atlantic City for a $590,000 line of credit at its casino.
He allegedly deceived investors about the progress of the projects and raised money from new investors, the U.S. Attorney claims, to make payments to previous investors “in the manner of a Ponzi scheme.”
D’Alessio has previously denied wrongdoing in connection with the allegations in the lawsuits and said he looks forward to his day in court.
The FBI assisted with the investigation, and the case is being handled by the federal prosecutor’s Securities and Commodities Fraud Task Force.