A real estate developer pleaded guilty Thursday to swindling more than $58 million from investors who gave him money for five luxury residential development projects in Westhampton, Manhattan and Westchester, federal prosecutors said.
Michael D’Alessio, 53, admitted in Manhattan federal court that he used some of the money to cover personal expenses and debts, including his gambling debts, prosecutors said. He also used money raised from investors in one project to make monthly payments to investors in a different project.
D’Alessio committed a second fraud when he tried to hide his assets to avoid seizure after he filed for bankruptcy in 2018, prosecutors said. D’Alessio carried out the scams from at least 2015 through April 2018.
“Today, this fraudster has taken responsibility for his actions and faces time in a considerably less luxurious property — federal prison,” U.S. Attorney Geoffrey Berman for the Southern District of New York said in a statement.
D'Alessio pleaded guilty to one count of wire fraud, which carries up to 20 years in prison, and one count of concealing assets from a bankruptcy court, which carries up to 5 years in prison.
U.S. District Judge Jesse Furman, who set sentencing for March 22, will decide D'Alessio’s prison term.
Benjamin Brafman of Manhattan, who represents D’Alessio, said he plans to ask the judge to grant his client leniency.
“Mr. D'Alessio is a fundamentally decent man who agreed to accept responsibility for his conduct so that hopefully he and his family can put this nightmare behind them as quickly as possible and can one day soon begin working again to repay his investors,” Brafman said in a statement.
The scheme, prosecutors said, followed the same pattern.
D'Alessio courted investors by offering to sell shares in a new company, typically named after the location where the property would be developed and eventually sold. For investors who gave D'Alessio money, he guaranteed monthly interest payments and a share of the profits from the sale of the property after it was built.
Once D’Alessio would get investors' money, he directed those funds through a series of shell companies he owned and controlled.
Of the five projects, two were in Manhattan and two were in Scarsdale, prosecutors said. The Westhampton project was located at 3 Sandpiper Ct. Some of the investors are from Long Island, but prosecutors said they do not know how many.