NEW YORK CITY—Michael D'Alessio, the former president and CEO of Michael Paul Enterprises LLC in White Plains, was charged in federal court with wire fraud in a scheme to defraud investors. If convicted, the maximum sentence is 20 years behind bars.

The indictment says the 52-year-old New York resident developed luxury real estate properties in Manhattan, the Hamptons, and Westchester County and elsewhere. It states that the projects typically followed this model: D'Alessio sought investments by offering to sell shares in a newly formed limited liability company named after the location of the real estate to be developed and sold. D'Alessio would promise a monthly interest and a share in the profits from the sale of the property. He would represent that investor funds would be used to develop specific properties and to cover related business expenses.

“In reality, D'Alessio allegedly commingled investor funds and used them to pay his own debt, fund his own gambling, and pay personal expenses,” says Manhattan US Attorney Geoffrey S. Berman.

Investors believed they would get a return on their money, so they put their faith in D'Alessio, according to the FBI New York office's assistant director-in-charge William F. Sweeney, Jr. But the indictment accuses D'Alessio of channeling investors' funds through a series of bank accounts held in the name of shell companies that he owned and controlled. It states D'Alessio utilized the investors' funds to pay off debts and personal expenses, including significant gambling expenses.

“Even though he attempted to use money from one project to pay monthly installments to investors in another project, investor funds were not used for their stated purposes,” says Sweeney.

The feds accuse D'Alessio of attempting to conceal his fraud by deceiving investors about the progress on development projects, and raising money from new investors to pay investors on different projects—similar to a Ponzi scheme. Prosecutors assert from 2015 through April 2018, he used wire communications in interstate commerce including email communications and electronic fund transfers to obtain and misappropriate money through fraud.

Berman is pushing for D'Alessio to forfeit any proceeds he received due to allegations in the criminal charge. If the proceeds are not available, the government will seek forfeiture of Berman's other property up to the value of the amount he received based on the indictment.

In March, Westfair news reported that earlier this year investors filed lawsuits against D'Alessio in Westchester Supreme Court over failed Manhattan condominium projects. The paper stated the Westchester Bank also sued for $811,000 on a $1 million loan that D'Alessio took out in 2015. The paper reported that D'Alessio emailed investors apologizing for their financial losses.

According to Westfair online, D'Alessio says when investors sued and banks read news accounts about the lawsuit, they shut down his lines of credit and stopped funding construction loans. He reportedly said this essentially put him out of business which prevented preserving the investors' capital.

The phone number for D'Alessio's real estate company in White Plains has been disconnected and he did not respond to GlobeSt.com's attempt to communicate with him.

Instant Insights /

Real Estate Developer Michael D'Alessio Charged with Wire Fraud

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