UES Real Estate Developer Ran $58M Ponzi Scheme, Feds Say

UPPER EAST SIDE, NY — A real estate developer who defrauded investors in a project on the Upper East Side is facing federal prison time, federal prosecutors with the Southern District of New York announced.

Michael D’Alessio, 53, was sentenced to six years in federal prison last week after pleading guilty in November, prosecutors said. D’Alessio was also ordered to forfeit more than $58 million and is facing three years of supervised release following his prison term.

The developer solicited investors in his buildings by forming an LLC company for each development and selling shares in the company in return for a monthly interest payment and a share in the building's profits. D’Alessio followed the same strategy for developments in Manhattan, the Hamptons and Westchester county, raising millions from wealthy investors with the promise that any money paid to buy into an LLC would be used to develop a luxury residential building.

Between 2015 and 2018 D’Alessio diverted funds paid by investors into bank accounts for shell companies he owned, prosecutors said. The developer would then used the funds to pay off previous investors and his own personal expenses. In total, D’Alessio missappropriated $58 million.

D’Alessio duped his investors by misrepresenting the progress made on his development projects. For one development on the Upper East Side he told investors that a building would be delivered to him vacant so he could easily redevelop the property. In reality, the building was full of rent-stabilized tenants that D’Alessio could not easily force to vacate their homes, prosecutors said.

"Michael D’Alessio promised investors that he would develop and build luxury properties that would yield big returns. When the real estate market took a downturn, D’Alessio resorted to fraud. In the end, all he built was a Ponzi scheme that he used to rip off his investors of their hard-earned life savings to the tune of $58 million,"U.S. Attorney Geoffrey S. Berman said in a statement.