Real Estate Developer Pleads Guilty In Manhattan Federal Court To Defrauding Investors Out Of $58 M
https://www.justice.gov/usao-sdny/pr/real-estate-developer-pleads-guilty-manhattan-federal-court-defrauding-investors-out-58
Department of Justice
U.S. Attorneys Office
Southern District of New York
FOR IMMEDIATE RELEASE
Thursday, November 8, 2018
Real Estate Developer Pleads Guilty In Manhattan Federal Court To Defrauding Investors Out Of $58 Million In Years-Long Real Estate Investment Scheme
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL DALESSIO pled guilty today to operating a years-long scheme to defraud investors in his luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere, and to making false claims and concealing assets in connection with his bankruptcy case. DALESSIO pled guilty before U.S. District Judge Jesse M. Furman.
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MICHAEL DALESSIO, a real estate developer and general contractor, served as the president and chief executive officer of a real estate investment and development firm specializing in the design, construction, and management of both residential and commercial real estate properties (Company-1). DALESSIO and Company-1 developed, and purported to develop, luxury residential real estate properties in Manhattan, the Hamptons, Westchester, and elsewhere.
DALESSIO typically followed the same pattern in each real estate investment project: he sought investments by offering for sale shares in a newly formed limited liability company (LLC) named after the location of the parcel of real estate to be developed and sold (the Target Property). In exchange for a purchase of shares in the LLC, DALESSIO promised a guaranteed monthly interest payment and a share in the profits from the sale of the Target Property. In soliciting investors, DALESSIO made numerous representations to potential investors, including that investor funds would be used only to develop the relevant Target Property and to cover related business expenses of the relevant LLC.
However, in reality, from at least in or about 2015 through in or about April 2018, DALESSIO misappropriated investor funds for his own use and benefit, and made other material misrepresentations. Upon receiving investor funds, DALESSIO typically channeled those funds through a series of bank accounts held in the name of shell companies owned and controlled by DALESSIO. DALESSIO then used much of those investor funds for his own benefit, including to pay off debts and prior investors, and to fund significant gambling and other personal expenses. DALESSIO took steps to conceal his fraud, including deceiving investors regarding the progress of various real estate projects and using money raised from investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme. DALESSIO defrauded investors out of approximately $58 million.
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