A New York-based real estate developer was sentenced to six years in prison on Thursday for running a multiyear scheme to defraud investors of $58 million, the U.S. Attorney’s Office for the Southern District of New York announced.

Michael D’Alessio, a 53-year-old New York City man pled guilty to misleading investors about luxury developments in Manhattan, the Hamptons, Westchester and elsewhere.

“Michael D’Alessio promised investors that he would develop and build luxury properties that would yield big returns,” Manhattan U.S. Attorney Geoffrey Berman said in a statement. “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,” Berman added.

D’Alessio followed a similar pattern in each instance of fraud, according to the indictment. He would offer investors shares in a newly formed LLC named after the property’s address. In exchange for the purchase of shares, he would promise monthly interest payments and a share in the profit of the property’s eventual sale.

When D’Alessio received the funds, he would then typically channel them through bank accounts held in the names of shell companies and use the money to pay off debts as well as prior investors (in the manner of a Ponzi scheme), and to fund gambling and other personal expenses.

In one example cited in the indictment, D’Alessio represented to investors that a building would be delivered to him vacant, however, he knew it was inhabited by rent-controlled tenants who could not be easily evicted.

D’Alessio went into involuntary bankruptcy in 2018 and at that time submitted forms that omitted money and property belonging to his estate. Law enforcement agents specifically found $44,000 in cash including $30,000 in a gym bag alongside a firearm.

Law enforcement agents also uncovered text messages between D’Alessio and another individual where D’Alessio asked the individual for $100,000 that the individual was allegedly holding for him.

In total, law enforcement determined that D’Alessio concealed at least $143,000 from the bankruptcy court.

In addition to six years in prison, D’Alessio was sentenced to three years of supervised release and ordered to pay forfeiture in the amount of $58 million.

Email Patrick Kearns

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