Michael D’Alessio (Credit: iStock)
Westchester developer Michael D’Alessio was sentenced to six years in prison on Friday morning after pleading guilty in November to defrauding investors in his New York development projects.
D’Alessio, the former CEO and president of Michael Paul Enterprises, was accused of funneling more than $58 million of his investors’ money to shell accounts under his control and using these funds to pay off gambling debts, cash out early investors and cover other debts. He was also accused of excluding money and property belonging to his estate when he filed for Chapter 7 bankruptcy in 2018.
The federal courtroom was packed for D’Alessio’s appearance on Friday, which took place in Lower Manhattan at the Thurgood Marshall Courthouse in front of U.S. District Judge Jesse Furman.
D’Alessio broke down in tears while delivering a brief statement to the court saying he stood before the judge as “a broken man.”
“I feel terrible for all the damage and heartache I have caused to my investors, my friends and to what once was my good name,” he said before Furman handed down his sentence.
He asked the judge to view him not just as a criminal but as “a good man who has struggled with addiction and made terrible mistakes.”
Scott DeCarolis, a victim of D’Alessio’s Ponzi scheme, spoke at the sentencing as well. He asked Furman to remember the financial hardships D’Alessio’s decisions put his investors through, noting that the losses he suffered almost caused him to file for personal bankruptcy.
“I’ll be suffering the rest of my life for this,” he said.
Benjamin Brafman, D’Alessio’s defense attorney, stressed that his client had been struggling with a gambling addiction while the Ponzi scheme was going on and had also been on Abilify, an antipsychotic used to treat diseases such as depression and schizophrenia. He also noted that several victims of D’Alessio’s fund had written to the court asking that he get a lenient sentence.
Assistant U.S. Attorneys Amanda Kramer and Daniel Nessim acknowledged D’Alessio’s gambling addiction as well but said that this was not enough to excuse his actions, especially from the perspective of his investors.
“They were confident in these investments,” Nessim said, “and they paid the price.”
Furman ultimately sentenced D’Alessio to six years in prison followed by three years of probation. He will also have to do 300 hours of community service and take an outpatient program for drug and alcohol abuse. He will need to surrender approximately $58 million to the United States as well, and his prison sentence is scheduled to start on June 5.
He has sold multiple development projects at bankruptcy auctions in recent months, including boutique Manhattan condo buildings at 227 East 67th Street and 184 East 64th Street on the Upper East Side, which sold for $15 million and $17.5 million, respectively.
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