The U.S. Trustee’s Office claims that former White Plains real estate developer Michael P. D’Alessio sold a property for one-tenth of its value, shortly before filing for bankruptcy protection.
The adversarial lawsuit, filed last month in federal bankruptcy court in White Plains, claims that the buyer paid $100,000 for property in Suffolk County that was worth $1 million.
The complaint was filed against the buyer, Middle Pond Partners LLC of New Hyde Park, Nassau County.
The lawsuit is the latest in a blizzard of legal actions involving D’Alessio, his Michael Paul Enterprises and numerous limited liability companies.
D’Alessio raised millions of dollars by promising investors interest payments up to 16 percent per year, to finance luxury real estate developments.
Dozens of investors sued him last year in Westchester, Manhattan and Long Island courts. Three banks forced him into liquidation in bankruptcy court. He then filed Chapter 7 liquidation petitions for 25 real estate entities.
The U.S. Attorney’s Office accused him of swindling investors out of $58 million last summer, in what the government described as a Ponzi-like scheme in which he commingled investors’ funds and channeled funds through a series of shell companies. He pleaded guilty in November to wire fraud and bankruptcy fraud.
The new allegations concern 43 Middle Pond Road in Southampton.
D’Alessio bought the vacant property in January 2017 and mortgaged it for $300,000 to Maxim Capital Group LLC in Manhattan. He defaulted on mortgage payments in March 2018. Interest on the loan increased from 10 percent to 24 percent a year.
Last May, D’Alessio transferred the property to Middle Road Partners, an affiliate of Maxim Group, according to the complaint, for $100,000.
A bank appraisal had put the value of the property at $1 million. D’Alessio valued it at $900,000 on a bankruptcy petition.
By the time the property was sold, the complaint states, it had accumulated $722,000 in unsecured debt and two groups of investors had sued D’Alessio, claiming losses of $1.2 million on developing the property.
The property was transferred for less than its fair market value, the complaint states. The trustee’s office is asking the court to set aside the deed for the benefit of 43 Middle Pond Road Associates LLC, one of D’Alessio’s development companies. The trustee is also asking for a money judgment for an unspecified amount, against Middle Pond Partners.