Another 15 investors have sued former White Plains real estate developer Michael D”™Alessio, claiming he misrepresented his finances on bankruptcy forms, including gambling debts, in diverting $2.8 million from projects they were financing.
D”™Alessio used his companies “to carry out a massive fraud on numerous investors,” the bankruptcy court complaint, filed on Aug. 13, stated. He allegedly used false information to solicit investments and then used the money “to enrich himself or pay other investors in order to perpetuate a fraud.”
Numerous lawsuits have been filed in the past year against D”™Alessio, alleging fraud and misappropriation of funds in several failed real estate projects. In April, three banks petitioned U.S. Bankruptcy Court in White Plains to force him into Chapter 7 liquidation. Then D”™Alessio filed 24 bankruptcy petitions, declaring $23,350 in assets and $165 million in liabilities.
D”™Alessio did not immediately respond to an email asking for comment on the new lawsuit. Previously, he has denied wrongdoing and attributed the accusations to “disgruntled, seasoned real estate investors with big damaged egos.”
The investors poured money into eight real estate projects in Manhattan, Long Island and the Bronx.
D”™Alessio promised to use the money to buy and develop the properties, the complaint stated. He guaranteed all construction cost overruns and pledged to make his own capital contributions to each project.
“In almost every instance,” the complaint stated, “either no or very little construction took place.”
The investors claim he commingled funds and diverted the investments to other entities or to himself.
The complaint cited inconsistencies on D”™Alessio”™s bankruptcy statement of financial affairs. He answered “no,” for instance, to whether he had lost anything due to gambling in the year before he filed for bankruptcy.
But he testified at a July 12 creditors”™ meeting that he had lost hundreds of thousands of dollars at the Borgata Hotel in Atlantic City.
The lawsuit does not note that D”™Alessio did include the Borgata Casino on a 228-page list of creditors filed on May 30, showing a $590,000 line of credit in a casino depository account. He also listed a pending lawsuit filed by the casino in Superior Court in Atlantic City.
The investors also allege that D”™Alessio misrepresented what happened to $300,000 in cash from 12 closed bank accounts by stating on a bankruptcy form that he had no cash but testifying at the creditors’ meeting that he had lived off it.
The lawsuit argues that D”™Alessio is not entitled to use bankruptcy to discharge his $2.8 million in debts to the investors because the debts resulted from fraud and embezzlement.
The investors include Bruze Azus, David Azus, Ira Gordon, Steven Gutenplan, Charles Hirsch, Tina Jebailey-Post, William Jebailey, David Levy, Rita Levy, Rebecca Levy, Matthew Levy, Allan Miller, David Miller, David Samuels and Evan Steinbach. No addresses are listed, but the lawsuit says they are all from New York and Pennsylvania.
They are represented by James J. Vincequerra of Alston & Bird LLP in Manhattan.
D”™Alessio, as head of Michael Paul Enterprises, has claimed a 25-year record of building and managing commercial and residential real estate projects. He was based in White Plains but has moved his operations to the Bronx. About a year ago, he moved his home from Westchester to East 66th Street in Manhattan, near some of his failed real estate projects.
