Prosecutors: Wading River Ponzi schemer forged docs, lied to friend

10/18/2013 4:15 PM |
BARBARAELLEN KOCH FILE PHOTO | Alice Belmonte has been charged with nearly 40 felony charges. Prosecutors say she bilked investors of roughly $4 million.

BARBARAELLEN KOCH FILE PHOTO | Alice Belmonte has been charged with nearly 40 felony charges. Prosecutors say she bilked investors of roughly $4 million.

A disbarred Wading River attorney accused of masterminding a $4 million real estate Ponzi scheme forged contracts, faked emails from banks, and signed her victims’ names for them, going so far as to convince a close friend that her pie-in-the-sky foreclosure deals were well worth the investment while she bought new cars and took vacations to California with the stolen funds, according to court documents and sources close to the case.

Alice Belmonte began luring the victims of her scam with promises of “quick, high rates of return on their investments,” the documents state. She reportedly told victims she had contacts with banks involved in real estate owned-listings, better known as foreclosures, that failed to sell at auction and were owned by lenders.

Prosecutors allege the REO transactions never existed, and that Ms. Belmonte ended up taking the money for herself.

She was arrested on Thursday on nearly 50 charges in total, and is currently being held on $3 million bail. She faces up to 25 years in prison.

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Ms. Belmonte, 47, was a sole practitioner attorney specializing in real estate purchases and investments, with offices in New York City and on Long Island.

The scheme started in 2011, when Ms. Belmonte told investors that all they had to do was deposit money in her escrow account as “proof of funds” to let her prove to the REO listing owners she could close the deal, according to the documents.

She reportedly stole from 10 victims in total, starting with a group of investors from Florida in late 2011. According to prosecutors, she secured contracts with each of the victims – including one family that invested $2 million with Ms. Belmonte – over the next several months, asking them to wire $3.6 million in total into her escrow account.

Within days, the invested money had been taken out, in some cases on the same day it was deposited by her victims, the documents state. The money was then held in other bank accounts run by Ms. Belmonte and later used to repay other investors lined up in the Ponzi scheme.

Not long after their business relationship started, the Florida family which fell victim to Ms. Belmonte’s pyramid scheme noticed that her malpractice insurance policy included a section that “excluded coverage for intentional acts by a lawyer,” the documents state. They asked Ms. Belmonte to remove the section, but instead of getting rid of the amendment, Ms. Belmonte allegedly faked a new contract and gave it to them.

Through the forgery, she was able to keep them invested in her scam, authorities said.

The Florida victims’ money was reportedly never returned.

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At the end of 2011, more victims were lured into the scam, court documents state. A “close friend” and an acquaintance of Ms. Belmonte would be the next victims.

She convinced the two victims to invest $250,000 as proof of funding for another REO transaction, then bounced $615,000 in checks representing their profit and initial investment to the pair, according to the documents.

To reassure them that they would be paid soon, Ms. Belmonte faked another contract claiming she would be receiving $2 million for the sale of her companies. The supposed buyer in the deal was a Florida investment group – her original investors she was simultaneously defrauding, the documents state.

Ms. Belmonte forged the signature of one of the Florida investors to perpetuate the fraud, prosecutors said. She eventually returned $25,000 of the money, using funds stolen from Florida to make the payment, the documents state.

Meanwhile, Ms. Belmonte was stealing another $250,000 from someone else interested in buying real estate. Once the buyer deposited the money, Ms. Belmonte withdrew the funds to pay off other accounts.

In December 2012, the victim cancelled the contract and asked for a refund. Ms. Belmonte gave the client a forged wire transfer receipt a month later after “many excuses and delays,” the documents state.

The money had never been sent, prosecutors said. Instead of the multi-million account she claimed to have, Ms. Belmonte’s account balance was actually just $8.55, according to court documents.

The buyer never got the stolen funds back, the documents state.

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Ms. Belmonte used the millions in stolen funds not only to pay off other investors in the racket, but to treat herself to new cars and hotel room stays, a source familiar with the case said.

She recently used $100,000 to purchase two cars in California, a Chrysler 300 luxury sedan and a Chrysler Town and Country minivan, the source said. She also spent $77,000 of the money on hotel rooms in California, including rooms costing up to $1,750 per night, according to the source.

But by February, Ms. Belmonte was under pressure from four allegations brought by her victims that she misused their investment money, according to court documents.

In a state Supreme Court proceeding tendering her resignation as an attorney after 20 years, Ms. Belmonte admitted she “could not defend herself on the merits” of the charges. Her resignation was accepted and she was disbarred.

On Thursday, she was arraigned in Supreme Court in New York City.

Ms. Belmonte was charged with 39 felonies: one count of first-degree grand larceny, seven counts of second-degree grand larceny, one count of third-degree grand larceny, 26 counts of second-degree criminal possession of a forged instrument, three counts of third-degree identity theft, one count of first-degree scheme to defraud in the first degree. She was also charged with 10 misdemeanor counts of issuing a bad check.

Ms. Belmonte pleaded not guilty to the charges and was held on $3 million cash or bond bail. She is due back in court on Dec. 9, court officials said.

Her attorney, Kenneth C. Murphy of Manhattan, only said on Friday that bail was set too high, and declined to comment further about the case or Ms. Belmonte.

 

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