Prominent NYC real estate developer and top execs charged in $86M fraud scheme

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A once high-flying New York real estate developer and several other industry executive bigwigs have been indicted for stealing more than $86 million from investors and subcontractors through a years-long series of frauds and schemes, Manhattan prosecutors say.

Nir Meir, 49, who was the managing principal at the now-shuttered real estate investment company HFZ Capital Group, and the executives have been charged with varying counts of larceny, conspiracy, falsifying business records, tax fraud and money laundering.

The case stems largely from a failed luxury Manhattan condo project called “The XI,” located along the High Line in the Chelsea neighborhood of Manhattan’s West Side, as well as a 34-story office skyscraper in NoMad dubbed “29th & 5th.”

According to prosecutors, Meir hired the construction company Omnibuild in 2015 to construct two mixed-use commercial and residential towers at the Chelsea site.

REAL ESTATE FRAUD RISK IS ON THE RISE, AND VICTIMS ARE SOUNDING THE ALARM

He directed the project’s funds, totaling more than $253 million in four years, to be transferred to various LLCs controlled by HFZ. The assets were primarily diverted to cover financial shortfalls on unrelated HFZ projects and, at times, to personal accounts controlled by HFZ executives.

It led to a shortfall of more than $37 million owed to Omnibuild and its subcontractors, prosecutors say. 

In an attempt to fill this shortfall with funds and hide the true cost of work from the project lender, Omnibuild executives John Mingione, 54; Roy Galifi, 62; and Kevin Stewart, 48, conspired with Meir; HFZ executives Anthony Marrone, 64, and Louis Della-Peruta, 69; and various subcontractors to inflate their monthly invoices’ “percentage of completion.” 

This was done to make it appear to the lender that the subcontractors were further along in the project than they actually were. 

Kevin Stewart and Roy Galifi walk into a Manhattan Criminal Court courtroom Wednesday, Feb. 7, 2024 in Manhattan, New York. Manhattan

SCAMS ARE THE POLICY PROBLEM NO ONE IS TALKING ABOUT

The lender believed the executives’ representations and released additional funds to HFZ. When certain subcontractors expressed concerns about submitting falsely inflated monthly invoices, Meir, Marrone and Mingione instructed them to continue doing so in order to be paid. This conspiracy netted the participants an additional $6.5 million from the lender, prosecutors say,

When HFZ’s financial difficulties became public knowledge through a series of lawsuits, HFZ investors demanded to inspect its financial records. 

Meir then directed an HFZ accountant to forge certain bank account statements to reflect millions of dollars in investor funds, when, in fact, they were nearly empty, prosecutors allege.

In one instance, Meir instructed the accountant to inflate statements for an account to purport that it contained more than $24.6 million, when, in fact, it contained $814. 

In another instance, Meir stole $24 million in funds from an office tower project on West 30th Street between 5th and 6th Avenues in NoMad, prosecutors allege, while $4.6 million was stolen from investors for a phony project in San Francisco. 

Meir also instructed his accountants to stop HFZ from paying property taxes in 2018, 2019 and 2020, defrauding the city of more than $15.6 million, prosecutors say. 

“These indictments depict allegations of widespread fraud within the real estate industry primarily spearheaded by one man: Nir Meir,” Manhattan District Attorney Alvin Bragg said in a statement. 

“In total, we allege these defendants’ conspiracies netted them a total of $86 million stolen from investors, contractors, and the city of New York. My Office’s Rackets Bureau is laser-focused on fraud in the construction and real estate industries and will continue to root out people who steal from investors and corrupt the market.” 

Meir was arrested in Miami Beach, Florida, on Monday and is in the process of being extradited to New York, according to reports.

All three Omnibuild executives, as well as the company, pleaded not guilty to the charges during their arraignment Wednesday, according to the New York Post.

HFZ and Marrone also pleaded not guilty. The other HFZ defendant, Della-Peruta, is expected to surrender Thursday and is still awaiting arraignment, the publication reports.

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