Michael Rizzi, 45, Brooklyn, New York,and Edward Monahan, 45, Staten Island, New York, were each charged in a criminal complaint with one count of bank fraud and on count of conspiracy to commit bank fraud, in connection with a scheme to submit false documentation to a bank to make Rizzi’s sale of property to his friend and business partner look like an “arm’s length” transaction. Monahan was arrested in Staten Island, New York, and was presented in federal court. Rizzi is currently incarcerated in Federal Correctional Institute, Loretto in Pennsylvania.
Each charge carries a maximum sentence of 30 years in prison.
Rizzi, a retired New York City police officer, is currently serving a 15 month sentence for money laundering conspiracy in connection with his operation of a multi-million dollar online escort service that catered to wealthy clients who arranged assignations at their homes, at major hotels and, in at least one instance, on a five-day trip to a secluded resort in Jamaica.
According to the allegations in the Complaint unsealed in Manhattan federal court:
Rizzi purchased a property (the “Rizzi Property”) in 2007 with the assistance of a mortgage (the “Mortgage”) The Mortgage was acquired by a bank (“Bank-1”) that same year. Over time, RIZZI stopped paying the Mortgage and, in 2009, the Mortgage fell delinquent. In 2015, Rizzi contacted Bank-1 and requested a short sale due to financial hardship (the “Short Sale”). Bank-1 advised Rizzi that the Short Sale was required to be an “arm’s length” transaction, meaning that the buyer could not have any personal, familial, or business connections with Rizzi.
Later that year, Monahan agreed to buy the Rizzi Property from Rizzi. In connection with the sale and closing of the Rizzi Property, Rizzi and Monahan both executed various documents in which they affirmed that the buyer and the seller were engaged in an “arm’s length” transaction, and the seller and buyer of the Rizzi Property did not have a personal or business relationship. Rizzi and Monahan were, in fact, friends and business partners. Among other things, Rizzi and Monahan were partners in the ownership of Nitecap Megastore, a Staten Island adult sex and smoke shop. Monahan also has posted photos and videos on social media, which depict Rizzi and Monahan socializing with each other.
As a result of this scheme, Bank-1 suffered more than $250,000 in losses.
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent in Charge of the United States Department of Homeland Security’s Homeland Security Investigations, announced the unsealing of the criminal Complaint. U.S. Attorney Kim praised the investigative work of HSI’s El Dorado Task Force in this case, and thanked the New York City Police Department for its assistance.
The case is being prosecuted by the Office’s General Crimes Unit. Assistant United States Attorney Louis A. Pellegrino is in charge of the prosecution.
