Michael Rizzi and Edward Monahan Are Alleged to Have Made False Claims in Connection With the Sale of a Staten Island Property
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 today the unsealing of a criminal Complaint charging MICHAEL RIZZI and EDWARD MONAHAN with bank fraud and 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 is was presented in federal court. RIZZI is currently incarcerated in Federal Correctional Institute, Loretto in Pennsylvania, and is expected to be presented in federal court early next week.
According to the allegations in the Complaint[1] unsealed today 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.
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RIZZI, 45, of Brooklyn, New York, and MONAHAN, 45, of Staten Island, New York, are each charged in the Complaint with one count of bank fraud and one count of conspiracy to commit bank fraud. Each charge carries a maximum sentence of 30 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. 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.
[1] As the introductory phase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Source: U.S. Department of Justice, Office of the United States Attorneys
