HFZ Capital Group’s former head of construction Anthony Marrone pleaded guilty today for his role in a multimillion dollar fraud scheme.
Marrone pleaded guilty to one count of attempted grand larceny in the third degree and 14 counts of falsifying business records in the first degree. Both charges are Class E felonies.
He is expected to be sentenced in April to three years of probation with each charge to run concurrently. Marrone has waived his right to appeal.
Marrone is now the second former HFZ employee to plead guilty to the Manhattan District Attorney’s charges. The corporate entity, HFZ Capital Group, has also pleaded guilty, pointing the blame at former HFZ principal Nir Meir.
Prosecutors allege Meir was the mastermind of the $86 million fraud scheme. Since his arrest last year, he has been detained in Rikers. Meir has pleaded not guilty.
The D.A. alleges that Meir directed $253 million of trust assets designated for the XI, a condo project in Manhattan, to be transferred to different entities controlled by HFZ. These transfers were made to cover shortfalls on unrelated HFZ projects, and to personal accounts controlled by HFZ executives. These transfers ultimately left a shortfall of more than $37 million on the XI project.
In order to fill the shortfall, prosecutors allege three executives from the XI’s contractor, Omnibuild, including its CEO John Mingione, conspired with Meir, Marrone, a project manager, and subcontractors to inflate monthly invoices. These invoices made it appear to the lender that the project was further along than it actually was. As a result, the lender released additional funds to HFZ based on these invoices, according to the D.A.
The D.A. alleges that after subcontractors started expressing concerns about sending in false invoices Meir, Marrone, and Mingione instructed subcontractors to continue to submit the inflated invoices.
Prosecutors allege the conspiracy netted the participants an additional $6.5 million. (Omnibuild and Mingione have pleaded not guilty to the charges and claim they are victims of HFZ and Meir.)
Prosecutors also alleged Meir moved $107 million out of a NoMad office project’s account into other HFZ accounts. When Meir returned the money into the project’s bank account, there was a $24 million shortfall. Marrone allegedly warned the contractor on the project, Pavarini McGovern not to tell the project lender, while Meir faked wire transfers to string his contractor along, according to the D.A.
In May, former project manager Louis Della-Peruta pleaded guilty to one charge of falsifying business records. Last summer, HFZ Capital Group pleaded guilty to three counts of grand larceny in the first degree and criminal city tax fraud.
Marrone’s attorney declined to comment.
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