Real Estate Mogul Eric Malley Sentenced for $58M Fraud

Former CEO Eric Malley of MG Capital Management L.P. has been sentenced to five years in prison for orchestrating a $58 million real estate investment fraud. United States Attorney Damian Williams announced that Malley, who pleaded guilty on May 20, 2021, induced hundreds of investors into investing in his two fraudulent real estate funds.

The scheme involved lying about the Funds’ ownership of luxury Manhattan properties and their debt-free status, as well as false claims about pre-existing corporate tenant relationships. The truth was that Malley’s Funds held mortgaged properties almost exclusively rented to individual tenants, and there were no successful prior funds as he had claimed.

In total, approximately 335 investors were conned into investing nearly $58 million in the Funds. As a result of the fraud, the Funds have incurred millions of dollars in losses and are currently being liquidated. Malley, 51, from New Canaan, Connecticut, was also sentenced to three years of supervised release, ordered to pay restitution of $33,249,822.12, and forfeit $5,625,747.45.

MALLEY’s fraudulent activities were uncovered by the Office’s Securities and Commodities Task Force, with Assistant United States Attorney Elizabeth A. Hanft leading the prosecution. United States District Judge Edgardo Ramos presided over the sentencing.

“For years, Eric Malley swindled investors through false promises about himself, his credentials, and the state of his real estate investment funds,” said U.S. Attorney Damian Williams. “Today’s sentence sends an important message that there are grave consequences to such deception.”

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