Huntington developer Gregory DeRosa sued by investor for alleged fraud
A development firm is accused of defrauding an investor out of millions of dollars that were to be used to buy a Huntington commercial building at 175 W. Carver St., seen here. Credit: Google
This story was reported and written by Jonathan LaMantia, Deborah S. Morris and Sarina Trangle.
A prominent Huntington development firm and its CEO, Gregory DeRosa, are facing a litany of lawsuits, including one filed this week alleging DeRosa defrauded an investor out of millions of dollars that were to be used to purchase a commercial property in Huntington.
John P. Paci III, a former Huntington school board member and onetime backup quarterback for the New York Jets, alleged he provided $4.6 million to G2D Development to purchase the former Gundermann & Gundermann insurance office at 175 W. Carver St. in Huntington, according to the lawsuit.
Paci alleged DeRosa knowingly misrepresented the likelihood that United Healthcare would agree to a 16-year lease at the property.
Other defendants in the case are DeRosa's wife, Nicolle DeRosa, and Naples, Florida-based Sound Point Funding, a lender in the deal.
As part of the February 2023 purchase of the property, which Paci intended to hold in a family trust, executives at G2D sent an amended agreement to the trustee, Paci’s brother, to review.
The lawsuit alleges those documents included resolutions that allowed DeRosa to borrow from Sound Point a $2.5 million purchase money mortgage, a type of loan typically used when a borrower doesn’t qualify for more traditional forms of lending. Paci said he was not informed about the mortgage, which DeRosa and the firm borrowed despite being "in possession of all the capital necessary to close," according to the lawsuit filed in Suffolk County Supreme Court in Riverhead.
Paci, who owns a majority interest in the company that owns the Huntington building, later learned an additional $1 million mortgage was taken out on the property in October 2023, according to the lawsuit.
"It is readily apparent that the DeRosas spent millions of dollars loaned to and invested with G2D Development Corp. on personal residences, luxury goods, vehicles, yachts, and other self-serving investments, which plaintiff was not aware of and held no interest in," the lawsuit said.
DeRosa did not return calls or texts for comment.
Paci said on the advice of his attorney he could not comment. Paci's East Setauket-based attorney, Paul M. O’Brien, said he and his client are happy to prove all of the allegations in court.
"We would like nothing more than transparency from Mr. DeRosa, Mrs. DeRosa and the G2D enterprise, but if necessary we will prove those facts in court," O'Brien said.
Paci further alleged in the lawsuit the DeRosas engaged in "blatant self-dealing," funneling money out of G2D to its affiliated construction firm and LLCs, including Yacht Management Services LLC, Q Division LLC, Spectre Consulting Group LLC and L’Americaincq LLC.
Paci also invested in G2D Development projects for a 33-unit apartment building at 45 Lumber Rd. in Roslyn and Station One, a 37-unit apartment project, according to Riverhead Industrial Development Agency documents. He alleged DeRosa knowingly lied about progress on those projects. The two projects received tax benefits from the Nassau County IDA and Riverhead Town IDA, respectively.
On Thursday, a contractor on the Roslyn project sued G2D for breach of contract in Suffolk County Supreme Court. Bohemia-based construction company DCC Builders sued G2D Construction, alleging the firm owes nearly $464,000 for labor and materials it supplied.
G2D has an ownership stake in at least seven properties across Long Island, and DeRosa is involved with additional developments through other, sometimes-related limited liability corporations, according to public records and CoStar, a real estate analytics tool.
G2D’s portfolio includes offices in Melville. The firm spent $7.3 million on a 70,000-square-foot office at 576 Broadhollow Rd. in 2018, according to CoStar. A group affiliated with DeRosa owns another 33,000-square-foot building at 575 Broadhollow Rd., according to tax and business registration paperwork.
Paci’s allegations followed a series of lawsuits, some filed in Suffolk County Supreme Court, against Gregory DeRosa and G2D by merchant cash advance companies, which alleged the developer owes millions of dollars after defaulting on its loans. Merchant cash advance lenders provide high-interest, short-term loans to cover cash flow shortages.
In one example, Boston-based Cheetah Capital sued the company in July after it agreed last September to purchase 35% of G2D’s future receivables up to $3.75 million and provided a $2.5 million loan. The following month, it provided G2D another $1.5 million. The loans required weekly payments of about $79,000.
G2D defaulted in November and Cheetah alleges it is owed $2.6 million, plus additional costs and attorney’s fees.
Other cash advance lenders also are suing G2D and DeRosa over loans, including some with annual percentage rates of 381% and 251%, respectively. Those firms include Clearview Funding Solutions, Blade Funding, based in Lakewood, New Jersey, Celtic Advance, of Salt Lake City, and Parkview Advance, of Stamford, Connecticut.
DeRosa is behind some of the bigger name apartment projects in the region.
G2D constructed Gateway Plaza, a roughly 65-apartment project in Huntington Station and The Shipyard, a 36-unit development in Riverhead. It also announced plans for Station One, a mixed-use building with 37 apartments, in Riverhead.
Progress at Station One, at 205 Osborn Ave., appears to have stalled as DeRosa turned to short-term cash agreements backed up by his firm’s future revenue. DeRosa’s team estimated it would spend $14.5 million building Station One and invest $19.6 million in the endeavor over a decade, according to a cost-benefit analysis from the Riverhead IDA, which grants tax benefits in an effort to spur economic development. The IDA approved incentives that would amount to more than $2 million over 10 years.
A prominent Huntington development firm and its CEO, Gregory DeRosa, are facing a litany of lawsuits, including one filed this week alleging DeRosa defrauded an investor out of millions of dollars that were to be used to purchase a commercial property in Huntington.
John P. Paci III, a former Huntington school board member and onetime backup quarterback for the New York Jets, alleged he provided $4.6 million to G2D Development to purchase the former Gundermann & Gundermann insurance office at 175 W. Carver St. in Huntington, according to the lawsuit.
Paci alleged DeRosa knowingly misrepresented the likelihood that United Healthcare would agree to a 16-year lease at the property.
Other defendants in the case are DeRosa's wife, Nicolle DeRosa, and Naples, Florida-based Sound Point Funding, a lender in the deal.
WHAT TO KNOW
Huntington development firm G2D Development and its CEO, Gregory DeRosa, face lawsuits from an investor who says he was defrauded out of millions of dollars as well as several cash advance lenders.
The investor John P. Paci III, a former Huntington school board member, alleged he provided $4.6 million to G2D Development to purchase an office building but was not informed DeRosa intended to take out a mortgage on the property.
G2D Development owns apartment and office buildings in multiple Long Island communities and has several projects that are still in progress.
As part of the February 2023 purchase of the property, which Paci intended to hold in a family trust, executives at G2D sent an amended agreement to the trustee, Paci’s brother, to review.
The lawsuit alleges those documents included resolutions that allowed DeRosa to borrow from Sound Point a $2.5 million purchase money mortgage, a type of loan typically used when a borrower doesn’t qualify for more traditional forms of lending. Paci said he was not informed about the mortgage, which DeRosa and the firm borrowed despite being "in possession of all the capital necessary to close," according to the lawsuit filed in Suffolk County Supreme Court in Riverhead.
Paci, who owns a majority interest in the company that owns the Huntington building, later learned an additional $1 million mortgage was taken out on the property in October 2023, according to the lawsuit.
"It is readily apparent that the DeRosas spent millions of dollars loaned to and invested with G2D Development Corp. on personal residences, luxury goods, vehicles, yachts, and other self-serving investments, which plaintiff was not aware of and held no interest in," the lawsuit said.
DeRosa did not return calls or texts for comment.
Paci said on the advice of his attorney he could not comment. Paci's East Setauket-based attorney, Paul M. O’Brien, said he and his client are happy to prove all of the allegations in court.
"We would like nothing more than transparency from Mr. DeRosa, Mrs. DeRosa and the G2D enterprise, but if necessary we will prove those facts in court," O'Brien said.
Paci further alleged in the lawsuit the DeRosas engaged in "blatant self-dealing," funneling money out of G2D to its affiliated construction firm and LLCs, including Yacht Management Services LLC, Q Division LLC, Spectre Consulting Group LLC and L’Americaincq LLC.
Paci also invested in G2D Development projects for a 33-unit apartment building at 45 Lumber Rd. in Roslyn and Station One, a 37-unit apartment project, according to Riverhead Industrial Development Agency documents. He alleged DeRosa knowingly lied about progress on those projects. The two projects received tax benefits from the Nassau County IDA and Riverhead Town IDA, respectively.
On Thursday, a contractor on the Roslyn project sued G2D for breach of contract in Suffolk County Supreme Court. Bohemia-based construction company DCC Builders sued G2D Construction, alleging the firm owes nearly $464,000 for labor and materials it supplied.
G2D has an ownership stake in at least seven properties across Long Island, and DeRosa is involved with additional developments through other, sometimes-related limited liability corporations, according to public records and CoStar, a real estate analytics tool.
G2D’s portfolio includes offices in Melville. The firm spent $7.3 million on a 70,000-square-foot office at 576 Broadhollow Rd. in 2018, according to CoStar. A group affiliated with DeRosa owns another 33,000-square-foot building at 575 Broadhollow Rd., according to tax and business registration paperwork.
Paci’s allegations followed a series of lawsuits, some filed in Suffolk County Supreme Court, against Gregory DeRosa and G2D by merchant cash advance companies, which alleged the developer owes millions of dollars after defaulting on its loans. Merchant cash advance lenders provide high-interest, short-term loans to cover cash flow shortages.
In one example, Boston-based Cheetah Capital sued the company in July after it agreed last September to purchase 35% of G2D’s future receivables up to $3.75 million and provided a $2.5 million loan. The following month, it provided G2D another $1.5 million. The loans required weekly payments of about $79,000.
G2D defaulted in November and Cheetah alleges it is owed $2.6 million, plus additional costs and attorney’s fees.
Other cash advance lenders also are suing G2D and DeRosa over loans, including some with annual percentage rates of 381% and 251%, respectively. Those firms include Clearview Funding Solutions, Blade Funding, based in Lakewood, New Jersey, Celtic Advance, of Salt Lake City, and Parkview Advance, of Stamford, Connecticut.
DeRosa is behind some of the bigger name apartment projects in the region.
G2D constructed Gateway Plaza, a roughly 65-apartment project in Huntington Station and The Shipyard, a 36-unit development in Riverhead. It also announced plans for Station One, a mixed-use building with 37 apartments, in Riverhead.
Progress at Station One, at 205 Osborn Ave., appears to have stalled as DeRosa turned to short-term cash agreements backed up by his firm’s future revenue. DeRosa’s team estimated it would spend $14.5 million building Station One and invest $19.6 million in the endeavor over a decade, according to a cost-benefit analysis from the Riverhead IDA, which grants tax benefits in an effort to spur economic development. The IDA approved incentives that would amount to more than $2 million over 10 years.
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