A Manhattan investor used a complex financial scheme to steal $8 million from an Upper East Side nursery school run by his now ex-wife, a new lawsuit alleges.
The Manhattan civil suit, filed Wednesday, claims investment banker Hugh Levey lavished the funds on his mistress.
His ex, Wendy Levey, runs the nonprofit Epiphany Community Nursery School on East 74th Street.
“Wendy Levey had every reason to believe that her husband would use his business savvy to further interests of [Epiphany] and had no reason to believe that her husband and father of her children would ever loot the school’s funds,” the suit claims.
The Harvard and Yale-educated banker also used the money to pay personal expenses including upkeep of an upstate farmhouse he shared with his lover, according to court papers.
A forensic accounting by former IRS agents showed that the fraud started in the late 2000s when Levey was director of the school’s board and his own financial firm, Gruppo Levey, was struggling, the suit says. It lasted for a decade.
Levey disguised the fraudulent transfers as loans on the school’s books, then slashed the loan balances to zero at the end of each year by creating fictitious consulting fees and lease commissions owed to outside companies he controlled, according to court papers.
“Though it drained funds, it did not impact the day-to-day finances of the school,” said Epiphany spokesman Mike Morey.
Levey and his attorney did not immediately respond to requests for comment.