A former Suffolk County legislator was among five suspects arrested Wednesday on grand larceny charges by fraudulently obtaining more than $50 million dollars in mortgages on dozens of homes in Southampton Town, including several a few miles from Sag Harbor in and around Noyac and Water Mill.Â
In a second scheme, an East Islip man and a Farmingville suspect are charged with attempted mortgage fraud for filing bogus paperwork to attain mortgages for homes in Deer Park, Amityville, Jamaica, Queens and Brooklyn.
District Attorney Thomas Spota said the alleged frauds employed the use of straw purchasers to victimize lenders by filing false loan applications that claimed the homebuyers were employed by various corporations owned or controlled by the scheme’s participants. Another scheme, alleged to have been used to secure money, District Attorney Spota said, involved “mortgage stacking”; the creation of bogus title reports that concealed outstanding mortgages on properties and showed the homes to be owned “free and clear” and unencumbered by existing liens.Â Â
Arraigned Wednesday in Southampton Justice Court on three counts of first degree grand larceny and first degree scheme to defraud are former Suffolk County Legislator George O. Guldi of 44 Brushy Neck Lane Westhampton Beach and Ethan E. Ellner, 54 Sagamore Drive Plainview.Â
Guldi, 55, an attorney who served two terms in the county legislature, and Ellner, 49, an attorney and operator of Suburban Abstract, a title company in Stony Brook, allegedly defrauded lending institutions of millions of dollars by using forged documents, false employment and income information on applications, straw buyers, false powers of attorney, deed flipping, and mortgage stacking, said the district attorney in a press release Wednesday.
Codefendants Donald C. MacPherson, 65, and Carrie Coakley of New York and Dustin J. Dente of Roslyn pled not guilty at their arraignments today in Southampton Justice Court.Â MacPherson is charged with two counts of first degree grand larceny and one charge of first degree scheme to defraud.Â Macpherson’s wife, Carrie Coakley is charged with first degree scheme to defraud.Â Dente, 37, an attorney, is charged with two counts of first degree grand larceny.Â
Â “The damage these defendants single-handedly caused to our local economy is simply appalling,” Spota said.Â The district attorney said the defendants engaged in “a seven-year mortgage fraud spree” involving dozens of several east end homes, including a house at 1106 North Sea Road in Southampton, and two Water Mill homes at 982 Noyac Path and 2027 Deerfield Road.Â
The alleged scheme to defraud involved three basic forms of fraud:
Use of “straw buyers”:
Evidence gathered during the course of the investigation, said Spota, found the defendants used straw buyers (or as they called them “investors”) with fictitious employment and income information for use on mortgage applications to make the mortgage applicants appear far wealthier and thusly, a much lower risk for lenders.
Specifically straw buyers in the scheme charged Wednesday were falsely listed as having incomes as high as $45,000 per month as employees of companies the defendants owned.
One of these companies was Arena Studios, Inc. located at 407 Broome Street in Manhattan; a business that at one time provided dominatrix services. This club was also used by the defendants to successfully solicit straw buyers.
Another source of straw buyers for the scheme to defraud was Maximum Restraint Films and McPherson’s publication, The Soho Journal, said the district attorney, who added publication also promoted Hamptons rental properties fraudulently purchased and used as summer rentals by the defendants.Â Another MacPherson firm, the Hamptons Consulting Group, he said, was used as the employer for a straw buyer to falsely report an annual salary of $325,000 per year on a mortgage application.
Fraud by Mortgage Stacking and Title Washing:
Mortgage stacking involves the acquisition of a second and in some cases a third mortgage on a house through the use of a bogus title report that falsely reports to the lending institution that no first mortgage exists on the property.
A 2004 mortgage disappeared from the title history of 982 Noyac Path, Water Mill facilitating a fraud in which the name and credit of a person was used to purchase and obtain a first and second mortgage on the property totaling approximately $1.7million dollars, said the district attorney.
The mortgage applicant, on paper, was fraudulently portrayed to have been employed at the SoHo Journal for 10 years as the Director of Sales earning $36,000 a month. In truth, the applicant was not an employee of the publication and had no knowledge that their name and credit was being used to purchase and mortgage a house in the Hamptons, the district attorney said. In 2007, the house went into foreclosure.
While in foreclosure, a straw buyer purportedly employed by Maximum Restraint Films with a monthly income of $45,000 was used in January 2008 to purchase and mortgage the Noyac Path property for another $2 million. The Noyac Path title report was again altered to falsely report to the lender that the first and second mortgage, totaling $1.5 million (and pending in foreclosure), had been satisfied, the release said.
Â The mortgage stacking fraud and a straw buyer were also used by some of the defendants to illicitly obtain a loan for a house at 1106 North Sea Road, Water Mill. The investigation established the title report falsely cleared an original $1.25 million dollar mortgage after a new $1.8 million dollar mortgage was obtained.Â The evidence found the proceeds of the new mortgage flowed into the accounts of defendants Ellner, Guldi and Dente, claimed the release.
A home at 2027 Deerfield Road in Water Mill, originally titled to Walter Guldi, the father of defendant George Guldi, with an outstanding mortgage of approximately $1.5 million dollars went into foreclosure in 2005. George Guldi acted as the attorney representing the estate in the foreclosure action. Â In May 2008, the defendants are alleged to have washed the title of 2027 Deerfield Path of the original mortgage to receive a new $1.8 million dollar mortgage obtained in the name of a straw purchaser.Â Proceeds of the stacked mortgage flowed into accounts controlled by Defendants Ellner, Guldi and Dente, the release said.
All three houses are or have been in foreclosure.
“We found the defendants repeatedly ignored the obligation to pay off existing mortgages and instead funneled the money into their personal accounts to finance their businesses and lifestyles,” District Attorney Spota noted.Â
Arrested by Mortgage Fraud Unit detective investigators Wednesday for alleged mortgage fraud involving homes in western Suffolk and New York City are Ellner, Gary Small, 41, 9 Greentree Avenue in Farmingville and Victor Jinete, 34, of 35 Starlight Drive in East Islip.
Ellner, Small and Jinete pleaded not guilty in first district court in Central Islip today on four charges of Attempted Mortgage Fraud second degree.Â Jinete also pleaded not guilty to one count of first degree scheme to defraud.Â The alleged schemes involve the use of straw buyers and title washing resulting in fraudulent mortgages being issued by duped lenders for properties at 64 Duke Street, Deer Park, 130-25 Inwood Street, Jamaica, 891 Glenmore Avenue, Brooklyn NY and 40 Darerka Street, Amityville.