Tag Archive | "Thomas Spota"

East End Drug Task Force Busts “Hollywood” Heroin Ring

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By Kathryn G. Menu

When the East End Drug Task Force last week busted a ring of heroin dealers in Riverhead officials say was trafficking in a particularly potent brand of the drug, it cast a light on the growing problem of opiate addiction across Suffolk County, including the East End.

Suffolk County District Attorney Thomas Spota on February 19 announced the arrest of nine men, who officials say were involved in the sale of  “Hollywood” heroin,  a brand he said commanded a premium price on the street because of its strength and brought buyers to Riverhead from Sag Harbor to Ronkonkoma and the North Fork.

The defendants, who all face multiple felony charges, were arrested between October and February.

“This heroin distribution network is based in New York City, where the alleged local East End dealers would travel to buy the heroin from three Harlem men and return to the East End with sleeves of heroin, each containing 100 individual doses packaged for immediate sale to users,” said Mr. Spota.

Mr. Spota said the three defendants from Manhattan have “lengthy criminal histories” and a cumulative total of 28 felony and misdemeanor convictions—almost all of them for drug-related crimes.

The “Hollywood” heroin ring included six men Mr. Spota referred to as the “Riverhead crew.” Robert Baker, 46, of Riverhead; Leon Langhorne, 38, of Riverhead; Leroy Langhorne, 41, of Riverside; Joseph Thomas, 41, of Mastic; Jerome Trent, 58, of Riverhead; and Farrow Sims, 42, of Calverton allegedly sold what Mr. Spota said was a particularly potent brand of heroin, marked with a red lettered stamp “Hollywood” on each dose.

Heroin with the red “Hollywood” stamp, said Mr. Spota, was a premium brand of the drug police learned during the course of the investigation that local users would pay a premium price for. According to Mr. Spota’s office, the price of “Hollywood” branded heroin is up to 50 to 100 percent more expensive than other street heroin.

“On average, street heroin in Suffolk can cost as much as $10 per bag, but the heroin stamped with the word “Hollywood” cost $15 to $20 a dose—because of its potency,” said Mr. Spota.

According to Mr. Spota, drug task force detectives made purchases and witnessed others buying the heroin in parking lots of retail businesses along Route 58 in Riverhead. He said enough evidence was gathered by the team to arrest and indict the defendants using confidential informants, undercover officers and, eventually, wiretaps.

The East End Drug Task Force is a multi-jurisdictional drug enforcement unit that includes detectives and officers from the New York State Police, Suffolk County Police Department, Suffolk County Sheriff, as well as town and village police departments including East Hampton Town and Village, Riverhead, Shelter Island, Southampton Town and Village and Southold.

Drug sales took place along Route 58, in parking lots of the Tanger Outlet Mall, Walmart, gas stations, Home Depot and the Department of Motor Vehicles, as well as in the McDonalds parking lot on Route 24. Addicts using the “Hollywood” heroin, said Mr. Spota, were primarily from Sag Harbor, Greenport, Miller Place, Rocky Point, Ronkonkoma and Southampton.

The heroin was purchased by the “Riverhead crew,” according to Mr. Spota, from three men from East Harlem. Jose Calvente, 65, Jose Morales, 75, and Carlos Ramos, 52.

Mr. Calvente, Mr. Morales and Mr. Ramos all face various counts of felony charges including criminal possession of a controlled substance in the third degree, criminal sale of a controlled substance in the third degree and conspiracy. Mr. Calvente and Mr. Ramos were held in Suffolk County Jail in Riverside in lieu of $250,000 bail and Mr. Morales was remanded to the Suffolk County Jail in Yaphank, also in lieu of $250,000 bail.

The six men in the “Riverhead crew” also face multiple felony charges, including various counts and degrees of criminal possession of a controlled substance in the third degree. Mr. Baker, Leroy Langhorne, Leon Langhorne, and Mr. Sims face counts of criminal sale of a controlled substance in the second degree, a felony. Mr. Baker, both Langhornes and Mr. Sims also face felony conspiracy charges; Mr. Trent has been charged with misdemeanor counts of criminal possession of a controlled substance in the seventh degree, criminal possession of a weapon in the fourth degree, and criminal use of drug paraphernalia in the second degree; and Mr. Sims faces a misdemeanor count of criminal possession in the fourth degree.

Mr. Baker was remanded to Suffolk County Jail in lieu of $250,000 bail; Both Leroy and Leon Langhorne were released on their own recognizance, as was Mr. Trent. Mr. Thomas was remanded to Suffolk County Jail in lieu of $75,000 bail and Mr. Sims was remanded in lieu of $200,000 bail.

During the investigation, over 2,000 bags of heroin were confiscated, as was thousands of dollars in cash.

According to Mr. Spota, heroin with the “Hollywood” stamp was first noticed by local law enforcement on the East End when overdoses, none fatal, occurred in 2011. Heroin use is not a new problem in Suffolk County, said Mr. Spota—a sentiment echoed by Dr. Jeffrey Reynolds, the executive director of the Long Island Council on Alcoholism and Drug Dependence (LICADD) and Southampton Town Justice Deborah Kooperstein, who also serves as a justice for the East End Regional Intervention Court.

The low cost of heroin is cited by all three as having an impact on the increase in abuse. They also cite an increase in the abuse of opioids—narcotic painkillers that can be legally prescribed by a doctor that share similar qualities to drugs like heroin, an opiate derivative.

In 2012 a special grand jury was empanelled by Mr. Spota and issued a 99-page report on the plague of opioid abuse in Suffolk County and recommendations on how to combat that problem in the wake of a 2011 pharmacy robbery that left four dead in Medford. According to the District Attorney’s office, in that case David Laffer, 33 at the time, admitted he was in search of prescription painkillers for himself and his wife when he gunned down two store employees and two customers at the pharmacy. Laffer pled guilty to five counts of first-degree murder and was sentenced to life in prison.

According to a 2012 report, between 1996 and 2011, heroin use “rose steadily accounting for a 425 percent increase in the number of participants in the Suffolk County Drug Court Program. During this same period, opioid pill use accounted for a startling 1,136 percent increase.”

“To compare, cocaine use resulted in a 29-percent increase during the same period, but declined 13 percent between 1996 and 2001,” reads the report.

“Between 2006 and 2010, heroin arrests rose from 486 to 1315, an increase of approximately 170 percent,” the report continues. “Opiate abusers in Suffolk County fell into a vicious cycle of alternating between expensive opioid analgesic pills and the cheaper heroin creating a large overall class of opiate abusers and addicts.”

According to Dr. Reynolds, LICADD has seen the increase in abuse firsthand. In the last five years the council went from serving 100 families dealing with opiate abuse monthly to 850 in January of 2014.

“It has been a steady climb,” said Dr. Reynolds.

Making the jump from prescription pills to heroin, said Dr. Reynolds, can often be tied to economics and availability. With prescription opiates now more expensive and difficult to obtain, those who are hooked can sometimes look for the less expensive street heroin for their fix.

Dr. Reynolds noted heroin use is not limited to one demographic, but is a drug abused across the board.

“In a lot of ways, today it is a solidly middle class phenomena,” he said, “whereas back in the day it was mostly an issue in poorer minority communities that were decimated by drugs like heroin.”

Teenagers to those leading seemingly successful adult lives—and everyone in-between—are susceptible to becoming addicted to a drug like heroin, said Judge Kooperstein.

“Right now in the drug court, the youngest person we are working with is 18 and we had a graduate yesterday who is 58,” she said, noting most people in the East End Regional Intervention Court system are heroin addicts.

“Heroin is here because it is cheap,” Judge Kooperstein said, agreeing with Dr. Reynolds that this is a drug being abused, like others, in all communities, not just those tucked away from suburbia.

“You can’t divorce yourself from this,” she said. “It’s everywhere.”

Sag Harbor Man Pleads Guilty to July DWI Accident on Route 114

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By Tessa Raebeck

A Sag Harbor man pled guilty Tuesday to charges that while driving drunk last July, he caused a collision that seriously injured a six-year-old boy, the Suffolk County District Attorney’s office said in a press release.

William Hurley, 60, of Sag Harbor pled guilty to the seven-count indictment at a court conference in Central Islip. He was charged with two counts of vehicular assault in the second degree, assault in the second degree, assault in the third degree, two counts of Driving While Intoxicated (DWI) and reckless driving, according to the release issued by District Attorney Thomas Spota.

The charges maintain that while driving drunk on Route 114 in East Hampton Town last July 6, Hurley caused a head-on collision that left a six-year-old boy seriously injured and his mother hospitalized. Hurley was reportedly driving his Toyota pickup truck northbound at around 6:15 p.m. when he crossed the double yellow line and swerved into oncoming traffic where he collided head-on with a southbound BMW driven by Elizabeth Krimendahl, 53, of New York City, according to East Hampton Town Police. His blood alcohol content was .14; the legal limit is .08.

Krimendahl suffered a leg injury in the crash and was taken by helicopter to Stony Brook University Hospital. Her young son, Thaddeus, was in a car seat in the backseat and was seriously injured and hospitalized with a skull injury.

Hurley, the owner of Peconic Beverage East on Pantigo Place in East Hampton, was taken to Southampton Hospital and then transferred to Stony Brook at the time of the crash.

The cars collided in an area of Route 114 that is one of the road’s rare straight stretches. According to police, Hurley’s vehicle struck Krimendahl’s close to the double yellow line and both cars ricocheted off one another to opposite sides of the road. The truck rolled over before stopping and the front of the BMW, a four-door sedan, was crushed.

“The defendant,” said District Attorney Spota, “who was driving all over the highway crossing over the double yellow line several times prior to the crash, told East Hampton Town police officers that he was tired, and admitted at the scene that he consumed two drinks made of vodka and grapefruit juice, drinks that he described as ‘strong ones.’”

Hurley, who was described by police as having “glassy, bloodshot eyes,” and smelling of alcohol at the scene, said he thought he had fallen asleep at the wheel, according to Spota.

Following Hurley’s plea of guilty, State Supreme Court Justice Fernando Camacho made a sentencing promise to sentence him to two years’ incarceration and two years of post-release supervision.

Ex-Con with Sag Harbor Past Pulls Gun During Questioning

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By Kathryn G. Menu

An ex-convict with a criminal past linked to Noyac was admitted to the psychiatric unit of Stony Brook University Hospital on Tuesday, September 25. Police say there was an altercation at the suspect’s Wading River home after police went to the house to question the 60-year-old about a missed parole meeting and a drug enforcement officer had to open fire on the suspect after he allegedly pointed a handgun at himself and then police officers.

According to a press release issued by the Suffolk County District Attorney’s office on Wednesday, September 26, Thomas Michael Counihan, of Wading River-Manor Road, currently on probation for a drug possession charge, displayed a loaded Colt .45 while investigators from the East End Drug Task Force searched his room last Tuesday night for illegal narcotics after Counihan missed a parole meeting.

The press release states that Counihan grabbed the gun from the top of his bed and first pointed the gun barrel at his face, then his chest. Counihan then began to turn the gun towards two officers, according to police, and it was at that point one of the officers fired one shot at Counihan, missing him, but prompting the suspect to drop to the floor.

In Counihan’s room, officers say they found and seized 250 packets of heroin, approximately two ounces of powder cocaine, a large plastic bag containing marijuana, a syringe and nine unlabeled prescription bottles containing various pills.

“It is clear the police officer’s discharge of his weapon, given the circumstances, was justified,” said Suffolk County District Attorney Thomas Spota.

According to District Attorney Spota, when Counihan is released from the psychiatric unit of Stony Brook University Hospital he will be charged with Criminal Possession of a Loaded Handgun, a felony, as well as for possession of heroin, cocaine and marijuana.

“We are relieved that the two East End Drug Task Force officers were not injured during the standoff with this dangerous, violent felon,” he said.

Counihan’s criminal history includes six convictions, four on felony charges, including a violent felony conviction in 1985 for a Southampton Village robbery in which Counihan used a deadly weapon, said police.

Part of Counihan’s criminal history also dates back to the Sag Harbor area.

According to a 1990 article in The Sag Harbor Express, written by then reporter Thomas Horn, Jr. — now a Sag Harbor-based attorney — in July of 1988 Counihan was arrested for possession of two ounces of cocaine, holding “a large amount of cash” that did not exceed $1,000 as well as various drug packing materials.

At the time, Counihan was residing in the Noyac Road residence that belonged to his mother, Josephine Counihan, and the suspect’s ex-wife.

At the time of the 1988 arrest, Counihan was already on parole from a 1982 conviction for armed robbery and was indicted on the drug charges.

After his arrest, Southampton Town Police, in conjunction with the Drug Enforcement Agency, made application to the U.S. Attorney’s Office and a warrant for seizure of the Noyac Road property was issued.

After police proved in court that Counihan’s mother allegedly was aware of the criminal activity taking place at the home, the house was seized on February 15, 1990 with police taking control of the residence that July.

Forty-five percent of the proceeds of the home’s sale went to Counihan’s ex-wife, 45 percent was transferred to Southampton Town Police and 10 percent given to the federal government, according to Horn’s article.

After the house was sold, it was demolished by new owners in the early 1990s.

In Horn’s article, Southampton Town Police termed it “the first decision of its kind for a property located on Long Island.”

photos: East End Drug Task Force

 

Two Men Released From Prison During County Investigation

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By Claire Walla

It was an announcement that shocked many last week. On Friday, May 25, the Suffolk County District Attorney’s office said two previously convicted drug dealers would be released from state prison, their charges fully dropped.

Bernard Cooks, 31, of Southampton and Mohammad Proctor, 36, of Riverside had both been convicted of felony charges of criminal possession of a controlled substance. Those convictions were based on charges brought by Southampton Town Police in relation to drug raids performed by the department’s now disbanded Street Crimes Unit.

Cooks had served nearly one year in prison, while Proctor had served two years, until their cases were reopened and their charges dropped last week.

According to the statement released by the D.A.’s office, both convictions were quickly revoked as the result of an ongoing investigation into the alleged misconduct of a Southampton Town Police officer who was assigned to the Street Crimes Unit.

The statement went on to explain the D.A.’s office had obtained information “that affects the credibility” of the officer, Lieutenant James Kiernan, who has since been suspended and faces 32 disciplinary charges.

“The minute [the D.A.’s office] knew about this, they moved with all possible speed to get my client released,” said Susan Menu, an attorney for Bernard Cooks. “They went above and beyond,” she added. “They even called up and made sure he was being released.”

Menu got the call from Suffolk County District Attorney Thomas Spota two weeks ago.

“I was very surprised. I had not known about this coming down the pike,” she said, adding, “I know very little about the investigation.”

Menu was in court on Wednesday, May 23, representing Cooks, as well as Proctor, whom she represented on behalf of his lawyer, Sag Harbor resident Laura Solinger.

Menu made a motion to vacate the convictions, as the constitutional rights of both men had been violated, she explained. District Attorney Thomas Spota then officially dropped all charges, “in the interest of justice,” she added.

Like Menu, Solinger said she was “pleasantly surprised” by the news that the charges against her client were so suddenly dropped.

“My client’s very happy,” she said. Proctor’s two children, a girl under 5 and a teenage boy, had been taken into Child Protective Services when their father was sent to prison. Solinger said she spoke with her client Tuesday morning to explain how he could obtain a certificate of disposition — a document that would prove his indictments were dismissed — so he could be reunited with his children.

“The decision to release convicted drug dealers back into the community under these circumstances is not taken lightly and is made free from political consideration or favor, contrary to recent assertions made by former town and police officials,” Spota said in a statement released last Friday. “Rather, we are duty bound under the law to take this action.”

According to Southampton Town Attorney Tiffany Scarlato, “The town board has been instructed by myself not to make any comments.” This is primarily due to the fact that the investigation is ongoing and town board members have not been privy to the details of the case, she explained.

However, as she is also an attorney in private practice (her office is in Sag Harbor), Scarlato admitted she had “never” seen an investigation of this magnitude.

“No attorney I’ve spoken to has ever seen anything like this either,” she added.

According to the D.A.’s office, over 100 cases are still being reviewed as part of the ongoing investigation into the Street Crimes Unit.

“Our review continues of both pending and closed cases to determine what, if any, action is necessary,” the statement continued. “It is anticipated that other cases involving [the Street Crimes Unit] will be dismissed.”

County’s New DWI Task Force To Start This Weekend

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By Claire Walla

Responding to the number of arrests for Driving While Intoxicated (DWI) here on the East End, Suffolk County District Attorney Thomas Spota announced Wednesday, May 23 the creation of a new East End DWI Task Force.

Flanked by Sheriff Vincent DeMarco, SCDA Bureau Chief Steve Kuehhas and police chiefs from the 10 East End police departments, as well as officials from Suffolk County Police, Suffolk Park Police and New York State Police, Spota said the task force would begin operations this Friday, May 25 — just in time for the Memorial Day weekend.

The task force will involve 41 police officers from departments across the East End, who will work under the auspices of the district attorney’s office to patrol certain areas where high rates of drunk driving have been identified. According to a representative in the district attorney’s office, all East End department chiefs reportedly got together to identify these “hot spots” throughout the county where DWI arrests have been common.

For obvious reasons, she added, the specifics of these locations and the times when the task force will be deployed are being withheld from the public.

Spota said in a press release that the philosophy behind the formation of the task force is to employ a team approach to cracking down on people who drive while intoxicated. Officers will cross over jurisdictional boundaries to collectively patrol certain targeted areas.

“Local police departments in the five towns and villages don’t have the resources to focus solely on drunk and drugged drivers on holiday weekends,” Spota is quoted as saying. “This team strategy will augment local law enforcement and make the expansion of the enforcement action on the East End more mobile and responsive.”

According to figures released by the D.A.’s office, the total number of DWI arrests processed in East End town and justice courts from 2009 to 2011 averaged 1,100 to 1,200 per year.

Former Suffolk County Lawmaker Pleads Guilty in Mortgage Fraud Case

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GEORGE GULDI

During jury selection on Friday for a case regarding his involvement in a multimillion-dollar mortgage fraud scheme, former Democratic Suffolk County Legislator George Guldi pled guilty to 35 felony charges.

Guldi, from Westhampton Beach, pled guilty to 34 counts of grand larceny and one charge of scheme to defraud in relation to an $82 million mortgage fraud scheme that involved over 60 homes and commercial properties on Long Island, most of them in Southampton, according to the Suffolk County District Attorney’s Office.

One of the properties tied to the case was the 6 Union Street, Sag Harbor property formerly owned by Anselm and Helga Morpurgo.

This was to be Guldi’s second criminal trial this year. He has been incarcerated since March after being found guilty of grand larceny and insurance fraud in an unrelated case. In that case, prosecutors argued Guldi stole money paid by his insurance carrier that should have been held in escrow for the reconstruction of his Westhampton Beach residence, which was destroyed in a house fire in 2008.

Guldi was sentenced to four to 12 years in prison for that conviction. According to the Suffolk County District Attorney’s Office, in return for pleading guilty to all of the remaining charges against him, Judge James F.X. Doyle promised Guldi a one-to-three year sentence, which will run concurrently with the sentence he received earlier this year.

Doyle’s decision, which will be finalized at a sentencing hearing on Wednesday, August 31, in Suffolk County Criminal Court in Riverhead, was not what Suffolk County District Attorney Thomas Spota had hoped for.

In a press release issued on Friday, Spota said he was “extremely disappointed that, over our objection, the Judge has promised the defendant a sentence that is completely inadequate to punish him and deter the massive mortgage fraud that has so severely impacted our local economy.”

Spota said he has directed Mortgage Fraud Unit prosecutor Thalia Stavrides to ask Judge Doyle to sentence Guldi to the maximum term of incarceration, which is eight and one-third to 25 years consecutive to the four to 12 year sentence he is already serving.

Guldi’s co-defendant in the upcoming trail, Dix Hills attorney Brandon Lisi, also pled guilty on Friday, admitting his role in creating millions of fraudulent mortgage deals to victimize Washington Mutual Bank, JP Morgan Chase and other lenders to buy commercial and residential properties in Sag Harbor, Cold Spring Harbor, Southampton and Huntington.

Lisi was one of two buyers present at the 2007 auction of the Morpurgo home in Sag Harbor, which sold at court-ordered auction for $1.4 million. Attorney Samuel Glass, who with a group of lenders was defrauded by Lisi and Guldi, among others, in the purchase of the Union Street property, said his group hopes to take ownership of the property once the case has been settled, but will have to test market conditions before deciding whether or not to sell the home as is or renovate the dilapidated residence.

Lisi pled guilty to two counts of grand larceny in the first degree and one charge of grand larceny in the second degree. Similar to Guldi, Judge Doyle promised Lisi a one-to-three years’ sentence.

Lisi is also facing separate federal charges in an unrelated case regarding bank and wire fraud charges.

“Mr. Guldi’s greed leaves a trail of financial ruin heretofore unseen in this county,” said Spota. “His scheme to defraud lenders through the use of straw purchasers, false documents and phony loan applications duped financial institutions into loaning him and his co-defendants millions of dollars for houses that today are in default.”

Guldi was a Suffolk County Legislator representing the second legislative district from 1994 to 2003 when he lost a re-election bid to current Suffolk County Legislator Jay Schneiderman.

Budget Officer Faces Felony Charges

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web DiNapoli-Sota

East Hampton Town’s former budget officer Edward “Ted” Hults was arraigned on seven felony charges and two misdemeanors Thursday morning after a months long investigation by Suffolk County District Attorney Thomas Spota into alleged criminal mismanagement and fraud related to illegal transfers from the town’s Community Preservation Fund and misrepresentations allegedly made by Hults on bond applications.

For over a year, Hults and East Hampton Town Supervisor Bill McGintee have been under scrutiny, and investigation, over the town’s finances, as the town went from an $11 million surplus in 2004 when McGintee was elected to what is expected to near an $18 million deficit by the close of the next fiscal year.

McGintee has yet to be charged with any crimes, although according to published reports he has retained legal counsel.

Hults, who resigned as budget officer three weeks ago, was arraigned at East Hampton Town Justice Court on a felony charge of defrauding the government, and a misdemeanor count of official misconduct as a result of the alleged transfer of $8 million from the town’s CPF to other operating funds, despite warnings from the town attorney that such transfers were illegal.

He was also charged with two counts of fraudulent practices in respect to stocks, bonds and other securities, two counts of falsifying business records in the first degree and two counts of offering a false instrument for filing in the first degree – all felony crimes, as well as an additional misdemeanor count for official misconduct in relation to allegations that Hults prepared bond documents with false information in July and August of 2007 in an effort to borrow money on behalf of the town.

According to a release issued by District Attorney Spota’s office on Thursday, Hults allegedly prepared a bond anticipation note for the town in June and August of 2007 that stated the town had a surplus of $171,573 when in fact it was running a deficit of over $900,000. Another misrepresentation made in the note, said Spota, was that former town attorney Laura Molinari had reviewed the documents when in fact she had not. Molinari resigned last year as town attorney after joining town board members in calling for Hults’ dismissal.

According to the district attorney’s office, the felony counts have the potential to carry 16-month to four-year sentences, while the misdemeanor counts are punishable by up to a year in jail.

Hults pled not guilty to the misdemeanor charges and did not enter a plea for the felony counts.

During his arraignment on Thursday, Chris McPartland, chief of the county’s government corruption bureau, which has been handling an investigation of town officials’ alleged crimes, did not request bail for Hults, citing his cooperation with the district attorney’s office. East Hampton Town Justice Lisa Rana released Hults on his own recognizance and the court will reconvene to hear the matter on July 30 at 9:30 a.m.

Following Hults’ arraignment, district attorney Spota and New York State Comptroller Thomas DiNapoli – whose office has been investigating the misuse of CPF throughout the five East End towns – convened a press conference to discuss both the district attorney’s investigation and the state comptroller’s findings.

Noting East Hampton is often viewed as a playground for the rich and famous, Spota noted many residents of the town are hardworking men and women, sometimes working two jobs, and now wondering how they will manage not only their mortgage payments, but also sky-high taxes.

“They are entitled, in my view, to rely on their public officials to be running an honest, efficient open government,” said Spota. “Unfortunately that has not happened in East Hampton.”

Spota said the criminal mismanagement and fraud committed by Hults was not for personal gain – Hults has not been accused of embezzlement – but rather for “political advantage.”

“These lies did not personally enrich Hults in anyway, or anyone else,” said Spota. “He did it to hide the deteriorating financial situation that would, if uncovered, create significant political problems for the town supervisor who at that time was running for reelection.”

According to Spota, the “scheme” began in December of 2006 when Hults allegedly received a call from McGintee reporting that the town was unable to meet its payroll for its over 500 employees. It was then, Hults told the district attorney’s office, that he suggested they take monies from CPF to meet payroll and other financial obligations.

“It is very, very clear in the law, and Hults and McGintee were warned and told by the town attorney that the CPF is to be used only to acquire open space and farmland,” said Spota.

In addition to covering payroll, according to Spota, the $8 million taken from CPF also covered town expenses at the airport, for highway street lighting and for garbage removal.

“These illegal transfers were made to hide from the taxpayers and voters in the town the horrendous fiscal condition that the town was truly in,” said Spota.

Guldi Among Five Arrested for Multi-Million Dollar Mortgage Fraud

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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. 

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.  

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. 

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.  MacPherson is charged with two counts of first degree grand larceny and one charge of first degree scheme to defraud.  Macpherson’s wife, Carrie Coakley is charged with first degree scheme to defraud.  Dente, 37, an attorney, is charged with two counts of first degree grand larceny. 

 “The damage these defendants single-handedly caused to our local economy is simply appalling,” Spota said.  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. 

 

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.  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.

 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.  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.  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.  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. 

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.  Jinete also pleaded not guilty to one count of first degree scheme to defraud. 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.