Guldi Is Arrested In ‘Fraud’
D.A. explains charges against former legislator
(04/02/2009) George O. Guldi, a Westhampton Beach attorney and
 Jennifer Landes
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former Suffolk legislator, was among five people charged yesterday in what authorities described as a “seven-year fraud spree.” The alleged scheme involved several East End houses and as much as $50 million in fraudulent mortgages.
Thomas J. Spota, the Suffolk County district attorney, alleged that Mr. Guldi and Ethan E. Ellner, a Plainview lawyer who owns Suburban Abstract, a title company based in Stony Brook, defrauded lending institutions of millions of dollars.
Mr. Spota said Mr. Guldi and his alleged partners used forged documents, false employment and income information on applications, power-of-attorney statements that contained false notary signatures, and “deed-flipping,” or frequent changes on public records to conceal true ownership or lien status. The scheme to defraud involved three basic forms — straw buyers, “mortgage stacking,” and “title washing.”
“The damage these defendants single-handedly caused to our local economy is simply appalling,” Mr. Spota said in a press release. We found the defendants repeatedly ignored obligation to pay off existing mortgages and instead funneled the money into their personal accounts to finance their businesses and lifestyles, Mr. Spota said.
Mr. Guldi, who is 55, surrendered yesterday afternoon to face felony charges, along with four co-defendants. A lawyer for 30 years, he practices matrimonial, criminal, and real estate law in Westhampton Beach. He served as the Southampton Town Democratic Committee chairman in 1992 and 1993, when he was elected to the Suffolk Legislature. In 2004, he lost his seat to Jay Schneiderman, the present legislator for the easternmost district.
He was arraigned in Southampton Town Justice Court on three felony counts of first-degree grand larceny and one count of scheme to defraud, another felony. If found guilty of the grand larceny charges, Mr. Guldi faces 81/3 to 25 years in prison, in addition to 11/3 to 4 years for the scheme to defraud charge.
Donald C. MacPherson, the 65-year-old publisher of The SoHo Journal and a part-time Westhampton Beach resident, and his wife, Carrie Coakley, 38, were also charged.
Mr. Spota said the defendants used a club Mr. MacPherson and his wife owned in Manhattan, Arena Studios on Broome Street, and The SoHo Journal to successfully solicit straw buyers. Arena Studios at one time provided dominatrix services and, according to its Web site, it rents dungeons and props for sex play.
The D.A.’s investigation also alleged that The SoHo Journal promoted rental properties on the East End that had been fraudulently purchased and used as summer rentals by the defendants.
Mr. MacPherson was charged with two counts of first-degree grand larceny. He and his wife were each charged with a first-degree scheme to defraud.
The defendants allegedly paid individuals to act as “straw purchasers,” who allowed their names and/or credit to be used to obtain mortgages on dozens of Southampton properties. These added up to more than $50 million.
The straw purchasers, or investors, as the defendants called them, allegedly filed falsified loan applications that claimed the homebuyers were employed by companies owned or controlled by the scheme’s participants. Mr. MacPherson allowed one investor to claim employment in his company, the Hamptons Consulting Group, and to falsely report an annual salary of $325,000, Mr. Spota said.
The homebuyers always appeared far wealthier and thus a much lower risk for lenders, according to a press release. In one case, straw buyers were said to have an income of as much as $45,000 per month as employees of defendants’ companies.
Mortgage stacking was used to fraudulently obtain mortgages on three properties in Southampton Town, the district attorney said. It involves the acquisition of second and sometimes third mortgages, using a bogus title report that shows no first mortgage on the property.
In this way, the D.A. said, a 2004 mortgage disappeared from the title history of a house on Noyac Path in Water Mill. A first and second mortgage totaling about $1.7 million were then fraudulently obtained. On paper, the mortgage applicant was said to have worked at The SoHo Journal for 10 years as director of sales, earning $36,000 a month. In truth, the applicant was not an employee of the publication and had no knowledge that his or her name and credit was being used to purchase and mortgage a house in the Hamptons, Mr. Spota said in a release.
When the house went into foreclosure in 2007, a straw buyer who was said to work at Maximum Restraint Films, earning $45,000 a month, was used to buy and mortgage the house for another $2 million. The title report, according to the D.A., had been altered to make the lender believe that first and second mortgages, totaling $1.5 million, and a pending foreclosure had been satisfied.
Similar mortgage stacking schemes were allegedly used for a house on North Sea Road in Southampton and a house on Deerfield Road in Water Mill that had been owned by Mr. Guldi’s late father, Walter Guldi.
Mr. Guldi’s father’s house had an outstanding mortgage of approximately $1.5 million when it went into foreclosure in 2005. Mr. Guldi represented the estate in the foreclosure proceedings. Mr. Guldi and Mr. Ellner allegedly washed the title of the first mortgage to obtain a new $1.8 million mortgage in the name of a straw purchaser.
Proceeds from the new mortgage went into an account controlled by Mr. Guldi, Mr. Ellner, and Dustin J. Dente, a 37-year-old lawyer from Roslyn, according to the D.A. Mr. Dente was charged with two counts of first-degree grand larceny.
Late last month, Wachovia Federal Savings Bank named Mr. Guldi in a lawsuit involving a $1.8 million mortgage given to a Nassau County dentist who apparently bought his father’s house on Deerfield Road in Water Mill. Mr. Dente and Mr. Ellner were also listed in that suit.
The case against Mr. Ellner includes properties in western Suffolk and New York City as well. Mr. Ellner was also charged yesterday, along with two other defendants from Farmingville and East Islip, in other mortgage fraud cases. He faces three counts of first-degree grand larceny, and one count of attempted second-degree mortgage fraud.
Mr. Guldi’s arrest came just a month and a half after Mr. Spota’s office executed a search warrant at his law office on Feb. 3. Last month, an office spokesman confirmed it had been investigating Mr. Guldi, and that documents and other records were taken in the February raid.
Three months ago, Mr. Spota disclosed the existence of a new mortgage fraud unit. It had begun work in June. Part of the D.A.’s Economic Crime Bureau, the unit has three assistant district attorneys, two detective-investigators, two state police investigators, and a forensic auditor. Up until last month, the unit was responsible for 27 arrests and 9 indictments involving $19 million in alleged fraud.