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George Guildi, a former Suffolk County Legislator, was nabbed in the mortgage fraud scheme.

Southampton - A former Suffolk County legislator is among five suspects arraigned on Wednesday, March 21 on grand larceny charges by fraudulently obtaining more than $50 million in mortgages on dozens of homes in the town of Southampton.

George Guldi, 55, of Westhampton Beach, was arraigned Wednesday in Southampton Town Justice Court on three counts of first degree grand larceny and first degree scheme to defraud. Guldi, an attorney and former Suffolk County Legislator, and co-defendant Ethan Ellner, 49, of Plainview, 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.

Suffolk County District Attorney Thomas Spota said Wednesday that 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, he said, involved "mortgage stacking," or 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.

Douglas MacPherson

Co-defendants Donald MacPherson, 65, the owner of Magic's Pub and the Sunset Cafe in Westhampton Beach, and his wife, Carrie Coakley, 39, of New York City, and Dustin Dente, 37, of Roslyn, filed a plea of not guilty at their arraignments in Southampton Town Justice Court, which were also conducted on Wednesday. MacPherson is charged with two counts of first degree grand larceny and one charge of first degree scheme to defraud. Coakley is charged with first degree scheme to defraud. Dente, 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 asserted. The district attorney added that the defendants engaged in "a seven-year mortgage fraud spree" involving dozens of 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.

Evidence gathered during the course of the investigation 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 were falsely listed as having incomes as high as $45,000 per month as employees of companies the defendants owned.

This house at 2027 Deerfield Road in Water Mill was used in the mortgage swap Guildi spearheaded.

One of these companies was Arena Studios, Inc., based 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 was Maximum Restraint Films and The SoHo Journal, a publication owned by MacPherson. The SoHo Journal also promoted Hamptons rental properties reported to be fraudulently purchased and used as summer rentals by the defendants. Another MacPherson firm, the Hamptons Consulting Group, was used as the employer for a straw buyer to falsely report an annual salary of $325,000 per year on a mortgage application.

Ethan Ellner, 49, of Plainview, allegedly defrauded lending institutions.

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 in 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 $1.7 million.

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 were being used to purchase and mortgage a house in the Hamptons. 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 trumped up 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 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 in Water Mill. Investigations established that the title report falsely cleared an original $1.25 million mortgage after a new $1.8 million mortgage was obtained. The evidence found the proceeds of the new mortgage flowed into the accounts of defendants Ellner, Guldi and Dente.

A home at 2027 Deerfield Road in Water Mill - originally titled to Walter Guldi, the father of George Guldi, with an outstanding mortgage of approximately $1.5 million - 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 mortgage obtained in the name of a straw purchaser. Proceeds of the stacked mortgage flowed into accounts controlled by defendants Ellner, Guldi and Dente.

All three houses are or have been in foreclosure. "We found that 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.

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