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Couple charged with fraud in obtaining $80,000 in Sandy relief funds

A couple is facing fraud charges after they declared a North Fork vacation house as their primary residence in order to obtain nearly $80,000 in superstorm Sandy relief funds, officials said Wednesday.

William Grella, 64, a doctor, and Gary Osborne, 44, a fashion designer, moved with their two children into a Rockland County rental property in May 2012 and were using a New Suffolk cottage they owned as their vacation and weekend retreat, according to a complaint filed by the U.S. Attorney’s Office for the Eastern District, which covers Long Island.

But after Sandy damaged the cottage in October 2012, they falsified documents in applying for recovery programs eligible only on primary residences, according to the complaint filed by the Office of Inspector General with the U.S. Department of Housing and Urban Development.

Grella and Osborne got at least $4,116 from the Federal Emergency Management Agency; an initial payment of $14,000 from a Small Business Administration loan; $34,734 in single-family homeowner recovery funds from New York State; and $26,805 in interim mortgage assistance funds from the state, the complaint said.

In news articles before and after Sandy, Osborne mentioned the cottage as his weekend place, including in a June 2007 New York Times article about the North Fork and a January 2013 Crain’s New York Business story about his clothing business, officials said.

Grella, who has offices in New Jersey, and Osborne, who has a Manhattan-based children’s clothing business, were arraigned Wednesday in U.S. District Court in Central Islip and each released on a $100,000 bond.

Osborne’s attorney, Joseph Conway of Mineola, said the couple initially used their North Fork cottage as a retreat, but made it their home as early as 2010 to raise their children. Osborne was active in the Southold Town community, and the doctor would commute to his New Jersey practice, the attorney said.

“We steadfastly deny the charges and are eager to prove that the Suffolk house was in fact their primary residence,” Conway said.

Grella’s attorney did not immediately return requests for comment.

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