DA: Ex-pol, dominatrix ran mortgage fraud scheme

A former Suffolk legislator, a Manhattan dominatrix and several other people were charged Wednesday in what Suffolk prosecutors said was a $50 million web of mortgage fraud that began in a Manhattan fetish club and ended with scores of pricey Southampton homes ownerless and in foreclosure.

George Guldi, 57, of Westhampton Beach, a private attorney since leaving the Suffolk Legislature in 2003, acted as the lawyer in dozens of fraudulent transactions that made him millions, prosecutors said. Guldi and others took out mortgages for more than 50 East End homes on behalf of fake buyers, pocketed the money, then left the houses to languish once payments came due, prosecutors said.

"The damage these defendants single-handedly caused to the East End is simply appalling," Suffolk District Attorney Thomas Spota said Wednesday at a Riverhead news conference. "These defendants went on a seven-year-long mortgage fraud spree."

Prosecutors said the fake borrowers, or straw buyers, were recruited by a Manhattan couple, Donald MacPherson, 65, and Carrie Coakley, 38, from among the clientele of their Manhattan sexual fetish fantasy business, Arena Studios. Coakley's work as a dominatrix was featured in the 1998 documentary "Whipped."

According to Arena Studio's Web site, the Broome Street company provides space for dominatrixes to meet clients, boasts a "beautifully decorated and fully equipped private dungeon," and, among other items, rents out "medieval torture" implements, bondage furniture and three kinds of whips.

In return for payments of $5,000 to $10,000, clients of the dungeon and others posed on paper as buyers of expensive homes all over the Town of Southampton, Spota said. The clients' income and employment information were overstated so they would qualify for the millions of dollars in loans needed to buy the properties, Spota said.

For example, in a 2008 mortgage application for a home at 982 Noyack Path, prosecutors said the straw buyer falsely claimed to be a $45,000-per-month employee of Coakley and MacPherson's production company, Maximum Restraint Films.

Spota did not release the names or number of straw buyers involved in the scheme, but said they would likely face charges in the future.

After MacPherson brokered new mortgages with various lenders, participants of the scheme pocketed the cash - sometimes repeating the process several times on the same homes, Spota said.

He said the scammers' efforts were made possible by the work of Ethan Ellner, 49, a Plainview lawyer who prosecutors said created fake titles that falsely claimed no money was owed on the homes. Straw buyers were thus able to dupe lenders into issuing new mortgages without first paying off sums previously owed on the house, prosecutors said.

Ellner's lawyer, Raymond Perini of Hauppauge, said his client pleaded not guilty to charges of first-degree grand larceny, scheme to defraud and other charges, but declined to comment further.

Coakley and MacPherson's lawyer, Steven Wilutis of Miller Place, said his clients denied all the charges and disputed claims that straw buyers were used. "Anybody involved in the purchases of these houses were legitimate people," he said. "Foreclosure doesn't mean a crime was committed."

Guldi and MacPherson pleaded not guilty to first-degree grand larceny and other charges in Southampton Village Justice Court. Coakley pleaded not guilty to one count of first-degree scheme to defraud.

A Roslyn lawyer, Dustin Dente, 37, who prosecutors said oversaw some of the scheme's closings, pleaded not guilty to first-degree grand larceny charges.

Prosecutors also charged Gary Small, 41, of Farmingville, and Victor Jinete, 34, of East Islip, in connection with what they said was a separate mortgage fraud scheme conducted in western Suffolk, also with Ellner's participation. Both pleaded not guilty to second-degree attempted mortgage fraud and other charges. Their lawyers could not be reached for comment.

Dente's lawyer, John Carmen of Garden City, declined to comment. Guldi's lawyer, John Diffley of Whitestone, did not respond to a request for comment.

Ellner, Coakley and MacPherson posted $25,000 cash bail. Guldi was released on $20,000 cash bail, and Dente posted bail of $10,000.

Staff writer Mitchell Freedman contributed to this story.