The Many Woes of George O. Guldi: A Hamptons Pol Fights for His Good Name

As badly as 2008 ended, 2009 started off worse when the district attorney’s office raided Mr. Guldi’s offices in Westhampton Beach, leaving with nearly all his computers and 49 boxes of files. Soon after came the arrest for mortgage fraud, and the legal battles that have consumed his past two years.

Although it seldom received sweeping headlines, mortgage fraud was the It Crime of the past decade. The massive scope of this quiet crime wave, supported by the same easy lending bubble that led to the recent recession, did not become apparent until the market’s 2007 collapse. New York was one of the hardest hit–a LexisNexis survey released last summer placed the state second in national mortgage fraud, outpaced only by Florida.

The indictment explains several different ruses Mr. Guldi used to fool banks into making unwise loans. A typical instance involved a house in Water Mill owned by Mr. Guldi’s father, which went into foreclosure in 2005, the result of an unpaid $1.5 million mortgage. In 2008, Mr. Spota’s office alleges, the defendants falsified the property’s title, making it appear that the house carried no mortgage at all. Using a stolen identity–a “straw buyer”–they purchased the house with a new $1.8 million mortgage, pocketing the money and letting the bank foreclose on the property.

With homes valued so highly, profits piled up quickly. Marcus Asner, who formerly headed the Southern District’s Major Crimes Unit and now works in white-collar defense at Arnold & Porter, said the $82 million charge in the Guldi case was the largest he had heard of in the region. The complexity of such a scheme, he said, would be staggering. “In a case like this, someone would have to manage a number of straw buyers for a number of properties all at once,” he said.

Some of the straw buyers were reportedly employees of Arena Studios, a fetish photography outfit on Broome Street, now shuttered. When the shop’s owner, Mr. MacPherson, was arrested, along with his wife, the New York press had a field day–painting her as dominatrix and him as an S&M mogul. (Mr. MacPherson “took a beating” on his East End investments, joked The Daily News.)

Last month, at a small cafe near the SoHo Journal‘s offices, Mr. MacPherson, 66, spoke very carefully about the crimes he and Mr. Guldi have been accused of committing. A dignified man, he is tall, with long gray hair and thick, caterpillar-like eyebrows. Whether by accident or design, the former fetish entrepreneur comes across more like a classics professor than a crook.

“I see my primary occupation as a journalist,” Mr. MacPherson told The Observer. Though he owns a home and several businesses in the Hamptons, his priority has never been real estate, he said, but maintaining Soho’s “sadly neglected” artistic heritage. Like Mr. Guldi, he is drawn to large causes. He opposes the proliferation of billboards in the neighborhood, for one. Perhaps more importantly, he has fought to recover statues by an artist named Bob Bolles, forgotten pieces of artwork that, as Mr. MacPherson explained, were removed from a park on Broome Street in 2000 and left to rot on Randall’s Island.

Mr. MacPherson met Mr. Guldi through his former attorney Thomas McVann, a partner in the Guldi firm. Over the course of the decade, he said, he worked occasionally with Mr. Guldi without ever becoming close.

“I think he’s a little bit crazy,” said Mr. MacPherson, “but I mean that as a compliment.” When pressed on this apparent paradox, he described his co-defendant as “a very opinionated individual who believes strongly in his point of view.”

Mr. Guldi had been planning a bid to reclaim his old seat in the Legislature when the arrest warrants came down, and he did not let the indictments stop him. After securing release on a $500,000 bail, he went on with his plans for the September primary against his old opponent, Jay Schneiderman.

“That’s the boldness of the man,” said Ms. Viloria-Fisher, the sort of behavior that “sometimes makes you wonder whether he knows what the boundaries should be.”