Did you hear the one about 3 lawyers, $50 Million and the S&M Club?

Attorney to Plead Not Guilty To Grand Larceny Charges

The New York Law Journal - NEWS IN BRIEF - August 10, 2009

The investigation into a $50 million mortgage fraud scam involving three lawyers, a Manhattan dominatrix club, and dozens of East End, Long Island, properties is expected to grow larger today with additional charges and additional defendants, a spokesman for Suffolk County District Attorney Thomas J. Spota said. The operation allegedly recruited straw buyers at the dominatrix club Arena Studio to obtain fraudulent home mortgages and has snared attorney George O. Guldi, who was a Democratic Suffolk County legislator until 2003.

Here's a background New York Daily News article:

SoHo S&M club owners Donald MacPherson and Carrie Coakley tied to $50M mortgage ripoff

BY KERRY BURKE AND WILLIAM SHERMAN 
DAILY NEWS STAFF WRITERS - March 26th 2009, 8:23 AM

Mortgage scammers used dominatrixes and the owners of a renowned SoHo S&M parlor to pull off a $50 million fraud scheme involving dozens of properties in the Hamptons and the city. Donald MacPherson, 65, and his wife, Carrie Coakley, 39, proprietors of the bondage den Arena Studios, were unmasked as two of the five people charged with ripping off banks in a seven-year spree. The duo, who sponsor the annual Black and Blue Ball for S&M aficionados, used dominatrixes at their Broome St. Club to recruit patrons to participate in the scheme, the Suffolk County district attorney's office said.

Former Suffolk County lawmaker George Guldi, 55; title company owner Ethan Ellner, 54, and lawyer Dustin Dente also were charged in the scam. Prosecutors said the ring used straw buyers with phony jobs and inflated incomes to "buy" the homes in Southampton, Water Mill and other locations, Suffolk County District Attorney Thomas Spota said. The straw buyers, who were not arrested, took out millions of dollars in mortgages from lenders, including Wachovia and Deutsche banks, and turned the money over to the five ringleaders, said Spota's spokesman, Robert Clifford. "Some of the straw buyers were patrons of the club and the dominatrixes approached them and asked if they wanted to make some easy money," Clifford said. The straw buyers, who were not identified, were paid about $20,000 each. It's unclear how much the dominatrixes were paid for their recruiting efforts. MacPherson, a former member of Community Board 2 in Manhattan, and Coakley, who live in Greenwich Village, could not be reached.

Prosecutors said the ringleaders created bogus documents saying the buyers earned up to $45,000 a month. The straw buyers' employers listed included MacPherson's S&M club and his Maximum Restraint Films, Ltd. which owns the SoHo Journal, an arts publication that advertises summer rentals in the Hamptons. Several of those homes were subject to the fraudulent mortgages, a criminal complaint says. "The economic damage these defendants single-handedly caused to the Suffolk County economy is simply appalling," Spota said. Homes on Inwood St. in Jamaica, Queens, and Glemore Ave. in Brooklyn also were encumbered with phony mortgages, some of which were $2 million or more on individual homes. The scheme involved a hustle called "mortgage stacking," in which bogus or "washed" title reports conceal outstanding mortgages. All five alleged ringleaders pleaded not guilty to grand larceny and mortgage fraud charges in their arraignment at Southampton Town Justice Court.