By Lincoln Anderson
In news that sent shock waves from Soho to Southampton, last week Don MacPherson, a former Community Board 2 member and owner of the Soho Journal, was arrested as part of a $50 million mortgage fraud ring, reportedly involving more than 50 Hamptons properties.
Don MacPherson, left, and his wife, Carrie Coakley, in photographs taken at the Suffolk County District Attorney’s Office on March 25 when they surrendered to authorities.
Mixing kink with alleged corruption, MacPherson was identified as the owner of Arena Studios, at 407 Broome St., a business that at one time provided dominatrix services. According to the criminal complaint, clients of the domination den were solicited to pose as phony mortgage applicants as part of the elaborate scheme.
MacPherson’s wife, Carrie Coakley, was described in press reports as a dominatrix.
MacPherson, 65, and Coakley, 39, who live at 80 Varick St., surrendered at the Suffolk County District Attorney’s Office on the morning of Wed., March 25.
MacPherson is charged with two counts of grand larceny in the first degree as to mortgage fraud and one count of scheme to defraud in the first degree. Coakley is charged with one count of scheme to defraud in the first degree.
MacPherson faces a maximum of eight-and-one-third years to 25 years in prison on each of the grand larceny counts, and one-and-one-third to four years behind bars for scheme to defraud. His wife faces up to one-and-one-third to four years in jail.
At their arraignment, both pled not guilty. They were released after each posting $25,000 bail.
MacPherson’s next court date is April 27, and Coakley’s is April 22, in Southampton Town Justice Court.
MacPherson and his co-defendants are accused of using so-called “straw buyers” with fictitious employment and income information on mortgage applications to make the applicants look more affluent and, thus, a lower risk for lenders.
Specifically, the “straw buyers” were falsely said to have jobs — with incomes as high as $45,000 a month — at several companies MacPherson owned, including Arena Studios, the Soho Journal, Maximum Restraint Films and the Hamptons Consulting Group. In return for participating, the fake buyers were reportedly paid $5,000 to $10,000.
‘Washing and Stacking’
The defendants are also accused of using “mortgage stacking” and “title washing” to milk properties by taking out multiple mortgages on them.
In one instance, according to Thomas J. Spota, the Suffolk County district attorney, a mortgage applicant for 982 Noyac Path, in Water Mill, Long Island, 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 fact, according to Spota, the applicant was not an employee of the publication “and had no knowledge their name and credit was being used to purchase and mortgage a house in the Hamptons.”
“A 2004 mortgage disappeared from the title history of 982 Noyac Path, Water Mill,” according to the complaint, “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. … In 2007, the house went into foreclosure.
“While in foreclosure,” the complaint continues, “a straw buyer purportedly employed by Maximum Restraint Films with a monthly income of $45,000 was used 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.”
Said Spota, “We found 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.”
Former Suffolk County legislator George Guldi was also arrested on grand larceny charges as part of the alleged Hamptons mortgage ring. An attorney, Guldi is accused of closing the fraudulent deals, and using forged documents and false powers of attorney.
“Making it so much easier,” according to Spota, for the defendants to perpetrate their fraud for seven years while evading detection, was Ethan Ellner, who runs a title company in Stony Brook. Ellner is accused of washing the properties’ titles of outstanding mortgages, which allowed the defendants to do mortgage stacking. Ellner too was charged with grand larceny.
In addition, according to the complaint, MacPherson’s Soho Journal, through its advertisements, “promoted Hamptons rental properties fraudulently purchased and used as summer rentals by the defendants.” In other words, while profiting off the fraudulent mortgages, the defendants also made more money off the houses by renting them out during the summer.
“They perpetrated a complex web of fraud and deceit,” Spota said.
The cover of the latest issue of the Soho Journal, Don MacPherson’s cultural and news magazine.
Laughs off charges
But MacPherson laughed off the charges — literally.
When The Villager called him on his cell phone last Thursday afternoon, MacPherson, upon answering, burst into uproarious laughter.
“I have never been the owner of the sex club — I’ll tell you that,” he said, laughing again. “It’s a fetish photographers’ studio — and it’s a location where I’ve done some of my photography.
“I can tell you, categorically, that it is some kind of a put-up job by a political hack,” MacPherson said of the charges against him. “There is no dominatrix business — it’s a fetish photography studio.” He said the studio is used by people to dress up before the annual Black and Blue Ball, a fetish-wear ball that his wife runs.
As for his reference to his photography, a trademark of the Soho Journal is its photos of female nudes taken by MacPherson.
He said Arena Studios and the offices of the Soho Journal are located on the same floor, right next to each other.
“First of all, you have to understand, this is under litigation now, so I can’t go into long discussions of it,” he continued. “There is no fraud. There never was any fraud. I have been investing in properties in the Hamptons since the ’70s — and there are other people who have bought the properties, and I have managed them.”
The main problem, he said, is that “the credit markets have seized up.”
Mortgage meltdown
According to a March 25 article in the Southampton Press, court documents state that MacPherson has not made any mortgage payments on 11 houses in Southampton Town for the past year. Court records show MacPherson stopped making payments on the mortgages — many of them worth $1 million or more — in the summer of 2007. Banks began to investigate and foreclose on the properties.
But MacPherson told The Villager he is simply being persecuted for speaking out against wrongs in the Hamptons.
“I have sued the town of Southampton in federal court, on grounds that they have been anti-Latino, anti-immigrant and anti-summer renters,” he said. “They tried to pass an unconstitutional law — saying names have to be revealed and limiting the number of renters [per house].
“They did this to make it very difficult for landlords to rent their property,” MacPherson said. “There has been a very strong anti-New Yorkers type of attitude by the politicians — not by the people.”
He said it’s all detailed on his Hamptons Politics blog. He also writes the Soho Politics blog.
MacPherson said he had another call coming in and couldn’t talk further. When The Villager called him back the next day, MacPherson said, “I can’t really talk right now. I can’t really talk any further right now.”
According to the Southampton Press, MacPherson reported in early February on his Hamptons Politics blog that his Manhattan offices were raided by the New York City Police Department on orders from Spota’s office. At the time, MacPherson would not comment about the incident to the Southampton Press, while a spokesperson for Spota, would only say that the D.A. was in the midst of a mortgage fraud investigation on Long Island’s East End.
According to a source, the photography studio was just a small part of the business of Arena Studios, which was a bona fide “dungeon” for dominatrixes and their clients.
The studios’ Web site currently lists a full range of “theatrical props” for sale and rental, including “clamps,” “equestrian,” “medieval torture,” “leashes & collars,” “whips,” “dungeon decor” and “medical & dental.”
Sean Sweeney, a C.B. 2 member and ally of MacPherson’s, said, “His wife ran the Black and Blue Ball; he was very out about that. The wife had a female partner — and they did bondage.”
As for his film company, a few years ago MacPherson told The Villager about a new goth/horror movie he had produced in the vein of “Death Race 2000.”
Wanted to whip board into shape
MacPherson was appointed to Community Board 2 in 2001. He ran unsuccessfully for board chairperson in 2005.
He grew up in the Hudson Square and Soho area, where his family’s roots stretch back to the start of the 20th century and where his father was a printer. He attended New York University.
A major plank in MacPherson’s C.B. 2 chairperson campaign was that Soho, in particular, was becoming oversaturated with liquor-licensed premises, and that the board had an inappropriately pro-business slant, especially its Business Committee, which is the committee that reviews liquor-license applications.
In December 2004, The Villager had exposed that Bob Rinaolo — the leader of the board’s pro-business faction and chairperson of its Business Committee — had hidden from the board for a year and a half a conflict of interest ruling about himself: essentially, that someone with a liquor license shouldn’t be chairing a committee that makes decisions on liquor licenses. Once a seeming shoo-in for chairperson, Rinaolo subsequently withdrew from the race — then told MacPherson that he had tapped Maria Passannante Derr to run in his place.
In a March 30, 2005, article in The Villager in which he declared his candidacy, MacPherson cited several key issues he felt were being ignored by the board: “Air quality in Lower Manhattan, pollution; billboards and the proliferation of signs; the inability to cross a street with a baby carriage without being run over by a truck or an 18-wheeler; and liquor licenses, being ignored by the S.L.A., the saturation of Soho.
“I seem to be alone in wanting to bring these issues out and do something about it,” MacPherson told The Villager.
However, he pulled out of the race shortly before the election, realizing he didn’t have enough votes to beat Derr.
Although the board has achieved a better balance in recent years under Borough President Scott Stringer, MacPherson resigned from C.B. 2 last August. At the time, he expressed concerns about the District 1 City Council race and may have been taking some heat from Stringer for participating in a meet-and-greet for Eric Gioia, who is running for public advocate, an office Stringer also had been eyeing.
“I’m disturbed by what I’m seeing as a trend Downtown of people trying to buy themselves into office,” MacPherson had told The Villager at the time.
‘You just blew my mind!’
C.B. 2 members were generally shocked to hear about the charges against their former colleague.
Ed Gold, a veteran board member, is a featured columnist in the Soho Journal.
“It’s a complete surprise to me,” he said. “He’s innocent until proven guilty — but he’s got a problem here. I don’t know what goes on in his head — but he’s very pleasant to work with on the community board. I supported him when he ran for chairperson. He ran as a reformer. He was very strong on bar oversaturation. … If I backed him for chairperson, it was because I thought he would have been a positive force for the community.”
The Soho Journal puts out four print issues per year. Despite the recent developments, Gold said he’s been told a new issue will be coming out this month.
When The Villager called her last week, Derr hadn’t yet heard the full details of the story. After being filled in, she said, “Wow! You just blew my mind!”
Similarly, David Reck, another C.B. 2 member, said, “I am totally blown away by it.”
Reck said he got to know MacPherson through the Soho Alliance before MacPherson was on C.B. 2, working together on issues in the Soho/Hudson Square area, notably traffic around the Holland Tunnel. MacPherson’s building is right across from the Watts St. tunnel approach.
Reck credited MacPherson with being a steady hand more than six years ago when then-C.B. 2 Chairperson Aubrey Lees appointed MacPherson to head the board’s Waterfront Committee during the first contentious — and ultimately failed — attempt to redevelop Pier 40.
“He became chairperson during a very tumultuous time on the waterfront,” Reck said. “And I think he did a good job of calming it down.”
Reck ran for chairperson against Derr in 2006, backed up by a Soho bloc including MacPherson and Sweeney, director of the Soho Alliance. But Derr won re-election.
Last year, Reck had a falling out with both MacPherson and Sweeney after a foiled “takeover” attempt at Downtown Independent Democrats that would have ousted Sweeney as the club’s president.
On occasion, MacPherson would show up with his children at political fundraisers and events, Reck recalled.
“I think the real tragedy is he has several young children,” Reck said of MacPherson. “Both he and his wife were charged.
“The kids seemed to like him, and they seemed kind of normal,” Reck said. “It seemed like a normal family.”
Brad Hoylman, C.B. 2’s current chairperson, declined to comment.
Muckraking blogger
Sweeney, however, backed the theory that the Hamptons powers that be are out to get MacPherson.
“Do you ever read his Hamptons blog?” he asked. “Donald was muckraking, exposing the Hamptons. He exposed the police collusion and prejudice against the illegal immigrants — and I’m sure they have it in for him. The Suffolk County establishment are going to crucify him. He has been a thorn in the side of judges, police and politicians in Suffolk County.
“And, actually,” Sweeney added, “the banks have been stealing from the people for years.”
Sweeney said MacPherson was “very generous with his money” in helping the community oppose the Trump Soho condo-hotel and on other local issues.
“He was going to give the Soho Alliance thousands of dollars to fight Trump — but he said he had to wait till the summer when business picks up” in the Hamptons, Sweeney said. “He volunteered thousands on the Grand St. bike lane — to sue the Department of Transportation on an Article 78. It didn’t get very far because people on the East Side didn’t want to give money — Little Italy and Chinatown merchants. They complain a lot, but they don’t want to put up the money.”
Sweeney said they figured they needed $20,000 to mount an effective lawsuit against the bike lane.
On the other hand, one C.B. 2 member, requesting anonymity, saw the outspoken MacPherson’s predicament as ironic.
“He makes himself very visible with his Web site, criticizing public officials,” the board member said. “Speaking as loud from his soap box, it’s surprising that he had something to hide. Some people will delight in the schadenfreude.”
A good neighbor — in soho
MacPherson and his family live on the top floor of 80 Varick St., a 10-story, rent-regulated building, sharing their floor with four other apartments. He did not appear to be home last Thursday; a reporter for a daily newspaper said she had knocked on his door hours earlier and there had been no answer.
Several residents and a staff member queried while passing through the building’s vestibule, said MacPherson was a model neighbor who cared about the community and his children.
“For me, he’s very nice guy,” said handyman Henrik Wyka, 55. He said MacPherson is the building’s biggest tipper — recently giving him $100 after he did a painting job after his work hours.
In halting English, Wyka, who is from Poland, indicated, with a shrug, and the words “Madoff,” “$50 billion” and “banks,” that he thought MacPherson’s allegedly ripping off $50 million from banks was a trifle compared to Ponzi scammer Bernie Madoff conning 1,000 times that much out of individuals and charitable organizations.
One tenant who declined to give his name said, “I know he’s been an advocate for this neighborhood and this building. He was always here for the tenants. They’re just a nice family.”
The man said it was known in the building that MacPherson was into the dominatrix scene.
Orion Daley, 57, the Balanced Party candidate for president in 2008 — he founded the party — said MacPherson deserves a fair trial.
“I believe in due process,” he declared. “That’s what our country’s built on.” On a more concerned note, he added, “All I can say is it must be a tremendous impact — I have three children. … I read the story and I said, ‘How could anybody in their right mind jeopardize their children like that?’ — I’m not saying that they did.”
Daley said MacPherson used to see Daley’s own children when they were young and showed a strong interest in fatherhood.
“He was looking forward to having his own,” Daley recalled. He said the youngest of MacPherson’s three children is 1 and the oldest is “adolescent.”
Indeed, giving the impression he was a doting parent, often in the past when The Villager called MacPherson on his cell phone or at home he would be taking his children to or from the private school they attend in the Village, or putting them to bed.
Daley said the building’s top floor where MacPherson lives is not considered the “penthouse.”
“There is nothing special about the 10th floor — except they have less heat,” he noted.
The tenants at 80 Varick St. include quite a few photographers, and “odd…eccentric Downtown types,” in general, Daley said.
Colorful mag, but no ads
The Soho Journal is fittingly offbeat, offering a mix of arts coverage and news. Recent issues featured a kooky interview with the Naked Cowboy and a profile of the Toys in Babeland sex-toys store on Rivington St. There is always a page of photos of “Soho and Hamptons Celebrities,” mixing shots of local politicians with waitresses and local pizzeria guys. The magazine regularly interviews Downtown’s political movers and shakers, and MacPherson writes his “Soho Politics” column for each issue.
A mystery, though, at least before the news of the mortgage scam, has been how MacPherson pays for the Soho Journal — which is distributed free in street news boxes — given that it has so few ads. At 44, glossy, full-color pages, it is obviously expensive to print.
One regularly recurring full-page ad is the Sea Breeze Motel in Westhampton, a motel MacPherson is said to own.
Erlene Wood, the small motel’s manager, said she has worked there four years, during which the ownership has changed once.
Asked if MacPherson was the owner, she said, “I don’t know for sure. I don’t see him. The check comes in the mail.”
MacPherson also owns both Magic’s Pub and Sunset Cafe in downtown Westhampton Beach, according to the Southampton Press.
The Cupping Room Cafe, at 395 West Broadway in Soho, is one of the Soho Journal’s only consistent advertisers, and has had a full-page ad in the last two issues.
Sarah Polansky, The Cupping Room Cafe’s office manager, said, “We didn’t pay for the ad. I think he just did it as a neighborly thing for us. He lives nearby. … He paid for his meals here. He did not get free meals.”
Mark Lampkins, the bistro’s bookkeeper and manager, said, “I just know he eats breakfast here a lot — almost every day. He brings his kids in.”
