Guldi Water Mill House To Be Auctioned Off

A Water Mill house owned by former Suffolk County Legislator George O. Guldi, related to the mortgage fraud scheme that eventually landed him in jail, has been foreclosed on and will be put up for public auction next month.

The property, located at 2027 Deerfield Road, was the center of a controversy in which Mr. Guldi was accused of pocketing at least $1.8 million from Wachovia Federal Savings Bank after a mortgage was given to an unidentified person who later filed identity theft charges as part of the scam.

According to Stephen A. Grossman, a lawyer with offices in Sag Harbor who is acting as the referee for the auction scheduled for September 12, the auction will erase any outstanding liens and mortgages currently associated with the property. The plaintiff in the case is Homecoming Financial LLC, a mortgage servicing company with offices in Minnesota that attained the mortgage in past proceedings involving the house.

Mr. Grossman said this week that the auction was finalized after a Judgment of Foreclosure and Sale was entered with the courts on May 23 and approved in June. “It is a mortgage foreclosure,” Mr. Grossman said. “The amount up to the amount for the mortgage goes to the people who own the mortgage.”

Mr. Guldi had taken out $3.5 million worth of stacked mortgages against the Deerfield Road property. The first mortgage, which totaled $1.5 million, was secured by Mr. Guldi’s father, Walter Guldi, whose name was also used to secure a second mortgage for $300,000 in 2005, just before his death in 2006. In 2008, a third mortgage was taken out on the house for $1.8 million.

None of the mortgages from the house was ever paid back. There is currently a lien on the house totaling $2.2 million. The lien does not include interest or other closing costs.

Robert Guttmann, an attorney from the Manhattan-based law firm of Zeichner Ellman & Krause, who is representing the plaintiffs in the case, did not immediately return calls seeking comment.

Mr. Guldi, a Democrat who represented the South Fork from 1993 until 2003, has been in Suffolk County Jail serving a four-to-12-year sentence since March 2011, when he was convicted of insurance fraud and grand larceny for misusing insurance funds after his Westhampton Beach home burned down.