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Owners of New Suffolk waterfront home charged with fraud in connection with Hurricane Sandy disaster relief benefits

The owners of a waterfront home in New Suffolk have been arrested by federal authorities on charges of making false and fraudulent statements in applications for federal assistance following Hurricane Sandy.

William Grella and Gary Osborne, owners of the home at 1200 First Street in New Suffolk, falsely stated on applications for federal disaster relief assistance that the New Suffolk home was their primary residence, according to a complaint filed Nov. 29 in the U.S. District Court for the Eastern District of New York.

The couple lived in Manhattan until May 2012 when they moved into a rented home in Chestnut Ridge, in upstate Rockland County, according to the complaint. The Chestnut Ridge home was their primary residence, according to an investigation by the U.S. Department of Housing and Urban Development’s Office of Inspector General, the complaint says.

But Grella, a medical doctor with practices in New Jersey, and Osborne, a fashion designer who owns a Manhattan-based children’s clothing manufacturer he directs from the couple’s Rockland County home while he provides care for the couple’s adopted children, listed the New Suffolk home as their primary residence in applications for FEMA disaster relief and rental assistance, as well as for an SBA home loan and NYS-administered disaster recovery funds, the complaint says. With the SBA application, they also submitted a falsified copy of the original lease on their Rockland County home, according to the complaint.

The couple obtained a $250,300 SBA loan for 15 years at an interest rate of $1.688 percent, as well as FEMA rental assistance payments to which they were not entitled in excess of $4,100, according to the complaint. In addition, the couple applied for and received at least $34,734 in Single Family Homeowner disaster recovery funds and at least $26,805 in Interim Mortgage Assistance disaster recovery funds from the Governor’s Office of Storm Recovery, which administers the HUD-funded NY Rising Housing Recovery Program, the complaint states.

According to the complaint, the couple admitted in media interviews that the New Suffolk home was a weekend residence.

Grella and Osborne were arraigned this afternoon before a U.S. magistrate judge in Central Islip where they pleaded not guilty and were released on $100,000 bond each, according to a spokesperson for the U.S. attorney’s office for the Eastern District of New York. 

Making materially false statements in connection with disaster relief applications is a violation of title 18 of the U.S. Code, section 1040 and is punishable by a fine and/or imprisonment of up to 10 years.

Denise Civiletti
Denise is a veteran local reporter and editor, an attorney and former Riverhead Town councilwoman. Her work has been recognized with numerous awards, including a “writer of the year” award from the N.Y. Press Association in 2015. She is a founder, owner and co-publisher of this website.