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Case 2:17-mj-01015-AKT Document 1 Filed 11/29/17 Page 1 of 10 PageID #: 1

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UNITED STATES DISTRICT COURT


EASTERN DISTRICT OF NEW YORK f ~C V 2 9 2D17
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UNITED STATES OF AMERICA COMPLAINT

- against - M.No. ____________


(T. 18, U.S.C., l 040)
WILLIAM GRELLA and
GARY OSBORNE,

Defendants. J 17- 101


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EASTERN DISTRICT OF NEW YORK, ss.:

STEPHEN KIM, being duly sworn, deposes and says that he is a Special Agent

with the Unjted States Department of Housing and Urban Development Office of Inspector

General ("HUD-OIG") and states as follows:

From on or about and between December 2013 and August 2016, in the Eastern

District ofNew York and elsewhere, the defendants WILLIAM GRELLA and GARY OSBORNE,

together with others, did knowingly falsify, conceal, and cover up by trick, scheme, and device

material facts, and did make materially false, fictitious, and fraudu lent statements and

representations, and did make and use false writings and documents knowing the same to contain

materially false, fictitious, and fraudulent statements and representations, in matters involving

benefits authorized, transported, transmitted, transferred, disbursed, and paid in connection with a

major disaster declaration under section 401 of the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, to wit, the disaster declaration in connection with Superstorm Sandy,

in circumstances where the authorization , transportation, transmission, transfer, disbursement, and

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payment of benefits was in and affected interstate and foreign commerce, and the benefit was

transported in the mail at points in the authorization, transportation, transmission, transfer,

disbursement and payment ofthat benefit, and the benefit was a record , voucher, payment, money,

and thing of value of the Urtited States and a department and agency thereof.

(Title 18, Unjted States Code, Section 1040).

1. The source of my information and the grounds for my belief are as follows: 1 I am

a Special Agent with the U.S. Department of Housing and Urban Development Office of Inspector

General, and I have been personally involved in the investigation of tills matter. I base this

affidavit on that personal observations and interviews, as well as on my conversations with other

law enforcement agents, and my examination of various reports and records. Where the contents

of documents and the actions, statements, and conversations of others are reported herein, they are

reported in substance and in part, except where otherwise indicated.

THE DEFENDANTS

2. WILLIAM GRELLA is a medical doctor, specializing in internal medicine. He

practices primarily in the Wayne, New Jersey area. He is employed as the Medical Director of

JDT Lincoln Park Resorts and Renaissance, located at 52 I Pine Brook Road, Lincoln Park, NJ

07035. In addjtion, GRELLA was also an owner of Integrated Hospital Medicine, a medjcal

practice, located at 224 Hamburg Turnpike, Suite 4023, Wayne, NJ. From January 2002 through

August 2013, WILLIAM GRELLA was also the President of Vital Medical Forces, another

medical practice located in Saint Claire's Dover Hospital, 400 W. Blackwell Street, Dover, NJ .

1Because the purpose of this complaint is merely to establish probable cause to arrest, I have
not set forth all the facts and circumstances concerning this investigation of which I am
aware.

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3. GARY OSBORNE, GRELLA's spouse, is a fashion designer. In October 2012,

he established and operates, Oliver & Adelaide, LLC, a Manhattan-based children's clothing

manufacturer that he directs from their residence, while providing care for their adopted children.

THE RESIDENCES

4. From 2003 through March 2012, WILLIAM GRELLA leased an apartment at 327

W. 30th Street, Apt 4E, New York, NY. GARY OSBORNE, now his spouse, shared that

residence. The men later purchased a cottage on the east end of the North Fork of Suffolk County.

The house is located at I 200 1st Street, New Suffolk, NY I 1956. The house was used as a summer

and weekend retreat.

5. In March 20 12, GRELLA and OSBORNE signed a lease to rent a residential

property, 2 Raymond A venue, Chestnut Ridge, NY, located in Rockland County, NY and gave up

their apartment in Manhattan. That residence is within 30 miles of Dr. GRELLA 's various medical

practices in New Jersey. The couple and their two children moved into the house in May 201 2,

opening utility accounts with Orange and Rockland Utilities. Thereafter they used that address on

all their business and personal tax filings as their declared residence.

6. At about the same time, OSBORNE, in February 20 12, established a children's

fashion and clothing line named after their adopted children: "Clever Oliver & Sweet Adelaide

LLC" d/b/a Oli ver & Adelaide. From that first year of business through the present, OSBORNE

filed taxes for the corporation, declarin g the Rockland County, as the location of the business. 2

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In 2010 both GRELLA and Osborne filed taxes using the New Suffolk address as their
residence, however in all subsequent years 20 I 1 to date, the couple declared the Rockland
County address as their residence on tax filings ..

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HURRICANE SANDY - OCTOBER 2012

7. On or about October 30, 20 12, President Obama declared a major disaster for the

areas in the State ofNew York affected by Hurricane Sandy. This disaster area included Suffolk

County during the period October 27, 20 12 through November 8, 20 12.

8. The declaration made federal funds available to Suffolk County residents through

the U.S. Department of Homeland Security ("DHS") Federal Emergency Management Agency

("FEMA"), the U.S. Small Business Administration, and the New York State's Governor's

Office of Storm Recovery ("GOSR") through their NY Rising Housing Recovery Program for

disaster relief.

9. THE FALSE APPLICATIONS- FEMA

10. On or about November 12, 2012, GRELLA submitted an application for FEMA

disaster relief, FEMA Registration Number No. 4 1-1439868. GRELLA claimed in the application

that hi s primary residence was in New Suffolk and was damaged by the di saster resulting in the

displacement of hi s household. OSBORNE was listed as co-app licant to the application.

11. On or about December 18, 20 12, after initially determining GRELLA was ineli gib le

for rental assistance because of flood insurance coverage, FEMA subsequently approved two

months of rental assistance. The approval was based upon information provided by GRELLA that

his New Suffolk residence was unsafe.

12. On or about January 16, 201 3, GRELLA submitted an application for Continued

Rental Assistance to FEMA's National Processing Service Center. The letter contained

GRELLA's signature and address in Rockland County, which fa lsely represented that the New

Suffolk cottage, rather than the Rockland County rental as their primary residence, as follows:

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"Please note our lease began on May l , 2013 because the home in Chestnut Ridge
was intended as a vacation rental, however has become our primary residence since
our home in New Suffolk, NY has become inhab itable United Airlines."
Letter ofDr. GRELLA to FEMA, January 16, 2013.

Included in the subm ission was an email, dated January 20, 20 13 with the image of

a cashed check to the landlord, for rent in the amount of $3,750. A number of prior rent receipts,

dated November 8, 2012, December 5, 2012, and January 2, 2013, were provided to FEMA.

13. Also submitted as part of the FEMA application was a falsified copy of the original

lease for the Rockland County house, that GRELLA and OSBORNE rented the property as of

November 1, 2012, after Superstorm Sandy struck Suffolk County. Based on the information

received, FEMA paid the defendants, at least $4,11 6 in disaster recovery funds to which the

defendants were not entitled.

SMALL BUSINESS ADMINISTRATION

14. In December 2012, GRELLA, signed a SBA Home Loan appl ication certifying

hi s eligibility into the loan program as his primary residence in New Suffolk had been flooded

out.

15. Also submitted as part ofthe SBA application was a copy of the fraudulently

altered lease indicating that GRELLA and OSBORNE had onl y rented the Rockland County

house as of November 1, 2012 after Hurricane Sandy struck Suffolk County.

16. In February and March 2013, WILLIAM GRELLA, signed SBA Loan

Authorization and Agreements with the SBA, in the amount of $250,300, for a period of 15 years

at an Interest rate of 1.688%. On or about July I 0, 2013, an initial payment of $ 14,000 was wire-

transferred to GRELLAs and OSBORNE bank account Chase Account 8 17353496. GRELLA

and OSBORNE cancelled the remainder of the loan. Based on the information received, SBA

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paid the defendants, at least $14,000 in disaster recovery funds to which the defendants were not

entitled.

17. On or about June 15, 2016, GRELLA re-applied for a loan in the amount of

$300,000.

18. On or about July 22, 2016, GRELLA was declined by the SBA based on

information which disclosed GRELLA's primary residence appeared to be in the Chestnut

Ridge, NY and not the damaged property in New Suffolk, NY, as listed on their SBA

application.

19. On or about July 21,2016, WILLIAM GRELLA faxed an appeal letter to the U.S.

Small Business Administration. Included was copies ofthe defendants NYS driver license, and a

letter from the Post Master of the New Suffolk, NY residence.

NY RISING HOUSING RECOVERY- Single Family Homeowner Program

20. To assist storm-impacted New Yorkers, the Governor's Office of Storm Recovery

("GOSR") operates the NY Rising Housing Recovery Program to facilitate home repairs,

rehabilitation, mitigation, and elevation for the owners of single-family homes.

21. From my training and experience, I have learned the following about the eligibility

into the Single Family Homeowner Program, administered by GOSR, funded by HUD, in

substance and in part:

You live in one of the counties designated a disaster area as a result of the named storm:
i. Superstorm Sandy: Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, Ulster,
and WestchesterHurricane Sandy,
ii. Hurricane Irene: Albany, Clinton, Columbia, Delaware, Dutchess, Essex,
Franklin, Greene, Hamilton, Herkimer, Montgomery, Nassau, Orange, Otsego Putnam,
Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Suffolk, Sullivan, Ulster,
Warren, Washington, and Westchester

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lll. Tropical Storm Lee: Broome, Chemung, Chenango, Delaware, Fulton,


Herkimer, Oneida, Orange, Otsego, Schenectady, Schoharie, Tioga, Tompkins and
Ulster
a. Your residential property was damaged as a direct result of one of these storms
b. Your residential property is a municipally approved dwelling unit
c. You have unmet needs after accounting for all federal, state, local and/or private
sources of disaster-related assistance, including, but not limited to, homeowners,
and/or flood insurance proceeds
d. Property types eligible for assistance include: Single-family residences,
Condominiums, Garden Apartments, Co-operatives, Mobile/Manufactured
Homes, Two Unit Owner-occupied Properties, and Rental Properties
d. The property must be occupied as a primary residence (whether owner-occupied or
rental) at the time of one of the three storms
NY RISING HOUSING RECOVERY- Interim Mortgage Assistance Program

22. Homeowners who are eligible participants in the NY Rising Housing Recovery

Program and are paying both temporary housing costs, such as rent, and mortgage payments may

be eligible to receive assistance from the Interim Mortgage Assistance ("IMA") Program. The

assistance amount is the monthly mortgage costs (interest, principal, taxes, and escrow), to a

maximum $3,000 per month, up to 20 months.

NY RISING HOUSING RECOVERY INVESTIGATION

23. On or about January 6, 2014, WILLIAM GRELLA and GARY OSBORNE signed

and submitted a PROGRAM ELIGIBILITY CERTIFICATION FORM and an INSURANCE

CERTIFICATION FORM, each certifying their eligibility into the Program.

24. On or about January 6, 2014 WILLIAM GRELLA and GARY OSBORNE signed

and submitted a SUBROGATION AND ASSIGNMENT AGREEMENT FORM, certifying their

eligibility into the Program, repayment of, and Duplication of Benefits.

25. On or about January 14, 2014 WILLIAM GRELLA and GARY OSBORNE

submitted an Interim Mortgage Assistance Tax Assessment Certification Form, certifying "I/we

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owned the Storm Damaged Property and occupied it, as our primary residence, during one or more

of the following periods of Eligibility:

1. Hurricane Sandy: October 27, 2012 to November 8, 20 12


11. Hurricane Irene: August 26, 2012 to September 4, 2011
111. Tropical Storm Lee: September 7, 2011 to September 11, 2011"

26. On or about January 14, 2014 GRELLA and OSBORNE submitted a certification

regarding Interim Mortgage Assistance, certifying that they are receiving funds for temporary

replacement housing while displaced from the Storm Damaged Property which was my/our

primary residence, and that they are NOT receiving funds for mortgage assistance during the

Period ofEiigibility while displaced from the Storm Damaged Property which was my/our primary

residence.

27. On or about January 14, 2014 GRELLA and OSBORNE submitted an Interim

Mortgage Assistance Data Form, certifying Eligibility of their Storm Damaged Property, and

stating Ken Herndon is the landlord they are renting a home from. The form included a lease citing

the effective date as October 29, 20 12.

28. On or about February 9, 2014 WILLIAM GRELLA and GARY OSBORNE

submitted an Interim Mortgage Assistance Data Form, including a letter, dated January 24, 2014,

from Ken Herndon, on Et Tu Raymond, LLC letterhead stating "Bill Grella and Gary Osborne

have been renting the house at 2 Raymond Ave., Chestnut Ridge, NY from November 2012 to

present. The rent was initially $3 ,750 per month, and was increased to $3,775 per month in June

20 13." Ken Herndon, at the request of GARY OSBORNE, prepared the letter. OSBORNE

specificall y requested the month of November 20 12 be entered as the start of the rental period in

the letter.

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29. On or about November 11 , 2014 WILLIAM GRELLA and GARY OSBORNE

submitted an appeal form stating

1200 151 Street in New Suffolk, NY is our primary residence. We have not been
able to live in the home since Superstorm Sandy we are located at a different
address because the property is not safe at this time for our 2 small children we
redirected some of our mail because of distance.
30. Based on information available to it at this time, GOSR calculates that, between

March 13, 2014, and August 15, 20 14, GOSR paid to the defendants, at least $34,734 in Single

Family Homeowner disaster recovery funds, and at least $26,805 in Interim Mortgage Assistance

disaster recovery funds, to which the defendants were not entitled.

3 1. In various media interviews the defendant OSBORNE identified their New Suffolk

cottage as a weekend residence.

a. In an interview in the New York Times on June 29,2007, the defendant OSBORNE

outlines their use of the New Suffolk home:

"We started looking in the South Fork, because a lot of our friend s are out there," said
Gary Osborne, who designs men's wear and has shared a weekend home in Mattituck
with hi s partner, William Grella, for nearly four years. "It was such a different vibe."
They have since bought a third home, south of Mattituck in New Suffolk. "The whole
reason behind having a second home is to spend qui et time at your home," Mr. Osborne
said, "away from work and social life."

b. Crain's New York Business magazine published an article on January 2, 2013,

concerning the children's clothing manufacturing that OSBORNE started, Oliver & Adelaide,

LLC, a Manhattan-based business. That article states: "He's hired stay-at-home moms and retirees

on the North Fork of Long Island where he spends weekends ... "

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WHEREFORE, deponent prays that warrants be issued for the arrest of WILLIAM

GRELLA and GARY OSBORNE, the defendants, and that they be arrested.

Stephen Kim
Special Agent
U.S. Department of Housing and Urban
Development, Office of Inspector General

Swon) to before me this


dJA- day ofNovember, 201 7
I
/s/ A. Kathleen Tomlinson

HONORABLE A. KATHLEEN TOMLINSON


United States Magistrate Judge
Eastern District ofNew York

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