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Judge orders ex-Orange Beach mayor to forfeit house, money in

MOBILE (AP) — Former Orange Beach Mayor Steve Russo has been ordered to surrender his interest in a Gulf Shores beach house and more than $400,000 as a result of his conviction on conspiracy, mail and wire fraud charges.

U.S. District Judge Kristi DuBose also ordered a co-defendant, former Orange Beach City Attorney Larry Sutley, to forfeit his interest in the partnership that bought the house. Russo and Sutley are scheduled to be sentenced next week.

In a 13-page written order issued late Wednesday, DuBose ruled that Russo and Sutley have to give up any interest in American Hot LLC, the limited liability corporation that Sutley formed, with himself, the mayor and developer Jim Brown as partners.

The partnership purchased a beach house that was destroyed by Hurricane Ivan in 2004. The partnership then constructed a new eight-bedroom, eight-bathroom house in its place. The remaining assets of American Hot consist of $66,717.25 left over from the original mortgage loan that was transferred into an account controlled by Brown. The money was intended to pay to market the house as a rental property. Brown gave up any interest to that money as part of a plea bargain worked out before the trial.

With the consent of DuBose and prosecutors, the defendants have put the property on the market for $2.9 million. If it sells, the money would be used to pay off the mortgage. Anything left over could be used to satisfy the rest of the forfeiture order.

"There are obviously some things in there that we're unhappy about, and there's obviously some things in there that we're happy about," Richard Horne, Russo's attorney, said.

Attorney Neil Hanley, who represents Sutley, said he did not want to comment on the forfeiture order until after next week's sentencing. Under a preliminary calculation of advisory sentencing guidelines, Sutley faces at least eight years and a month in prison.

Aggravating factors

Horne said the calculations for his client are even more severe, in the 15- to 18-year range. But he said he would vigorously contest aggravating factors that prosecutors have alleged.

Russo and his wife, Crystal Russo, also must surrender $93,000 in Crystal Russo's account that the ex-mayor transferred on the day that a grand jury handed down an updated indictment in the case.

The judge also said that Russo must give up the $400,000 he received from a land flip involving property where Russo had planned to build a mansion about a mile and a half from the general store that he runs with his uncle. DuBose noted that trial testimony indicated that Brown arranged for Russo to buy land off of Wolf Bay — using none of the mayor's own money — for $1.2 million and then to sell it less than an hour later for $1.6 million.

"The land-flip transaction was shown to be yet another gratuitous act on Brown's behalf to help Russo make money and thus, part of the scheme to commit honest services fraud," the judge wrote.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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