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Former BCIA chairman O'Malley indicted in mortgage fraud scheme
Tuesday, August
31, 2010 BY MICHAEL GARTLAND The Record STAFF WRITER
RECORD FILE PHOTO Ronald O'Malley Ronald O’Malley, the former chairman of Bergen County’s public financing wing and the CEO of a private mortgage brokerage firm, was indicted Tuesday by a federal grand jury on 68 counts of fraud and conspiracy to commit fraud. The 53-page indictment alleges that O’Malley used his position as chairman of the Bergen County Improvement Authority to falsify employment records and other documents to secure loans for clients who used his brokerage firm. O’Malley’s firm, the Ridgewood-based Residential Mortgage Corp., collected clients’ fees based on the loans, according to the indictment. News of O’Malley’s role in the alleged scam first became public in July, when his partner in the firm, Edward Olimpio, said in court that O’Malley signed verification forms for borrowers that falsely claimed the borrowers were being paid substantial salaries by the BCIA. The charges A list of the charges filed Tuesday against Ronald O’Malley, former executive director of the Bergen County Improvement Authority, and Laura-Jean Arvelo: O’Malley
Arvelo
Source: U.S. Attorney’s Office The indictment released by the U.S. Attorney’s Office late Tuesday afternoon shed more light on the scheme. It alleges the following: • O’Malley falsified a client’s verification of deposit records, using his and his mother’s joint bank account number on a client’s mortgage form. • As chairman of the BCIA, O’Malley claimed that private clients with Residential Mortgage Corp. were employed by the improvement authority when, in fact, they were not. • O’Malley falsely stated that a client had a balance of more than $50,000 with the “Bergen County Improvement Authority Credit Union Account” when such a credit union did not exist. • BCIA staffers falsely confirmed to lenders at the behest of O’Malley that Residential Mortgage clients were agency employees. • When confronted by American Partners Bank, a mortgage lender, about two of the loans, O’Malley said asset information had been falsified by an employee who had been terminated for substance abuse issues. O’Malley did not return a request for comment, and his attorney, Brian Neary, declined to answer questions Tuesday. Also named in the indictment is Laura-Jean Arvelo, who is accused of several counts apiece of wire, bank and loan-application fraud. Arvelo’s attorney, Joseph P. Rem Jr., said his client is innocent. “Follow the money,” he said. “You find one penny that went to my client, then God bless you. … If she didn’t get any money, why would she engage in a criminal conspiracy? Don’t conspirators share in the profits? She was not involved in a criminal conspiracy.” O’Malley’s indictment sparked renewed criticism of the BCIA and demands for a state investigation of the agency, which has accumulated about $450 million in debt during the past 10 years. “I have always felt they are one of the shadow governments out of the public scrutiny,” said state Sen. Loretta Weinberg, D-Teaneck, a longtime critic of the BCIA. Weinberg said she now wants to know whether any remaining BCIA staff were involved in fraud. “I would assume that county authorities would immediately take a look to see if that’s so,” she said. Republican County Freeholder Robert Hermansen called for an independent audit of the BCIA. Freeholder John Driscoll, also a Republican, said he would call on Governor Christie to initiate a state investigation. Hermansen also questioned the judgment of Democratic County Executive Dennis McNerney, who appointed O’Malley as BCIA chairman in 2004. “It’s a lapse in judgment,” Hermansen said. “Dennis needs to answer for what’s gone on here.” McNerney said in a written statement released Tuesday night that “if any employees of the Bergen County Improvement Authority were remotely involved in inappropriate or illegal actions, they will be terminated and immediately referred to the appropriate authorities.” McNerney appointed former Superior Court Judge Douglas K. Wolfson last month to investigate allegations that O’Malley participated in the scam just days after O’Malley resigned from his BCIA post. McNerney described the review as “ongoing” in his press release, but declined to answer specific questions about the indictment. O’Malley also held a public post with the Northwest Bergen County Utilities Authority as a commissioner. That title carries a $5,000 annual salary and a state pension. According to McNerney’s spokesman, Brian Hague, O’Malley resigned from that post Tuesday. Democratic Freeholders James Carroll, Elizabeth Calabrese and Bernadette McPherson did not respond to requests for comment. Freeholder David Ganz, a Democrat who voted to appoint O’Malley, described the indictment as “obviously serious charges.” “If you looked at his résumé, you would not have hesitated to vote for him in the capacity in which he was to serve,” Ganz said. Ex-financing chief for Bergen County pleads guilty in mortgage fraud Tuesday, August 23, 2011 Last updated: Tuesday August 23, 2011, 6:31 PM BY MICHAEL GARTLAND STAFF WRITER The Record Ronald J. O’Malley, the former chairman of Bergen County’s financing arm, pleaded guilty in Newark federal court Tuesday to one count of conspiracy to commit wire fraud contained in a 68-count indictment filed a year ago.
O’Malley, 48, who led the Bergen County Improvement Authority and was CEO of a private mortgage brokerage firm, was indicted for using his position at the authority to falsify employment records so he could secure loans for his firm’s clients. His firm, the Ridgewood-based Residential Mortgage Corp., collected clients’ fees based on the loans, according to the 68-count indictment. The admissions Ronald J. O’Malley responded yes in court Tuesday to each of the following questions:
O’Malley declined to comment after entering his plea and referred questions to one of the three attorneys who accompanied him in court Tuesday. That attorney, Justin Walder, provided a written statement. “Ronald O’Malley accepts full responsibility for his wrongful conduct,” Walder said. “Counts two through 68 of the charges shall be dismissed at the time of sentencing.” Count One of the indictment — the one to which O’Malley pleaded guilty — states that he used “wire communications in interstate commerce for the purpose of executing a scheme and artifice to defraud the lenders and to obtain money from the lenders by means of materially false and fraudulent pretenses, representations, and promises.” Laura-Jean Arvelo, a former Residential Mortgage employee, also pleaded guilty Tuesday in connection with the mortgage fraud scheme. Arvelo, 52, of River Vale, and O’Malley admitted to conspiring with each other to commit wire fraud. They also admitted to conspiring with Residential Mortgage co-owner Edward Olimpio and two other Residential Mortgage employees, Daniel Gilmore and Rachell Fischbein. The FBI investigation that led to the charges against O’Malley began with inquiries into mortgage loans that his firm handled for politically connected lawyer Dennis Oury, court records show. Oury served as the attorney for the improvement authority and for the Bergen County Democratic Organization, as well as for municipal boards in Bergenfield, Edgewater, Fairview, Fort Lee, Garfield, New Milford, Paramus and Ridgefield. He pleaded guilty in September 2009 to unrelated charges of conspiracy to commit mail fraud and failing to file a tax return for 2006. Oury has not yet been sentenced. Assistant U.S. Attorney Rachael Honig asked O’Malley a series of 18 questions in court Tuesday before U.S. District Court Judge Dennis Cavanaugh. O’Malley responded in the affirmative to each one, establishing his guilt before the court. “Did you sign false and fraudulent verification of employment forms for these borrowers that falsely verified that these borrowers were employed by and receiving substantial amounts of income from the BCIA?” Honig asked. “Yes,” O’Malley replied. “Did staff at the BCIA’s offices in Hackensack … respond to telephone calls from lenders seeking to verify these borrowers’ employment by falsely stating that the borrowers were employed by the BCIA?” she asked. “Yes,” he responded. O’Malley was not required to enter a plea when he made his first court appearance last September, but at the time, Walder maintained his client’s innocence. “Ron O’Malley never violated the public's trust,” Walder said in a written statement at the time. “All of the loans handled by Mr. O’Malley were for credit-worthy individuals. Each of the lenders conducted their own, independent underwriting and due diligence prior to approving the loans.” O’Malley’s statements in court Tuesday and court records tell a different story, though. In a sealed affidavit, written in support of a June 2009 search of O’Malley’s Ridgewood office, FBI agent Theresa M. Reilly said that Residential Mortgage arranged four loans to finance the purchase of two condominiums Oury bought in 2007. The first was a one-bedroom unit in Chicago’s Lakeview neighborhood, near Wrigley Field, which Oury bought for $227,900 for his daughter, a law school student at the time. The application submitted to American Partners Bank stated Oury had assets of $1.1 million in an account at Signature Bank, but statements verifying that balance showed that Oury's name and Edgewater address were apparently rendered in a different font than the rest of the text, Reilly said. Signature Bank confirmed that the account number listed on the loan applications did not exist, and that Oury did not have an account with the bank, Reilly said. The account number on the bank statements submitted with the application, however, contained an extra digit, and that account belonged to O’Malley. Reilly surmised that the bank account numbers on the loan applications were altered to omit the final digit, and that O’Malley's name and address were replaced on the statements with Oury’s “in order to fraudulently deceive American Partners into believing the assets in the account belonged to Oury.”
A similar switch occurred months later, when Oury bought a condo in
Fairview for $499,000 with
financing from a different lender, JPMorgan Chase Bank, Reilly wrote. The conspiracy count in his case carries a maximum prison term of 20 years and a $250,000 fine. Mortgage probe began with loans to public officialWednesday, July 27, 2011 Last updated: Wednesday July 27, 2011, 11:22 AM BY PETER J. SAMPSON STAFF WRITER The Record An FBI investigation that led to a 68-count fraud indictment last year against Ronald J. O'Malley began with an inquiry into mortgage loans his firm brokered for the politically connected lawyer Dennis J. Oury, recently filed court documents show. O'Malley, 47, of Upper Saddle River, was the chairman of the Bergen County Improvement Authority, the county's public financing arm, when he was indicted last August in an alleged scheme to use his public post to boost his private brokerage business. The back story
In a sealed affidavit, written in support of a June 2009 search of O'Malley's Ridgewood office, FBI agent Theresa M. Reilly laid out the case she was building against O'Malley, Oury and others in an alleged conspiracy to submit false loan applications and supporting documents to financial institutions. In several cases, O'Malley's company, Residential Mortgage Corp., created "bogus documentation" that inflated the assets reported by borrowers simply by pasting their names and addresses onto O'Malley's personal bank account statements or altering pages of his bank passbooks, Reilly wrote. The affidavit, which is still officially under seal, came to light last month when O'Malley's lawyers attached it to a motion to suppress evidence, including the contents of 11 computers and 435 mortgage files, that they claim was illegally seized. Reilly said Residential Mortgage arranged four loans to finance the purchase of two condominiums Oury bought in 2007, when Oury was counsel to the BCIA and the Bergen County Democratic Organization, and the attorney for municipal boards in Bergenfield, Edgewater, Fairview, Fort Lee, Garfield, New Milford, Paramus and Ridgefield. The first was a one-bedroom unit in Chicago's Lakeview neighborhood, near Wrigley Field, which Oury bought for $227,900 for his daughter, a law school student at the time. The application submitted to American Partners Bank stated Oury had assets of $1.1 million in an account at Signature Bank, but statements verifying that balance showed that Oury's name and Edgewater address were apparently rendered in a different font than the rest of the text, Reilly said. Signature Bank confirmed that the account number listed on the loan applications did not exist, and that Oury did not have an account with the bank, Reilly said. The account number on the bank statements submitted with the application, however, contained an extra digit, and that account belonged to O'Malley. Reilly surmised that the bank account numbers on the loan applications were altered to omit the final digit, and that O'Malley's name and address were replaced on the statements with Oury's "in order to fraudulently deceive American Partners into believing the assets in the account belonged to Oury." A similar switch occurred months later, when Oury bought a condo in Fairview for $499,000 with financing from a different lender, JPMorgan Chase Bank, Reilly wrote. As in the earlier case, she wrote, O'Malley brokered two loans - a mortgage and a home equity line of credit. Oury's only listed asset, a Signature Bank checking account, showed a $137,788 balance on statements in which Oury's name and address, again, did not match the font of the rest of the document, Reilly said. Reilly said O'Malley's bank statements had been altered to omit the two final digits of his account number and that Oury's name and address were substituted for O'Malley's to dupe the lender into approving the loans. Oury's lawyer, Gerald Krovatin, said he did nothing wrong. "Mr. Oury provided truthful and accurate information as part of the loan application process," Krovatin said. "And based on the government's further investigation, I don't think Agent Reilly would come to the same conclusions now as she did in June of 2009 about Dennis Oury's relationship to Ron O'Malley." Oury, who could testify against O'Malley, was not the only person the FBI suspected of conspiring with O'Malley to submit bogus loan applications, Reilly said in the 35-page affidavit, which detailed four other cases. When some lenders became suspicious of his paperwork, O'Malley lied to cover up the scheme, authorities alleged. In one instance, according to the affidavit, he claimed his briefcase, with his passbook inside, had been stolen from his car but was later recovered. Another time, the document said, he blamed a fired employee for altered asset statements in 11 cases. One of O'Malley's attorneys, Brian Neary, did not respond to a request for comment. None of the borrowers has been charged. O'Malley is also accused of using his BCIA post to create phony pay stubs, W-2 forms and other documents to deceive banks into approving loans for some of his clients. During the search of O'Malley's office, FBI agents found that much of the fraud evidence had been preserved, Assistant U.S. Attorney Rachel Honig, deputy chief of the criminal division, said in a legal brief. "The executing agents discovered hundreds of loan files containing documents that had been cut out or taped over, whited out, or otherwise obviously altered, with the original document, the document bearing a taped-on scrap of paper, and the resulting forgery all left in the file together," Honig wrote. "They found dozens of files with phony BCIA and other employment documents, often with the borrower's real Forms W-2 and pay stubs preserved in the file as well," she said. "They found incriminating notes on certain files, such as the notation that 'Ron' - the defendant - would 'cover the call,' in reference to an expected call from a lender to the BCIA to confirm employment." "They also found document after document that the defendant personally, in his own handwriting and in signature red ink, had marked up to insert fraudulent information and material misstatements," she said.
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