Ronald O'Malley, co-owner of Residential Mortgage Corporation in Ridgewood, resigned his post as Bergen County Improvement Authority commissioner in July after his partner at the mortgage firm pleaded guilty to fraud charges and implicated O'Malley in court. O'Malley now finds himself indicted in the same scheme.
He's facing one count of conspiring to commit wire fraud, 25 counts of wire fraud, 21 counts of loan-application fraud and 21 counts of bank fraud in the indictment, filed in New Jersey District Court in Newark.
According to a statement issued by the U.S. Attorney's Office, one count of conspiring to commit wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The individual wire fraud counts each carry a maximum potential penalty of 20 years in prison and a $250,000 fine; the bank and loan application fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine.
The indictment alleges that O'Malley, a resident of Upper Saddle River, used his position as the chair of the independent Bergen County Improvement Agency to falsify employment records and loan applications to secure loans for clients the firm claimed were employed by the BCIA. O'Malley's firm would then receive fees from the clients' approved loans.
BCIA Vice Chair Philip Wilson responded to the indictment, issuing a statement that said their "thoughts are with him [O'Malley] and his family during this difficult time." Wilson also stated that the circumstances surrounding Mr. O'Malley involve his private mortgage business, and that the BCIA has and continues to cooperate fully with the investigation carried out by the U.S. Attorney's office.
"People are innocent until proven guilty, and although these allegations are
serious they reflect actions of private citizens," the Vice Chairman said in a statement released by a consulting firm, Catania Consulting on Wednesday.
"These alleged individual actions should NOT taint the good work of my colleagues and I who are committed to funding and development of projects that make Bergen County a better place to live, work and play."
Bergen County Executive Dennis McNerney had decidedly harsher words regarding the alleged fraud counts, writing yesterday that he is "outraged to hear about these allegations."
The County Executive said that "it is clear no public monies were misappropriated," but stated, "However, if the allegations of coercing Bergen County Improvement Authority employees to validate the actions alleged in the indictment prove true, I am extremely disappointed and angry."
Eight lenders were alleged to have been defrauded in the schemes, according to the indictment, and O'Malley is alleged to have committed the 68 crimes, along with others, from a three year period in 2006-2009.
In one case, O'Malley claimed a borrower (Borrower 15) was employed by the BCIA as the Admin of County Equestrian, and had a monthly salary of $12,950. The U.S. Attorneys claim the individual was not in fact an employee of the BCIA, nor did they make that figure. The indictment claims O'Malley and others forged more documents to receive a higher loan payment
In another count, a borrower and spouse sought to obtain a mortgage for a house they purchased in Caldwell, NJ in 2008. O'Malley and his staff (one of whom was indicted with him, his executive secretary, Laura-Jean Arvello; Arvello faces 24 charges) prepared and submitted a false loan application, one claiming that the applicant had $45,000 in assets from the "Bergen County Federal Bank" and also had a monthly income of $2,000 on a condominium they owned.
Of course, the account balance was actually around $1,200 and there was no condominium, prosecutors say. According to the prosecutors, the applicants' signatures were copy-and-pasted and they were approved for a $417,000 mortgage loan. Residential Mortgage received a $5,669 service fee for their "service".
Additionally, another count claims O'Malley used a joint bank account number he shared with his mother on a client's mortgage form to commit fraud, which was approved and netted the firm $2,500.
When lenders found inconsistencies with applications, O'Malley and his staff would, according to the charges, provide more false documents that various applicants were government employees with some of "those weird pay stubs," which explained the confusion, and according to the former BCIA chairman, had significant income in order to obtain higher mortgage loans. The U.S. Attorney's Office alleges none of this was true.
McNerney also requested that the U.S. Attorney's office immediately release the identity of 'Individual 1' from the indictment, so that individual could be removed from the agency. "Protecting the public's trust is paramount and I will use every measure at my disposal to do so," he said.
Individual 1, according to the indictment, held a management position at the BCIA and oversaw the BCIA's daily activities and supervised its staff. 'Individual 1' has not been identified nor charged, though the unknown individual is involved with the conspiracy to commit wire fraud, the first count of the indictment.
All in all, according to the statement issued by the U.S. Attorney's Office, Residential Mortgage made some fairly large private monies from their schemes–at least $200,000, maybe more.
Bergen County Executive Dennis McNerney appointed a former Superior Court judge to review the Bergen County Improvement Authority a day after O'Malley resigned as commissioner. "While the review is ongoing, let me repeat 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," he wrote in Tuesday's press release.
Still, Bob Yudin, the chairman of the Bergen County Republican Organization, says the issue of corruption and political misdoing on the part of Democrats is "systemic," and said he called for a criminal investigation to be performed, and was dismayed that one was not called for by the County Executive, whom he claims has avoided the issue.
"Mr. O'Malley, based on the statements his partners made in front of a federal judge, clearly was doing something very wrong," Yudin said to Patch in an interview Wednesday morning.
"What we have here is a situation where the County Executive has turned his head to obvious criminal activity to Mr. O'Malley and the BCIA."
"What did Mr. McNerney actually know about it [the allegations of wrongdoing]?" Yudin asked.
He continued: "What did the Freeholders know about it? Did they know this was going on and just turn their heads and look the other way? That would be malfeasance."
Yudin called for for the BCIA to be shut down temporarily and said he couldn't believe that this was going on for years and McNereny and Democratic operatives didn't know about it.
"It speaks volumes for the corruption that has been so rampant in Bergen County under the Democrats over the last eight years."
Dennis McNerney's office did not respond to Yudin's remarks by press time (6:00 p.m. on Wednesday).
Calls to O'Malley's attorneys were not returned. Calls to Residential Mortgage Corporation were made and received by a private answering service that had been contracted by Residential Mortgage. Mr. O'Malley could not be reached for comment, nor could anyone at the embroiled mortgage business.
Correction: The Bergen County Equestrian Center is a working agency, unlike what was originally reported; Borrower 4 never worked for the agency.