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Former County Financing Head Pleads Guilty to Mortgage Fraud Charge

Ronald J. O'Malley could face up to 20 years in prison for using his Ridgewood mortgage business to defraud lenders

The former head of the Bergen County Improvement Agency (BCIA) pleaded guilty Tuesday to his , according to statements issued by the U.S. Attorney's Office.

Ronald J. O'Malley, 48 of Upper Saddle River, pleaded guilty to one count of conspiring to commit wire fraud in U.S. District Court Tuesday morning.

O'Malley used his position as chairman and commisioner of the BCIA to falsify employment records with his Ridgewood-based Residential Mortgage, according to the  in August of 2010.

According to prosecutors, O'Malley and co-conspirators Edward Olimpio, the co-owner of Residential Mortgage Corporation; secretary Rachel Fischbein; employees Daniel Gilmore Laura-Jean Arvelo and others; falsely claimed that borrowers were employed by the county's financing agency and were receiving salaries.

W-2 paystubs, Verification of Deposit (VOD) forms and other documents were submitted to the lenders under the pretense they were legitimate, when, according to the indictment, many of the accounts were created by O'Malley and his co-conspirators. Lease agreements were signed, claiming the borrowers had inflated incomes from properties they had rented, prosecutors said, and O'Malley and others at Residential Mortgage Corp. collected fees from the agreements.

When lenders found inconsistencies with applications, O'Malley and his staff would, according to the indictment, provide more false documents that various applicants were government employees with some of "those weird pay stubs," which attempted to explain away the confusion.

The U.S. Attorneys did not pursue the 67 other charges, according to a press release issued by the U.S. Attorney's Office.

According to the release, based on the indictment and court admissions, the scope of the mortgage fraud scheme was not limited to false claims of employment at the BCIA.

"O’Malley and his co-conspirators also made false representations regarding borrowers’ employment at places other than the BCIA, and created similar false documentation in support of such claims," the statement read. "The co-conspirators also created false asset information for borrowers, including by taking O’Malley’s own bank and brokerage account statements and 'cut-and-pasting' a borrower’s name and address over his own," among other charges.

U.S. Attorneys last year alleged the scheme, which lasted from 2006 to 2009, netted at least $200,000 from eight bank lenders.

The former agency head was recently appointed to the lead the joint planning board of Upper Saddle River and Saddle River before stepping down in the face of public pressure due to the indictment. Ridgewood Village Manager Ken Gabbert defended the appointment, telling media he was the best man for the job.

O'Malley is scheduled to be sentenced December 12 and could face up to 20 years in prison on the one count. Arvelo also pleaded guilty to charges on Tuesday. Olimpio, Fischbein and Gilmore  in the conspiracy.

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