The former head of the Bergen County Improvement Agency (BCIA) pleaded guilty Tuesday to his role in defrauding banks in a vast mortgage scheme, according to 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 commissioner of the BCIA to falsify employment records with his Ridgewood-based Residential Mortgage, according to the 68-count indictment filed by federal prosecutors 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, O’Malley and his co-conspirators created many of the accounts. 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.
Federal prosecutors 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.
Prosecutors last year alleged the scheme, which lasted from 2006 to 2009, netted at least $200,000 from eight bank lenders.
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 previously admitted guilt in the conspiracy.