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Former BCIA Chairman O’Malley indicted in mortgage fraud scheme
Ronald O’Malley, the former chairman of Bergen County’s public financing wing and the CEO of a New Jersey 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 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.
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