An attorney formerly licensed in New Jersey was arrested this morning
in connection with a long-running, large-scale mortgage fraud scheme
that caused losses of more than $30 million, U.S. Attorney Paul J.
Fishman announced.
Michael Rumore, 54, of Lyndhurst, New Jersey, is charged by complaint
with conspiracy to commit bank fraud and with money laundering. Rumore
and seven other co-conspirators were charged by complaint in September
2012. He made his initial appearance and had a bail hearing this
afternoon before U.S. Magistrate Judge Patty Shwartz in Newark.
According to the complaint:
From September 2006 to May 2008, the Rumore and the other defendants
engaged in a long-running, large-scale mortgage fraud conspiracy through
a mortgage company called Premier Mortgage Services (PMS). The
conspirators targeted properties in low-income areas of New Jersey (the
“subject properties”). After recruiting “straw buyers,” the defendants
used a variety of fraudulent documents to make it appear as though the
straw buyers possessed far more assets and earned far more income than
they actually did. The defendants then submitted these fraudulent
documents as part of mortgage loan applications to financial
institutions.
Relying on these fraudulent documents, financial institutions
provided mortgage loans for the subject properties. The defendants then
split the proceeds from the mortgages among themselves and others by
using fraudulent settlement statements (HUD-1s), which hid the true
sources and destinations of the mortgage funds provided by financial
institutions. Once the money was entered into accounts they controlled,
the defendants shuttled funds among various other accounts, in amounts
greater than $10,000 per transaction. In reality, as opposed to the
defendants’ false representations and fraudulent documents, the straw
buyers had no means of paying the mortgages on the subject properties,
and many of the subject properties entered into foreclosure proceedings.
In total, the conspirators and others defrauded financial institutions
out of more than $30 million.
Rumore, an attorney licensed in the state of New Jersey, served as
the settlement agent on mortgage loans brokered by other
conspirators—Isaac DePaula, Adilson Silva, and Lester Soto—for various
Subject Properties. Rumore used his status as an attorney to further the
fraudulent scheme, including by convening closings, receiving funds
from lenders, and preparing HUD-1s that purported to reflect the sources
and destinations of funds for mortgages on subject properties, when, in
fact, the HUD-1s were neither true nor accurate. At or following the
closings, Rumore disbursed mortgage loan proceeds directly to PMS, Soto,
DePaula, and Silva, including amounts not reflected on the HUD-1s.
Rumore received a fee for each fraudulent loan in which he participated.
The criminal complaint charges Rumore with one count of bank fraud
conspiracy. If convicted, he faces a maximum potential penalty of 30
years in prison and a fine of $1,000,000.
U.S. Attorney Fishman credited special agents of the FBI, under the
direction of Special Agent in Charge David Velazquez; and special agents
of the IRS, under the direction of Acting Special Agent in Charge
Shantelle P. Kitchen, for the investigation leading to today’s
complaint. Fishman also thanked the Social Security Administration,
under the direction of Special Agent in Charge Edward Ryan, for its role
in the investigation.
The government is represented by Assistant U.S. Attorneys Rahul
Agarwal of the U.S. Attorney’s Office General Crimes Unit and Zach
Intrater of the Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack nObama’s
Financial Fraud Enforcement Task Force. President Obama established the
interagency Financial Fraud Enforcement Task Force to wage an
aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes representatives from
a broad range of federal agencies, regulatory authorities, inspectors
general, and state and local law enforcement who, working together,
bring to bear a powerful array of criminal and civil enforcement
resources. The task force is working to improve efforts across the
federal executive branch and, with state and local partners, to
investigate and prosecute significant financial crimes, ensure just and
effective punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
The charge and allegations contained in the complaint against each
defendant are merely accusations, and the defendants are considered
innocent unless and until proven guilty.
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