An attorney formerly licensed in New Jersey was arrested in connection with a long-running, large-scale mortgage fraud scheme which caused losses of more than $30 million, U.S. Attorney Paul Fishman announced.
Michael Rumore, 54, of Lyndhurst, N.J., 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, 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. 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, 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 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.
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 Kitchen for the investigation leading to the 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.