Michael Rumore, 55, was joined in federal court in Newark by a tax preparer, Kenneth Jones, 64, of Elizabeth, who also admitted his part in the fraud.
Both pleaded guilty before U.S. District Judge Esther Salas to informations charging them with conspiracy to commit bank fraud, said U.S. Attorney Paul Fishman. Jones also pleaded guilty to aiding and abetting the filing of false and fraudulent tax returns.
According to could documents and statements made in court, from 2006 to 2010, Rumore, Jones and numerous others engaged in two related
mortgage fraud conspiracies through a company called Premier Mortgage Services (PMS).
conspirators targeted properties in low-income areas of New Jersey, and after recruiting so-called "straw
buyers," they used a variety of fraudulent documents, some of them created by Jones, to make it
appear as though the straw buyers possessed far more assets and earned far more income than
they actually did.
The conspirators, Fishman said, then submitted the fraudulent documents as part of mortgage loan
applications to financial institutions. Relying on these fraudulent documents, financial
institutions provided mortgage loans for the properties in question. The conspirators then split the
proceeds from the mortgages among themselves at closing time, including at closings presided
over by Rumore.
The closings, the government charged, went forward through the use of fraudulent settlement statements known as HUD-1s, which hid the true sources and destinations of the mortgage funds provided by
The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings. The conspirators defrauded financial institutions out of more than $30 million.
Rumore, the Toms River man, 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, Fishman said.
Rumore also disbursed mortgage loan proceeds directly to PMS and other conspirators, including amounts not reflected on the HUD- 1s. He received a fee for each fraudulent loan in which he participated.
The bank fraud conspiracy count to which Rumore and Jones pleaded guilty is punishable
by a maximum 30 year term in prison and a fine of $1 million, Fishman said.
The aiding and
abetting false tax returns to which Jones pleaded guilty is punishable by a maximum potential
penalty of three years in prison and a $250,000 fine.
The government was represented by Assistant U.S. Attorneys Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division and Zach Intrater of the Criminal Division.
Fishman credited special agents of the FBI, under the direction of Special
Agent in Charge Aaron T. Ford, and special agents of IRS-Criminal Investigation, under the
direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to Monday’s guilty plea.
Sentencing is scheduled for March 31, 2014