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Feds arrest ex-Lyndhurst lawyer in $30 million mortgage fraud

Photo Credit: Cliffview Pilot File Photo

YOU READ IT HERE FIRST: Paroled this past September after three years in state prison, disbarred attorney Michael Rumore of Lyndhurst was arrested on fraud charges again today — only this time by federal authorities.

While the self-professed gambling addict was serving his sentence, federal agents were building onto a case first brought by their state counterparts involving a large-scale mortgage fraud scheme that U.S. Attorney Paul J. Fishman said caused losses of more than $30 million.

Rumore, 54, was first charged, along with six co-defendants, while awaiting his release.

The large defendant — at 6-foot-4 and more than 300 pounds — had an initial appearance and a bail hearing this afternoon in federal court in Newark.

Federal authorities said those involved operated the scam from September 2006 to May 2008 through a Woodbridge-based company they called Premier Mortgage Services.

After targeting properties in poor neighborhoods in Belleville, Nutley, Irvington and Linden, they recruited straw buyers and ginned up supporting documents for mortgage applications for them that made it appear they could afford far more than they did.

Rumore and his cohorts then spolit the proceeds by using fraudulent settlement statements known as “HUD-1s,” Fishman said, “which hid the true sources and destinations” of the bank funds that covered the mortgages.

“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,” Fishman said.

In turn, many of the properties went into foreclosure, he said.

Rumore, who was licensed in New Jersey and once who practiced law out of his home basement office, “served as the settlement agent” on mortgage loans brokered by other co-conspirators, Fishman said.

“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.”

He collected a fee for each, Fishman said.

A co-defendant, mortgage broker Klary “Patty” Arcentales, was arrested at her Lyndhurst home in September.

Rumore was still in state prison at the time, awaiting release later than month, after serving 20 percent of a 15-year sentence for swiping more than $4 million entrusted to him for real estate closings — which he admitted gambling away in Atlantic City.

Rumore said he favored high-stakes slots, sometimes losing $400 a pull.

Sometimes, he said, he’d go 72 hours without sleep, falling deeper into the hole.

Fishman credited special agents with the FBI and IRS, while thanking the the Social Security Administration for its role in the investigation. 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 are prosecuting the case.

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