On Wednesday, a 48-year-old Naugatuck man pleaded guilty in federal court to conspiracy to commit wire fraud and conspiracy to commit money laundering.

The charges stem from his participation in a mortgage fraud scheme spanning a decade and costing lenders $7 million. Sentencing is yet to occur, but the man faces up to 40 years in prison.

Two New York residents were also reportedly involved in the scheme, which ran from 2001 to August of 2011. Both of them have pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering.

According to sources, the scam involved loan applications that contained false information concerning the purchasers' finances and property ownership, as well as false documents, including letters from non-existent employers, earnings statements and bank records.

The three men allegedly recruited "straw buyers" to purchase the properties without intent to live in them. The proceeds from the mortgages then went into a bank account for a real estate company run by the men. The money, from there, was transferred to each of the accused and to other individuals. Some of that money was reinvested into the fraud scheme, according to prosecutors.

Sources said that over $7 million of losses resulted from the fact that the homes were never occupied as primary residences.

The men reportedly used the fraudulent mortgage documents to purchase over 40 multifamily properties in the Bridgeport area. Federal authorities are still seeking the forfeiture of 20 properties in Bridgeport and $26,372 seized from the real estate company's bank account.

Mortgage fraud is, no doubt, a serious charge which can seriously affect the future of the accused. A good deal of investigation goes into these types of cases, and prosecutors have some pretty specific strategies at the ready to achieve a conviction. Those accused of this crime do well to consult an attorney to determine how to offer their best defense.

Source: Hartford Courant, "Conn. man pleads guilty to mortgage fraud scheme," January 19, 2012.