Two Tucson men committed mortgage fraud by taking out overvalued loans with the help of fake buyers, according to a federal indictment unsealed Thursday. The two men, Chris Nero and Roy Fife, are accused of inflating the value of at least 17 homes in the Tucson area.
The indictment, handed up in U.S. District Court for Arizona, is part of a larger takedown of alleged mortgage-fraud schemes involving 36 Arizona defendants.
That investigation, known as Operation Cash Back, was part of a nationwide effort that has resulted in indictments of more than 400 people, including two former Bear Stearns employees, the Justice Department said.
"Over the last few years, with the fluctuation in Arizona's real estate market, too many individuals associated with this industry have exploited this market for their own personal gain," John E. Lewis, FBI special agent in charge in Phoenix, said in a written statement.
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"Innocent homeowners and businesses all across Arizona are paying a steep price for the selfish and illegal acts of others who attempt to capitalize on this market."
Nero and Fife were indicted on 48 counts, including wire fraud, conspiracy and money laundering.
Each count of wire fraud alone carries up to 30 years in prison and a $1 million fine.
The indictment gave an over-view of the alleged conspiracy:
● Nero and Fife would make arrangements to buy homes in excess of the seller's asking price through the use of "straw buyers."
● The co-defendants obtained loans on behalf of the straw buyers by submitting documents containing false representations.
● They shared in the proceeds from the amount of each fraudulently obtained loan in excess of the seller's asking price.
Attorney A. Bates Butler III, who appeared with Fife at his initial appearance this week, said he noticed "factual inaccuracies" in the indictment, but would not elaborate.
Butler said in an interview Thursday that he could not represent Fife because the indictment's criminal-forfeiture clause ties up Fife's assets, making the defendant unable to pay for an attorney.
Nero's attorney, Jerry Laney, declined to comment when reached at his office late Thursday.
The co-defendants have been sued in the past by mortgage and property companies, Pima County Superior Court records show. Arizona Department of Real Estate records show that Fife was a licensed real estate agent between March 1996 and January 2008.
The indictment lists homes in the Tucson area for which the co-defendants' loans were allegedly overvalued, in which the two recruited "straw buyers" and paid them $99,000 in one example.
Authorities could not say by how much all the loans were overvalued, but the government said it will seek a judgment of $4 million, as well as all interest and proceeds.
From March 1 to June 18, Operation Cash Back in Arizona resulted in six mortgage-fraud cases, in which the 36 defendants were charged, the U.S. Attorney's Office in Phoenix said.
In the past two days, 30 arrests were made in the Phoenix and Tucson areas.
Several local, state and federal authorities were involved in the investigation, including the FBI, the IRS, the U.S. Department of Housing and Urban Development, the Arizona Department of Financial Institutions and the U.S. Marshals Service.
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