Former high-flying Modesto mortgage broker Tony Daniloo pleaded not guilty Friday in federal court in San Francisco to 122 counts of fraud and money laundering.

Daniloo, 32, was indicted Thursday by a criminal grand jury and faces a maximum penalty of 20 years in prison and $250,000 fine for each count, if convicted.

Authorities say he forged papers to qualify people with poor credit for loans, then diverted the money to buy luxury cars and expensive jewelry while some clients lost their homes. Prosecutors claim he swindled about $7 million from clients in and around Modesto and the East Bay, though the fed-eral indictment reflects transactions of $5.1 million.

Daniloo's company, DreamLife Financial, went out of business days before his arrest at his Turlock home in December 2004 on separate state charges.

He remains in federal custody in Oakland awaiting a trial-setting hearing scheduled for Sept. 19 in U.S. District Court in San Francisco.