SACRAMENTO -- Federal prosecutors announced Monday that 19 people have been indicted in a massive mortgage fraud case that preyed on people close to foreclosure and stripped homeowners in two dozen states of millions of dollars in equity.
McGregor Scott, U.S. attorney for the Eastern District of California, unsealed the contents of two indictments Monday that detail a conspiracy to strip 115 people of $12.6 million in equity and their homes in cases that stretch from California to New York.
A search warrant issued in connection with the case and obtained last month included the addresses of two homes in Modesto, one in Oakdale and one in Turlock.
It was not clear Monday whether the victims included any of the current or former residents of those homes, and those victims could not be reached for comment.
However, a map showing where victims lived was released by the U.S. attorney's office in conjunction with the announcement of the indictments and suggests that at least two victims were in the Northern San Joaquin Valley.
Two indictments -- both naming Charles Head, 33, of La Habra as the ringleader -- allege a total of 18 counts of money laundering, mail fraud and conspiracy.
Scott said Head faces at least 20 years in prison if convicted. The other 18 defendants face 12 to 15 years, he said.
The case came to an FBI agent's attention when a victim from North Highlands, northeast of Sacramento, reached an FBI economic crimes agent who was taking calls from the complaint line.
"(The agent) called Head, and, based on that call, the agent believed there was something to this," Assistant U.S. Attorney Ellen Endrizzi said.
Scott detailed how the scheme worked, starting in January 2004 and ending in November 2006, when investigators completed search warrants and froze the companies' activities.
The defendants reached out to people on the brink of foreclosure, offering them the chance to keep their homes and pay rent for them while repairing their credit, investigators said.
Those who agreed were presented with a hefty pile of paperwork that included blank spaces that were filled in later, giving a "straw buyer" title to their homes.
The homeowners paid rent to one of Head's property management firms, prosecutors said. The straw buyers paid the mortgage.
Then, Head and the co-conspirators refinanced the homes -- often with inflated appraisals -- and pocketed tens of thousands of dollars in equity, prosecutors said.
After about a year, the victims "were left without homes, equity or repaired credit," the indictment says.
Kevin Carlin, a New Jersey attorney who has spoken with about 70 victims of the fraud Head is charged with, said one of Head's ex-employees testified in a deposition that Head took an office full of workers to Hawaii.
Endrizzi said agents seized Head's Mercedes convertible, $385,000 in cash, 50,000 shares of stock and motorcycles. She said Head faces about 30 civil lawsuits from Hawaii to New Jersey.
Head was arrested Friday in Orange County and is being held in Santa Ana. He will be brought to Sacramento this week, Scott said.
Modesto Bee staff writer Ben van der Meer contributed to this report.