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by CareyBot

A federal grand jury has indicted two Northern California residents, charging them with a mortgage fraud scheme involving the sales of 10 Stockton-area homes at inflated prices.

Iftikhar Ahmad, 36, is accused of hiring straw buyers to defraud Long Beach Mortgage of more than $1.5 million in loan proceeds. A Sacramento woman, Manpreet Singh, 24, was allegedly paid $22,300 to act as a straw buyer in two of the transactions, prosecutors said.

The indictment charges Ahmad, through a company called I & R Investment Properties LLC, fraudulently sold 10 homes between July 2003 and January 2005.

Each transaction involved loan applications with false information about the buyer, such as their employment and monthly income. Some applications included false identifying information and counterfeit documents, and Ahmed allegedly provided down payments in some of the transactions, prosecutors said.

Both defendants are charged with multiple counts of mail fraud, and Ahmed also faces multiple money laundering charges, the U.S. attorney for the Eastern District of California said in a press release.

The maximum penalty for mail fraud that affects a financial institution is 30 years in prison and a fine of up to $250,000. Money laundering carries penalties of up to 20 years in prison and a fine of up to $500,000, prosecutors said.

Ahmad and Singh were previously arrested on a criminal complaint filed in connection with the investigation and released on bond. The charges are allegations, and the defendants are presumed innocent unless proven guilty.

Stockton had the highest rate of foreclosures among the nation’s 100 biggest metro areas during the first half of 2007, with one foreclosure filing for every 27 households, according to RealtyTrac.