A federal judge sentenced a North Carolina home builder to 27 months in prison last week, saying the man’s role in a $3.7 million mortgage fraud scheme had had “dramatic and far-reaching consequences,” the Charlotte, N.C. Observer reported.

Greg Smith, a Lake Norman, N.C., home builder, had pleaded guilty to three counts of mortgage fraud in September 2004, media reports said. Smith built homes for several subdivisions in Cornelius, N.C., and residents of those subdivisions told the Observer in fall 2003 that suspicious sales, too many absentee owners and a rash of foreclosures had dramatically reduced property values.

U.S. District Judge Graham Mullen said jail was “necessary to reflect the seriousness of the offense,” according to the Observer.

A federal investigation showed that Smith, along with more than a dozen real estate professionals, conspired to inflate the selling prices of homes, media reports said. The government said Smith participated in 78 deals that cost lenders $3.7 million, according to reports.

During the sentencing hearing, Smith’s attorney, James Wyatt, asked for leniency, reports said. Wyatt reportedly said Smith, a married father of two sons ages 10 and 2, played a minor part in the operation.

But Mullen said the mortgage fraud operation “wouldn’t work without (Smith),” reports said.

At least 11 people, including Smith, have pleaded guilty to mortgage fraud stemming from a two-year investigation, reports said. Smith was the first to be sentenced, according to reports.

After the hearing, Assistant U.S. Attorney Josh Howard said more indictments would come, thanks in part to Smith’s cooperation, reports said.

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