A mortgage company owned by a New York country legislator and a former Syracuse city auditor is among the alleged victims of a mortgage fraud conspiracy that involved a lawyer, a mortgage broker, a real estate appraiser, and a Realtor working together to defraud lenders out of more than $4 million.

According to the U.S. Attorney’s Office for the Western District of New York, a federal grand jury handed down a 24-count indictment charging Gregory Gibbons, a mortgage broker; Julio Rodriguez, a real estate appraiser; Laurence Savedoff, a lawyer; and Tina Brown, a Realtor, with conspiracy to commit wire and mail fraud affecting financial institutions, wire and mail fraud affecting financial institutions, and bank fraud.

The group, all of New York City, is accused of perpetrating a scheme where they allegedly inflated the true income, asset and employment information of borrowers in an effort to obtain mortgages on behalf of those borrowers.

According to the U.S. Attorney, to secure a loan, the group would allegedly submit, falsified employment documents that included, in some cases, phony income, assets, and places of employment.

That faulty information was submitted to lenders for approval, as well as to the Federal Housing Administration for insurance.

Additionally, the group allegedly submitted false settlement statements to the banks indicating where the proceeds of the loan were disbursed.

As a result, based on the fraudulent information and certifications submitted, loans amounting to more than $4,100,000 were approved for the borrowers.

Subsequently, the borrowers defaulted on the loans and the relevant properties are now in various stages of foreclosure.

Among the lenders that are among the alleged victims of this scheme is The Funding Source, a mortgage company owned by Onondaga County Legislature Chairman Ryan McMahon and Phil LaTessa, who is the city of Syracuse's former auditor.

Those details come courtesy of Syracuse.com, which reports that The Funding Source actually provided the mortgages on seven of the eight homes in question.

From Syracuse.com:

The Funding Source funded the mortgages then sold them to other banks for a fee. If the homeowner defaulted within a year, The Funding Source had to make that bank whole.

That happened with at least one of the mortgages The Funding Source funded, Nugent said. The company lost "hundreds of thousands" of dollars to the fraud scheme, he said.

The government's Federal Housing Administration was also a victim of the fraud scheme, the indictment said. FHA provided insurance to lenders against losses when homeowners default on their mortgages. FHA relied on The Funding Source to determine the veracity of the loan applications, the indictment said.

According to Syracuse.com, federal agents searched the offices of The Funding Source two years ago, leading some to believe that the lender was the target of an investigation, rather than the victim of fraud.

As it turns out, the company was one of nine financial institutions that were victims of the alleged scheme, according to Syracuse.com.

“Persons who engage in mortgage fraud undermine the American dream of home ownership,” said U.S Attorney Hochul. “Such actions - if successful - hurt potential homeowners, banks and government programs designed to assist homebuyers.”

If convicted, Gibbons, Rodriguez, Savedoff and Brown face a maximum penalty of 30 years in prison and a $1,000,000 fine.

"In the last number of years, we have seen enormous and damaging developments in the mortgage and housing markets, said U.S. Housing and Urban Development, Office of Inspector General, Special Agent in Charge Brad Geary.

“Indictments, such as this, set an important precedent that this type of behavior will not be tolerated and will be aggressively pursued,” Geary said. “We are deeply committed to working in partnership with our federal law enforcement counterparts to ensure that corrupt individuals do not use their positions to enrich themselves at the expense of the government.”