Vienna, Virginia-based Navy Federal Credit Union got caught in the middle of a home equity loan fraud scheme, causing the credit union losses of $2.7 million.

According to an announcement from the United States Attorney’s Office for the Eastern District of Virginia, Thomas Scott Brown, 47, from Atlanta, pleaded guilty to bank fraud and false statements to Navy Federal Credit Union on June 9.

From approximately 2006 through 2007, the release said that Brown purchased properties for buyers with his own money and then directed those individuals to apply for home equity loans with Navy Federal Credit Union.

While Brown claimed they owned the properties free and clear of any liens, they, in fact, still owed him for the properties.

To apply for the home equity loans, Brown instructed the buyers to submit false documentation to the bank, including fraudulent Housing and Urban Development Settlement Statements and false membership applications, the announcement stated.

And beyond the false statements, Brown further ordered these individuals to pay him from the proceeds of the home equity loans.

Brown’s scheme, in most instances, caused the borrowers’ homes to go into foreclosure after the bank approved the loans.

In total, 51 properties Brown sold eventually went into foreclosure, resulting in losses of $2.7 million for Navy Federal Credit Union.

U.S. District Judge Claude M. Hilton sentenced Brown to three years in prison, followed by five years of supervised release.