Two New Jersey men were arraigned in federal court Monday for a reverse mortgage scheme that used inflated property appraisals to obtain $1.6 million in proceeds that were then taken from unsuspecting homeowners.

Rafael Peralta of Clifton, New Jersey, and Philip Puccio Jr. of Mahwah, New Jersey, were indicted by a federal grand jury on one count of conspiracy to commit fraud and six counts of bank fraud.

According to the Department of Justice, Puccio is a mortgage broker who also had a stake in a home remodeling company alongside Peralta. The two allegedly solicited older homeowners for home repairs and renovations, encouraging them to apply for a reverse mortgage to finance the work.

They then conspired with an appraiser to submit inflated property valuations in order to secure larger proceeds on the reverse mortgages, and also submitted false loan documents that actively concealed the fact that the loan proceeds were being dispersed to entities they owned, the indictment stated.

The indictment lists six New Jersey properties for which the two men submitted inflated appraisals to obtain a collective $1.6 million in loans.

“The diverted loan proceeds were deposited into bank accounts controlled by Peralta and Puccio and used for their personal benefit and to further the conspiracy,” the DOJ stated.

The two face up to 30 years in prison, a $1 million fine, or twice the gross monetary gain by the defendants or twice the gross monetary loss to others, whichever is greater.