For example, in an initial transaction that involved the sale by the current owner, the conspirators convinced a financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was a conspirator or an entity controlled by the fraud ring.

Then, in a second transaction, the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using fake loan applications, pay stubs, bank account statements and title reports provided by members of the fraud ring. That resulted in the second transaction frequently closings for significantly more or even double the price of the first transaction.

Prosecutors did not identify the financial institutions, and they did not respond to a CU Times request for additional information.

Goodson, Garvin, and others allegedly rigged the short sale process at each step of the process in order to maximize the difference in price between the two transactions and to keep the victim financial institutions from detecting the fraud, according to the criminal complaint.

For example, Goodson allegedly concealed that he played multiple roles in the short sale transactions, including generating false preapproval letters from a New Jersey corporation he owned that purported to be a short-term lending company based in California.

These letters were used to deceive the financial institutions into believing that the purchaser – typically a conspirator or entity controlled by Goodson – had the credit necessary for the transaction. The New Jersey lawyer also negotiated the fraudulent short sales with the financial institutions, generated phony deeds that backdated the closing date of the first transactions. What's more, Goodson also was the closing attorney during some of the short sales.

The conspirators disbursed the funds into various accounts they controlled to conceal their illegal activities and split the profits, according to federal prosecutors.

The conspiracy to commit bank fraud count is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine.