An Arizona man has been sentenced to more than 11 years in federal prison for his leadership role in a mortgage fraud scheme prosecutors say cost financial institutions more than $14 million and contributed to declining home values across the valley.
Lloyd Gardley, 60, also was ordered Wednesday to pay roughly $1.5 million in restitution and serve five years of supervised release after he gets out of prison.
Gardley, who is in federal custody, pleaded guilty in August 2012 to two counts of bank fraud, one count of mail fraud and one count of conspiracy to commit bank fraud, mail fraud and wire fraud.
In a sentencing memorandum, Assistant U.S. Attorneys Brian Pugh and Sarah Griswold said Gardley recruited others to the massive conspiracy, which occurred between 2005 and 2007, and directed the fraudulent purchases of 40 homes to line his own pockets.
Eight co-defendants, including his wife, Candis Gardley, were convicted in the scheme. A ninth defendant was convicted of lying to federal authorities about her participation in the scheme. The other defendants included two loan officers, two real estate agents, an escrow assistant, an accountant.
According to prosecutors, the scheme involved the use of straw buyers and the submission of false information to financial institutions to obtain mortgage loans.
Once the mortgage loans were approved, the defendants funneled money from the loan transactions to themselves.
The defendants typically rented the homes and re-sold them for a profit, using the same scheme. They caused the more than $14 million in losses when they defaulted on the loans, according to prosecutors.