A Colorado real estate agent has pleaded guilty to wire fraud and money laundering in a mortgage scam that incorporated the illicit use of letters of credit (L/Cs).

William Mendez, described as the lead broker for the William E Mendez Team, admits to assisting more than 100 home buyers, who he or his associates knew to be illegal aliens or otherwise unqualified to obtain loans, by preparing and completing loan applications containing false information.

False documents

Fraudulent documents, prosecutors said, were used to support the applications including fake L/Cs as well as false information on income, identity, credit history and immigration status.

Other documents included false tax forms, pay stubs, social security numbers and green cards.

Insurance costs

The frauds have allegedly cost the Federal Housing Administration (FHA) - which backed the fraudulently obtained loans with mortgage insurance - around US$1.2 million.

Mendez' guilty plea came with his agreement to pay US$1.2 million in restitution to the government department within which the FHA operates, the US Department of Housing and Urban Development. In his plea, he also said he would quit the estate agency.

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