United States Federal Courthouse Los Angeles. Photo by John Schreiber.
United States Federal Courthouse Los Angeles. Photo by John Schreiber.

A federal jury was impaneled Tuesday to hear the case of three brothers — all Los Angeles County sheriff’s deputies — charged in a mortgage fraud scheme.

Billy, Benny and Johnny Khounthavong are charged with conspiracy to make false statements to two banks in connection with a “buy-and-bail” scheme.

A 10-count indictment filed last year alleges that the Khounthavong brothers made false statements and reports to Flagstar Bank to purchase a 3,900- square-foot home in Corona.

Prosecutors contend the Khounthavongs also lied to Bank of America regarding another large house they owned in Chino. The deputies allegedly walked away from — or “bailed” on — the second home, in which they were “under water,” meaning they owed substantially more than the house was worth, according to the indictment.

As a result of the scheme, the brothers dodged more than $340,000 of unpaid mortgage debt, federal prosecutors allege.

The Khounthavong brothers — two of whom were assigned to LASD jail facilities — are currently on leave from the department. If convicted of all charges, they each face the possibility of multi-year prison terms.

Before court adjourned early today, a Flagstar underwriter told jurors that in loan applications to purchase the Corona home, the brothers withheld information that they were a party to a lawsuit over the Chino house.

The siblings are free on bond.

Seven ex-deputies were convicted of corruption charges last year and sentenced to federal prison terms ranging from 1 1/2 years to almost 3 1/2 years.

City News Service

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