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