Two former California mortgage brokers have been indicted in a $2.4 million fraud scheme.
Paul Sloane Davis, 74, and Diane Cobb, 56, were arrested in Las Vegas, according to a San Jose Mercury-News report. Davis and Cobb, who were subsequently released on bail, are scheduled to appear Nov. 26 in federal court.
Prosecutors say that Davis and Cobb, who ran a company called DM Financial, got investors to fund short-term bridge loans for home buyers. The home buyers, however, never received any money from the loans, and were in fact unaware that their names had been used to secure the funds, the Mercury-News reported.
Instead, prosecutors say Davis and Cobb diverted the $2.4 million realized from the loans for their own personal use or to pay off investors, the Mercury-News reported.
Both defendants have been charged with 15 counts of mail fraud, wire fraud and conspiracy. Cobb was also charged with five counts of identity theft, the Mercury-News reported. Each count of conspiracy and fraud carries a maximum of 20 years in prison. Each identity theft count could potentially equal two years in prison, according to the Mercury-News.