A Westminster man is headed to federal prison for orchestrating a $1.7 million real estate scheme. Steven Mascarenas, 53, will serve 72 months for wire fraud, making a false statement to a pretrial services officer, and escape. He was also ordered to pay $1.7 million in restitution.

Mascarenas was indicted on April 22, 2010, along with co-defendants Kathy Mascarenas, his wife, and Katrina Roberts. He pleaded guilty on July 3.  Roberts pleaded guilty and was sentenced to 20 months in prison and Kathy Mascarenas pleaded guilty and was sentenced to 24 months in prison.

According to court documents, in 2004, Steven Mascarenas, then an attorney and licensed real estate broker, orchestrated the purchase and resale of residential properties in The Broadlands, a subdivision in Broomfield. He arranged to have individuals serve as “credit buyers” to obtain loans, purchase the properties, and resell them shortly thereafter at inflated prices to other “credit buyers” in his select group.

He concealed from the lenders that these “credit buyers” were only acting at his direction and were being compensated after the closings for their participation in having obtained the loans and purchased the properties. Mascarenas had Roberts prepare appraisal reports in which she fraudulently inflated the fair market values of the properties by $100,000 to $325,000. To make the inflated values in all of her reports appear legitimate, she falsely represented that the purchases, which were actually sales at market value, were “distressed” sales or “quick” sales below market value.

Mascarenas set the prices for the re-sales far beyond their true market values, and arranged for the buyers to obtain 100 percent financing for them. Kathy Mascarenas conducted financial transactions as necessary to facilitate, perpetuate, and conceal the fraud. All of the loans went into default, and the loss to the lenders was approximately $1,776,162.

In June of 2011 Mascarenas fled the half-way house he was residing in just hours before he was to be taken to a prison facility. On Dec. 4, 2011, he was arrested by the Lakewood Police Department at a motel in Lakewood.

“Mortgage fraud harms everyone involved in buying a home — buyers, appraisers, real estate agents, and bankers,” said U.S. Attorney John Walsh in a statement. “Lying on mortgage applications is a fraud, and a federal criminal felony.  As the financial crisis of 2007 and 2008 showed us, following the rules in real estate transactions matters and those who don’t, face time in federal prison.”