Texan Melvin Lendall Brown, 49 years old and owner of Brownstone Construction, was recently arraigned in a 16 count indictment for alleged wire fraud arising from a supposed multi-million dollar mortgage fraud scheme.

Sixteen counts of fraud is a whole lot since the maximum penalty, upon conviction, for each wire fraud count is 20 years in prison and a fine up to $250,000. So this would mean, 320 years in prison or up to $4 million.

United States Attorney Tim Johnson and FBI Special Agent in Charge Richard C. Powers announced the indictment. The investigation leading to the charges was conducted by the FBI and the Department of Housing and Urban Development Office of Inspector General. Assistant United States Attorney Stephen L. Corso will be prosecuting the case.

Mr. Brown was charged arising from a scheme to cheat residential mortgage lenders of roughly $5 million in loans in connection with home purchases in the Houston part of Texas.

He started recruiting individuals who have the reputation to act as borrowers to apply for a residential mortgage loan so that they could purchase one or more homes in the Houston, Texas area. Brown generally told each borrower he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time and compensate the borrower.

Aside from those fraudulent loan applications, Brown submitted and caused to be submitted false and fraudulent documentation, including sham lease agreements and bogus employment information.

He also took advantage of near closing or closings for the home purchases causing companies to disburse more loans using his company which he represented as the company hired to arrange or complete the project. He received more than $500,000 of the fraudulently-induced loan proceeds, which he used for expenditures unrelated to those properties.

He surrendered to the FBI the morning of Thursday. He also appeared before Magistrate Judge Calvin Botley who ordered Brown’s release upon posting 10 percent of a $100,000 bond into the registry of the court. The arraignment has been set for Sept. 11, 2009.