Nine people have been indicted on charges of conspiring to defraud Washington Mutual Bank and DLJ Mortgage Capital Inc, a unit of Credit Suisse Group AG, in a $92 million mortgage fraud scheme, prosecutors said on Thursday.

Real estate developer Thomas Kontogiannis, 60, and eight other defendants are accused of orchestrating fraudulent loans that were subsequently sold to the financial firms.

Federal prosecutors and the FBI said the scheme was centered around property developments that Kontogiannis bought and subdivided from 2001 to 2003 in the New York City boroughs of Brooklyn and Queens.

To finance the projects, the defendants are accused of staging sales of the properties financed by mortgage loans. Bogus appraisals supported the price of the properties, even where buildings had not yet been constructed or had fictional addresses, said the U.S. Attorney's Office in Brooklyn, which is prosecuting the case.

The loans were financed by lenders controlled by Kontogiannis and later sold to Washington Mutual and DLJ, prosecutors said.

Entities controlled by Kontogiannis made monthly payments on the mortgages, ensuring that none became delinquent, until the payments ceased in 2007 with about $92 million in principal outstanding on the fraudulent loans, prosecutors said.

All nine defendants were charged with conspiracy to commit bank and wire fraud, which for each person carries a prison term of up to 30 years if convicted.

Kontogiannis, whose attorney was not immediately available for comment, and several other of the defendants face additional charges including bank fraud and money laundering.

The defendants were set to be arraigned later on Thursday in U.S. District Court in Brooklyn.

Mortgage