SACRAMENTO, Calif. — Federal agents arrested Stockton residents Lillian Marquez, 38, and Michael Keatts, 56, in their homes early this morning for a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced. A federal grand jury indictment charged them with conspiring to commit mortgage fraud and with nine counts of mail fraud. The indictment was unsealed today. The defendants are scheduled to be arraigned today at 2:00 p.m. in Sacramento.

According to the indictment, from February 2006 through at least August 2012, Marquez and Keatts operated Colonial Home and Business Services in Stockton. Both defendants were licensed real estate agents who assisted clients in purchasing and selling homes. The indictment alleges that both defendants participated in supplying false information to mortgage lending institutions indicating that clients were employed by various businesses set up and controlled by the defendants. In fact, these clients were not employed by those businesses and their actual income from their true employment was far less than what was represented to lending institutions. To support these false claims, the defendants created and submitted fraudulent paystubs and tax documents falsely stating that their clients were so employed...