A complaint filed in federal court in New Jersey accused eight people of participating in a fraudulent mortgage scheme that cost banks $30 million, National Mortgage News reported Oct. 1.

According to the complaint filed in Newark, N.J., the defendants, who operated Premier Mortgage Services between September 2006 and May 2008, allegedly set up straw buyers to purchase properties and obtained mortgage loans for them. The defendants are accused of creating false documents that were provided to banks that showed the buyers had more assets and greater income than they actually had.

According to National Mortgage News, once banks approved the loans, the defendants split the proceeds among themselves using fraudulent HUD-1 settlement statements to cover up the real destination of the money. Each transaction totaled more than $10,000.

The suit stated that since the defendants had no intention of ever paying the mortgages, many of the properties they purchased went into foreclosure.

National Mortgage News reported that six of the defendants have been arrested, while two still remain at large.

Bank fraud conspiracy is punishable by a maximum prison sentence of 30 years and a $1 million fine. Two of the defendants also are facing charges of money laundering, which could result in another 10 years of imprisonment and a $250,000 fine.