INDIANAPOLIS — A former real estate investor who pleaded guilty to federal charges that he set up straw deals to obtain inflated mortgages on more than 100 Indianapolis houses has been sentenced to prison.

Forty-four-year-old Robert A. Penn of Naples, Fla. also was ordered Monday to pay more than $11 million in restitution. He earlier pleaded guilty to charges of wire fraud and admitted to money laundering conspiracy.

Kevin M. Lafavers of LaGrange, Ky. faces sentencing Feb. 2 in the case. He pleaded guilty to wire fraud.

The former Indianapolis residents were indicted in July on charges that from 2003 to 2005 they bought many of the homes for $120,000. Those were later seized by lenders and resold at sheriff's sales for $3,500 to $26,000.
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Diane Kosch had one of the most thankless jobs in the subprime lending craze.

Sitting elbow to elbow with colleagues at a conference table in a northern California office building, Kosch's job was to review a huge stack of loans each day at Long Beach Mortgage for problems, including evidence of fraud. She was given 15 minutes per file.

However, even when Kosch noticed clues of mortgage fraud - suspicious income, questionable appraisals or missing documents - the loans usually got approved anyway. Senior managers at Long Beach Mortgage, one of the nation's biggest subprime lenders, aggressively pushed loans through. As far as the company was concerned, Kosch's quality-assurance team was just slowing things down.
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