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Feds get second conviction out of mortgage fraud case

---Delavan man enters guilty plea

Mike Heine/The Week

(Published Oct. 15, 2007, 2:34 p.m.)

A 31-year-old Delavan man pleaded guilty to federal wire fraud Friday morning in a growing mortgage fraud investigation that struck Walworth County in 2004.

Martin Valadez had a hand in swindling six mortgage lending companies of more than $2.9 million through 13 fraudulent sales of 12 properties.

Valadez secured straw buyers and the false identities used to purchase homes at inflated values that the straw buyers never intended to live in.

Prosecutors say Valadez participated in the scheme with his father, Jose Valadez, 53, Delavan, and James Lytle, 33, of Lake Geneva, both of whom have signed plea agreements admitting wire fraud. Lytle has already pleaded guilty. Jose Valadez's case is still pending after his original lawyer died.

Others may have participated in the scheme, and further charges are possible, Assistant United States Attorney Carol Kraft said.

Lytle, a former mortgage broker, and Martin Valadez were the major players in the scheme, Kraft said. Jose Valadez once posed as a straw buyer in the scam, according to court documents.

Lytle pleaded guilty to wire fraud for swindling nearly $4 million from eight lending companies for the phony sales of about 20 properties.

Martin Valadez will have a sentencing hearing on Jan. 11, 2007, the day after Lytle is to be sentenced. The maximum penalty is up to 20 years in prison and $250,000 in fines.

He is currently in custody for a probation revocation because he admitted involvement in the scam. He has prior felony convictions dating back to 1999 of possession of cocaine and escape, according to court records.

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