CARLSBAD: Man sentenced to five years in prison for mortgage fraud scheme

CARLSBAD: Man sentenced to five years in prison for mortgage fraud scheme:

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A Carlsbad-based real estate consultant was sentenced to five years in prison for a multimillion dollar mortgage fraud scheme involving properties in Georgia, Florida and California, according to the U.S. Attorney's office.

John J. Borzellino was also ordered by U.S. District Court Judge Janis Sammartino to pay $4.1 million in restitution, federal prosecutors said on Friday.

Borzellino, 53, arranged to purchase homes by offering more than the seller's asking price with the understanding that the money above the asking price would be funneled to an account under his control, according to court documents.

Prosecutors said Borzellino disguised the funds diverted to him by falsely claiming them as "commission" or "consulting fees" to be paid by the sellers at closing, according to prosecutors. He also assumed several false identities to disguise his role in the transactions. He defrauded lenders into making more than $8 million in mortgage loans to purchase properties in the name of his wife and others, prosecutors said.

Borzellino also admitted that he failed to declare almost $1 million in income to the Internal Revenue Service, prosecutors said.