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A Salt Lake City man was an integral part of a mortgage fraud scheme that scraped hundreds of thousands of dollars off of properties using straw buyers and fraudulent loan documents, a federal prosecutor told a jury Tuesday.

But an attorney for Jamis Melwood Johnson, who is on trial in federal court in Salt Lake City, said the scheme was directed and carried out by another man also charged in a 38-count indictment in March 2009.

Johnson, 59, a disbarred attorney, was accused in the case along with Ronald W. Haycock Sr., 62, of Bountiful and Lyle Smith, 45, of Roy.

The indictment charges the three with a series of mortgage frauds in which they allegedly formed partnerships with homeowners eager to sell homes along the Wasatch Front that had been on the market for a time and promised them a portion of the profits. They then recruited people with good credit scores to act as straw buyers and greatly exaggerated their incomes on loan documents, prosecutors said.

The three also allegedly obtained appraisals far above the market price of the houses, received loans based on those inflated values and then skimmed off the extra to keep the scheme going and pay themselves.

Part of the scheme was to create false assets by claiming Johnson's company, Johnson & Associates, held hundreds of thousands of dollars from the straw buyers in escrow accounts to show they had sufficient assets for the purchases, Assistant U.S. Attorney Scott Thorley told jurors Tuesday.

"They were fabricated," Thorley said. "They did not exist."

But Jamie Zenger, one of Johnson's court-appointed attorneys, said it was Haycock who directed the operation and carried out or caused others to create false documents to mislead lenders.

"Witnesses will tell you Ronald Haycock was the mastermind of this scheme," she said.

Zenger pointed out that Haycock, who has pleaded guilty in the case and is awaiting sentencing, is hoping to reduce his penalties by testifying against Johnson.

Smith reached a plea agreement with federal prosecutors and is serving a 56-month federal prison sentence. By testifying against Johnson, Smith also hopes to reduce his sentence, Zenger told jurors.

Much of the prosecution's case against Johnson centers on his home in Salt Lake City.

Thorley said when Johnson was threatened with foreclosure, he went to Haycock to find a straw buyer in order to strip money out of it and help pay his bills.

The first witness in the case, Rodney Flahaut, of Pocatello, Idaho, testified how his income and assets were greatly inflated by someone on loan applications after he agreed to act as the buyer in exchange for what was supposed to be around $50,000 but ended up as $35,000.

Thorley said Johnson failed to make payments on the $2.2 million loan and that Flahaut could not repay the loan to which his name was attached. When Flahaut tried to collect, Johnson sued him and refused to move out of the house, Thorley said.