The owners of a Honolulu mortgage brokerage firm pleaded guilty to fraud and money laundering yesterday in a scheme that used phony buyers to obtain loans to buy homes that were in foreclosure proceedings.

Federal Magistrate Judge Barry Kurren set a Sept. 17 sentencing date for John Michael Dimitrion, 33, who pleaded guilty to three felony counts, and a Sept. 24 court appearance for his wife, Julie Ann Baldueza Dimitrion, 37, who pleaded guilty to two counts. Two employees of their company, Mortgage Alliance LLD, pleaded guilty previously.

Assistant U.S. Attorney Clare Connors told Kurren that the fraud involving three homes occurred in July 2005. The defendants arranged for “;straw buyers”; who lied on applications that they intended to live in the houses.

Based on the false information, mainland lending institutions wired amounts of $25,000, $68,000 and $45,000. Connors said, “;$10,000 as given to the straw buyer and the rest was deposited in a holding account created by Dimitrions.”;

Debbie Aurelio and her family, who signed over title of their home thinking they were refinancing, were in the courtroom to watch the Dimitrions plead guilty.

“;I feel better now that it came to a point where they know they cheated us,”; said Aurelio. “;We want our house back.”; The family of seven continues to live in their Ewa Beach home of 10 years.

The Aurelios filed a lawsuit against the Dimitrions, and “;their suit thwarted their eviction,”; said Legal Aid Society attorney Russ Awakuni. “;This family was smart enough to seek legal help,”; but the other two families had to leave their homes.

But the title to the Aurelio home is still held by the straw buyer, and “;there's not much the federal government can do about that. They will continue with the civil case because the title needs to be restored,”; Awakuni said.

“;The use of a straw man was obviously wrong,”; said Myles Breiner, attorney for Julie Ann Dimitrion. But he added, “;Their intention was to help people in dire need. They did over 1,000 loans properly. When they began dealing with people facing foreclosure, people gave them bad advice. They came up with creative solutions. ... It was a slippery slope.”;

The pair may be ordered to pay restitution when they are sentenced by U.S. District Judge Helen Gillmor. The maximum penalty for conspiracy to commit mail and wire fraud is five years' imprisonment and a $250,000 fine, and for transferring money from unlawful activities through a federally insured institution, 10 years and $250,000.

John Dimitrion also faces a 30-year sentence and $1 million fine for making fraudulent statements to financial institutions.