Davis man sentenced to 56 months in mortgage fraud scheme

SALT LAKE CITY (Deseret News) — A Davis County man involved in a multimillion dollar mortgage fraud scheme was sentenced to less than five years Wednesday — a reduced sentence he was granted for working with the government.

Lyle Clay Smith, 44, was sentenced to 56 months in federal prison, five years of supervised release and ordered to pay almost $2.5 million in restitution by U.S. District Judge Dee Benson.

Smith, who was indicted alongside Ronald William Haycock Sr. and Jamis Melwood Johnson in March 2009 on charges ranging from mail fraud to conspiracy, pleaded guilty to one count of conspiracy in October.

According to the indictment, the men recruited straw buyers with good credit scores to allow them to use their names to purchase homes in Highland, Draper, Salt Lake City, Sandy, Pleasant Grove, Provo, Alpine and Farmington, then falsified loan applications and inflated not only the appraisal values but also the straw buyers' incomes.

It is believed the men had 11 victims. Straw buyers were told they would have no financial risk and would not have to make payments or even occupy the home, but were left with mortgages that they could not repay and mortgage lenders who were left with outstanding loan balances far greater than the properties were worth, the indictment states.

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