CHARLESTON, W.Va. -- A Putnam County couple pleaded guilty in federal court Wednesday to charges stemming from a real estate scam that duped out-of-state investors out of $2.3 million.

Deborah L. Joyce, 38, of Hurricane, pleaded guilty to conspiring to commit wire/bank fraud. Her husband, Todd W. Joyce, 39, pleaded to aiding and abetting making a false statement to a financial institution. Both also admitted that they evaded taxes in 2007.

The mortgage fraud involved buying properties in the Stonegate subdivision in Hurricane, obtaining inflated appraisals, then re-selling the properties to out-of-state investors for more than they were actually worth.

The stipulation of facts attached to Deborah Joyce's plea agreement gives an example of how the scheme worked. In spring 2006, Deborah Joyce convinced the owners of 45 Spruce Ridge to sell their property to her company, Prime Developers LLC, for $395,000 -- close to the home's market value at the time.

Joyce then had a licensed appraiser value the four-bedroom, three-and-a-half bathroom home at $650,000.

"To obtain the higher value, Ms. Joyce asked the appraiser, contrary to industry standards, to include the below-grade basement as additional square footage in the 'Gross Living Area,'" the stipulation states. That move increased the home's square footage from 2,844 to 4,366.

In turn, 100X -- a Salt Lake City-based real estate investment group that was linked to Joyce -- convinced a would-be investor to buy the property for $615,000, which appeared to be a bargain relative to the inflated appraisal.

"Further, it was misrepresented to [the victim] that Prime Developers would be able market the property at a much higher price for either a quick resale on his behalf or secure a rent-to-own contract," the stipulation reads.

On Aug. 14, 2006, the property was sold twice in an "upside-down" closing, meaning that the money from the second, $615,000 sale was used by Joyce to pay the original owner $395,000.

The victim tried for two years to resell the property, but ultimately defaulted, and the property was sold out of foreclosure for $305,000.

The flipping scheme involved six properties in the Stonegate subdivision, according to the stipulation.

During Joyce's plea hearing, Assistant U.S. Attorney Thomas Ryan said that there were two local appraisers involved in the scheme, but he did not identify them by name.

"Obviously they were in on it?" asked U.S. District Judge Thomas E. Johnston.

"The investigation is ongoing," Ryan answered. "It includes those individuals."

After the hearing, U.S. Attorney Booth Goodwin said that the appraisers had been told that they are under investigation.

Todd Joyce also admitted that he gave a fake tax return to United Bank in Fayetteville in order to secure a $740,000 construction loan.

Deborah Joyce agreed that she owed up to $2.34 million in restitution, the amount prosecutors say was lost in the flipping scheme.

Between January 2006 and December 2007, the Utah investment group paid the couple more than $820,000, according to court filings related to the seizure of the Joyce's home and two Hummer limousines. Todd Joyce incorporated a company called Platinum Limousine, LLC, in January 2008.

Both face up to 35 years in prison when sentenced by Johnston on Jan. 3, although federal sentencing guidelines will likely recommend much shorter sentences.

The charges against the Joyces were announced in June as part of a nationwide campaign, titled "Operation Stolen Dreams," targeting people who commit mortgage fraud.

Under the Financial Fraud Enforcement Task Force, an interagency effort established by President Obama, more than 1,200 defendants had been charged at that time in 675 mortgage fraud cases in Operation Stolen Dreams since March 1, U.S. Attorney General Eric Holder said at a news conference. The total losses from the 675 cases are estimated at $2.3 billion, he said.

Reach Andrew Clevenger at acleven...@wvgazette.com or 304-348-1723.