RALEIGH - A Raleigh home builder and a businessman have been sentenced for their roles in a mortgage fraud scheme, the U.S. Attorney’s Office says.

U.S. District Judge Malcolm Howard sentenced James Thomas Davis, 56, of Raleigh, who owns Easy Financial Services, to 16 years, eight months in prison.

Howard also sentenced David Layton, 55, a Raleigh-based residential home builder, to four months in prison, according to his lawyer, Jack O’Hale of Smithfield.

Federal investigators have said Davis would approach builders who had new homes on the market and offer them more than the asking price. The builders would agree to let Davis pocket the difference between the asking price and the inflated offer, investigators said.

Davis would seek investors to act as borrowers on mortgage applications, which would falsely state that the investor planned to live in the home, investigators said. Davis would then recruit renters to live in the homes.

The renters didn’t have good enough credit to qualify for a mortgage themselves. They would live in the homes under a “rent-to-own” plan and pay Davis large down payments and low monthly rents.

Davis used a pyramid-type scheme, seeking money from new renters and investors to cover the difference between the mortgage payments and the monthly rents to keep the scheme going, according to investigators.

Layton admitted conspiring with Davis to make and use false documents at real-estate closings, according to prosecutors. Last year, a jury convicted Davis of conspiracy and fraud charges.

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