DAYTON — Five Dayton-area residents were indicted Wednesday, June 25, on federal charges they were operating an extensive mortgage fraud scheme that affected more than 200 area properties.

Also indicted was a former Centerville resident who now lives in East Cleveland.

Agencies participating in the Dayton Mortgage Fraud Task Force began arresting the suspects on Wednesday, according to Gregory G. Lockhart, United States Attorney for the Southern District of Ohio.

The indictment charges Julian M. Hickman, 30, of East Cleveland; Kamal J. Gregory, 34, of Centerville; Jessica A. Zbacnik, 41, of Monroe; Robert Mitchell, 42, of Vandalia; Edward McGee, 74, of Dayton; and Kenneth O. McGee, 49, of Dayton.

The five Dayton-area defendants were all arrested and appeared before U.S. Magistrate Judge Sharon L. Ovington on Thursday afternoon. All five were released on their own recognizance.

The 13-count indictment charges all six defendants with one count of conspiracy to commit mail fraud, one count of conspiracy to launder money and one count of wire fraud. All but Gregory are charged with six counts of mail fraud.

Hickman is also charged with three counts of willful failure to fire an income tax return, all misdemeanors.

The scheme involved 210 residential properties, including 205 in Montgomery County, along with 63 investors, and led to foreclosure of more than 90 percent of the properties, Lockhart said.

According to the indictment, the six actively recruited unsuspecting people to buy residential properties at prices artificially inflated about legitimate fair-market values. Most of the properties were low income, dilapidated and otherwise depressed, the indictment said.

Those purchases were financed with $15 million in mortgage loans obtained through fraud committed against 33 lending institutions, the indictment said.

The defendants also paid "kickbacks" to the buyers they recruited, promised to pay for all repair costs to the properties, and promised to make the mortgage payments until they located suitable renters, the indictment said.

Instead, the defendants kept $7 million from the loans for their personal benefit, the indictment said.

The six operated and controlled various real estate, mortgage and title insurance-related businesses and corporations throughout the Greater Dayton area including Commercial Property Advisor Group (CPAG), Diamond Vision Capital Group, First Union Appraisals, Gem City Professional Services (GCPS), Option One Appraisals, JMH Real Estate, River City Appraisers, Alliance Mortgage, Gregory Investments, Inc., KG Enterprises, Mad River Properties, Premier Mortgage Funding of Ohio, Star Point Mortgage, Ohio Financial Group, Mortgages Unlimited, Allied Mortgage, E & A Investments, and KM Investments.

Contact this reporter at (937) 225-2057 or lgrieco@DaytonDailyNews.com.