Prosecutors said Starr Ilzhoefer allegedly stole $1 million. Prosecutors also charged Aaron Guido in this case.
In 2004, Ilzhoefer was a contestant on "Project Runway," a reality television show that featured 12 or more fashion designers competing against one another.
Ilzhoefer went on to practice law as a corporate lawyer for respected firms. After that she went into real estate.
Prosecutors said Ilzhoefer helped trick the Federal Housing Administration and private financial institutions out of $1 million. They said she and other defendants charged targeted distressed homeowners, promised them foreclosure rescue and financial recovery, and convinced them to sell for less than they still owed lenders, which is known as a short sale.
Prosecutors said Ilzhoefer and the others lied on paperwork to lenders and already had other buyers waiting in the wings so they could flip the properties quickly, sometimes even on the same day.
They said the defendants also created shell companies to pave the way.
In a statement, Ilzhoefer's lawyer said "The government claims that way back in the great recession this young woman somehow tricked banks into selling their distressed real estate for less than what the banks now believe it was worth. We look forward to refuting these claims in court."
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