Two Twin Cities residents were indicted Wednesday on fraud charges tied to an alleged house-flipping scheme that involved nearly three dozen single-family residences and resulted in losses by lenders of at least $2.5 million.

Zack Dyab, 45, of Golden Valley, and Julia Rozhansky, 45, of Minnetonka, were charged by a federal grand jury with conspiracy to commit wire fraud, mortgage fraud and engaging in a monetary transaction in criminally derived property.

According to the indictment, between 2003 and 2006 Dyab and Rozhansky persuaded lenders to provide loans to relatives of Rozhansky identified only by their initials by submitting false loan applications with exaggerated income and other false financial information in order to purchase homes at inflated prices. Those homes were then sold to straw buyers who defaulted on their loans.

In some cases, the home buyers purchased their houses at inflated prices from Dyab, a mortgage broker, or his company, American Choice Lending, where Rozhansky was employed, the indictment alleges. In other instances, the home buyers purchased houses from third-party sellers who then turned part of the commission over to Dyab.

If convicted, Dyab and Rozhansky face maximum prison sentences of five years for the conspiracy charge, 20 years on each of six counts of mortgage fraud and 10 years on the monetary transaction charge.

In a separate mortgage case Wednesday, Jeffrey Michael Taylor of Blaine pleaded guilty to one count of conspiracy to commit wire fraud for his role in submitting false loan documents to CitiMortgage for a property he owned in Arizona. CitiMortgage lost $588,200 when Taylor, 35, and an unindicted co-conspirator walked away with the loan proceeds.

Taylor, 35, faces a maximum of five years in prison. He will be sentenced by U.S. District Judge John Tunheim.

David Phelps • 612-673-7269