KAUFMAN (May 19, 2009)—Karen Hayes 58, of Kemp, has been sentenced to 18 years in prison for her role in a complex $3 million mortgage fraud in which her sister was earlier sentenced to prison and in which her brother-in-law and niece are also charged.

Kemp, who pleaded guilty to engaging in organized criminal activity and falsifying statements to obtain property or credit, was sentenced Monday in Kaufman, the Texas Attorney General’s Office said.

She was named in an 88-paragraph indictment that alleged she falsified supporting documents involving the sale of manufactured homes.

Her sister, Kandace Marriott, 53, of Gun Barrel City, was sentenced in March to 99 years in prison for her role in the scheme.

Marriott’s husband Darrell, 56, and daughter Kally were also indicted and are awaiting trial.

Prosecutors say the four sold manufactured homes through their business One Way Home & Land in Navarro County and then--after investigations were opened in 2005--through Torenia, Inc., doing business as Energy Homes, in Kaufman County.

Investigators say the four illegally forged homebuyers’ signatures and inaccurately completed customer loan applications, the Attorney General’s Office said, in order to ensure that loans were approved for unqualified homebuyers in a scheme involving primarily low-income purchasers, the Attorney General’s Office said.

Prosecutors said monthly mortgage payments were received from the clients, but were not remitted to the proper mortgage lenders, causing the buyers to default.

When the buyers defaulted, the Department of Housing and Urban Development covered the defaults, which cost U.S. taxpayers more than $3 million, the Attorney General’s Office said.

Corsicana Police Cpl. Mark Nanny discovered the multi-county conspiracy, the Attorney General’s Office said, and contacted HUD officials and the FBI, which referred the case to state and local authorities.