Four employees at a Honolulu mortgage company were indicted by a federal grand jury for allegedly coordinating a home loan scheme that cost banks and troubled homeowners hundreds of thousands of dollars.

The Honolulu Advertiser reported Friday that John M. Dimitrion, founder and CEO of Mortgage Alliance and his wife, Julie A.B. Dimitrion, chief financial officer, were indicted with Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson for allegedly defrauding homeowners and banks by promising to save them from foreclosure.

The four are accused of conspiracy to commit mail fraud, wire fraud, money laundering and making false statements on loan applications to obtain $1.3 million in new loans between 2005 and 2007, the Advertiser reported.

Homeowners facing foreclosure were enlisted in the company’s foreclosure bailout program, according to the federal indictment, and would pay $20,000 to have their mortgages handled by Dimitrion.

John Dimitirion and his associates applied for larger loans than necessary and allegedly stole proceeds by putting the money into fake escrow accounts.

John Dimitrion charged homeowners $10,000 to pay the “investor,” who would buy their home but not take possession. He charged another $10,000 to put the majority of the proceeds from the loan transaction into an unlicensed escrow company created by Julie Dimitrion.

The money in the escrow account, by agreement between the fake investor and the homeowner, was supposed to be used to cover monthly mortgage payments, taxes, association fees and other costs.

When homeowners were unable to make payments on the new mortgages, they were told the money in the escrow account would cover it. John Dimitrion told the homeowners that when they got their title back, they would get the remaining loan proceeds left in the escrow account.

The fake investors had to lie to the bank by saying they intended to live in the house in order to get a new loan for the property.

The banks would transfer the loan proceeds from their Mainland accounts to the accounts of escrow companies in Hawaii responsible for closing the fraudulent real estate transaction.

In each case, the loan taken out by the fake investor was larger than the original loan owed by the homeowner, which resulted in larger loan proceeds, according to the report.

Mortgage Alliance was ranked one of the best small companies to work for in the state by Hawaii Business magazine in 2007.