Two local men, including a key witness in the state's case against Syed A. "Ali" Babar of New London, have been sentenced to serve time in federal prison for their roles in extensive mortgage fraud schemes.

Thirty-year-old Kenneth Perkins of Groton, who agreed to conceal a recording device to help convict several associates in the Babar scheme, was sentenced Monday to eight months in prison, followed by three years of supervised release, for serving as a straw buyer in approximately eight residential property sales in 2007. He had pleaded guilty in October 2011 to one count of conspiracy to commit wire fraud.

Michael Hodges, 53, of New London was sentenced Tuesday to 18 months in prison followed by two years of supervised release for acting as a straw buyer in the mortgage-fraud scheme headed by Jose Guzman of Waterford. Hodges purchased properties in New London and Norwich in 2006 and 2007 and pleaded guilty in October 2011 to conspiracy to commit mail fraud and wire fraud.

Chief Judge Alvin Thompson of the U.S. District Court in Hartford also ordered Perkins to pay nearly $4.2 million in restitution. Hodges was ordered to forfeit $25,000 and pay restitution of more than $300,000.

"Perkins received as much as $20,000 each time he agreed to act as a buyer," according to a summary of the case provided by the U.S. Attorney's Office.

In addition to buying homes, Perkins also assisted Babar — whom he met while a student at the University of Connecticut at Avery Point — by creating false employment records and even doctoring photographs, according to testimony.

The government said Perkins was part of Babar's scheme to obtain millions of dollars in residential real estate loans, including mortgages insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. Babar is serving a 10-year prison sentence, and six other scheme participants have received prison terms ranging from 30 to 90 months.

According to the government, Babar and his co-conspirators conducted approximately 30 fraudulent mortgage transactions, resulting in total losses of approximately $4.75 million.

In conspiring with Babar to buy seven properties in Connecticut and one out of state, Perkins knew that the sales prices on the sale contracts and closing documents were fraudulently inflated in order to secure higher loan amounts than the prices actually agreed to by the sellers, according to the government. In addition, Perkins also included false information about his income, assets and liabilities, his intention to occupy the homes as his primary residence and his ownership interest in the property for the past three years.

Hodges was part of a scheme in which Guzman and others used mortgage brokerage, property management and home improvement companies to arrange for property purchases, most of them homes within New London County. The did so by obtaining funding from various mortgage companies and mortgage originators after submitting false information on the buyers' loan applications.

"Hodges received $5,000 both times he acted as a buyer, and additional compensation when he identified a buyer or a property to be bought and sold," according to a summary of the case.

The government believes that more than 200 fraudulent mortgages were funded through the Guzman scheme, causing more than $9 million in losses to lenders.

Fifteen other individuals, including Guzman, have been convicted in his scheme. Guzman awaits sentencing.

k.florin@theday.com

l.howard@theday.com