More than six years after his arrest on charges that he led a multimillion-dollar mortgage-fraud scheme based in southeastern Connecticut, Jose Guzman of Waterford was sentenced Thursday in Hartford's U.S. District Court to more than four years in prison.

The 51-month sentence was significantly less than the maximum 20 years he could have been given, according to court documents. Senior Judge Alfred V. Covello ordered the 53-year-old Guzman, who had cooperated with authorities and won sentencing delays multiple times, to pay restitution to victims of $7.8 million.

Guzman's sentence was the largest handed out among the 17 guilty pleas won so far by prosecutors in the New London-based mortgage scheme. Syed A. "Ali" Babar, whose separate scheme based in the city unraveled a few years later, was sentenced to 10 years in prison in November 2011.

"Guzman and his co-conspirators caused more than 200 mortgages to be funded during the period of the conspiracy," according to a summary of the case supplied by the U.S. Attorney's Office in New Haven. "As a result of defaults on the mortgages, the lenders suffered losses of more than $9 million."

Guzman's scheme, which originated in 2004, was uncovered during a six-month investigation by The Day that was published in May 2007. The investigation, by former Day reporter Julie Wernau, found that dozens of people, many of Hispanic origin, were financially ruined after buying homes they could not afford.

Then-Attorney General Richard Blumenthal, now a Democratic U.S. senator representing Connecticut, immediately began his own probe and in June 2007 filed a lawsuit in New London Superior Court charging that Guzman had engaged in "fraudulent" and "unscrupulous" real estate practices. He was also accused of predatory lending.

Criminal charges soon followed, and other co-conspirators were rounded up, including Guzman's daughter Isaura, a real estate agent for Elizabeth Athan Real Estate who bought or sold at least four houses for which mortgages were obtained fraudulently. William Athan, one of the operators of the real estate company who also has pleaded guilty to fraud charges, still awaits sentencing.

"Guzman operated a fraudulent mortgage business first with Maurizio Lancia at Royal Financial Services, and then later with Stacey Petro at First Source Financial Services," according to the case summary.

Guzman, a New London real estate broker, formed several shell companies to perpetuate the fraud, according to prosecutors, including J.G. Property and Investment Management Co. and Broad Street Investment Group.

Encouraging people with good credit to buy homes they could not afford, the group submitted false information to mortgage companies and loan originators, including income verifications, asset statements and employment histories. Buyers were given some money, with the co-conspirators pocketing the rest, according to documents.

"For certain transactions, Guzman and his co-conspirators caused escrow checks to be issued to a contracting company purportedly to pay for work that had been done on the property prior to the closing, when no work had been performed," the case summary said. "The checks were converted to cashier's checks, which were used during the closing as down payments from the borrower."

Guzman as well as his co-conspirators collected large commissions and fees on the transactions.

Though the Guzman and Babar schemes were never officially tied together, an investigation by The Day published three years ago found that one of Babar's convicted co-conspirators, former Pfizer Inc. scientist Wendy Werner, had a tie to Guzman. Werner sold three houses in New London that were listed in an indictment as part of the Guzman scheme, and Guzman was a witness to the deed and mortgage in all of the transactions.

l.howard@theday.com