Two Weston men and a Milford woman were indicted Wednesday on federal charges for allegedly orchestrating a fraudulent mortgage scheme.

Steven J. Kottage, 44, and Genaro R. Hathaway, 46, a married couple from Weston, and Mary Ellen Durson, 53, of Milford, were charged in an 11-count indictment with conspiracy and other offenses stemming from their involvement in mortgage fraud, according to David Fein, the U.S. attorney for Connecticut.

The indictment alleges the men conspired to commit wire fraud involving a home on Fire Island, N.Y. Hathaway, a former lawyer, and Kottage purchased and financed the property in the name of Kottage's mother by filing false loan applications with Wells Fargo Home Mortgage, the indictment states. In each instance, Hathaway was the closing lawyer on behalf of Kottage's mother and Wells Fargo. The indictment further alleges that Hathaway subsequently purchased the property from the estate of Kottage's mother in his own name. Making that transaction, he allegedly made a false loan application to H&R Block Home Mortgage to obtain a separate mortgage. Rather than using the sale proceeds owed to the estate to pay off the outstanding loans issued by Wells Fargo, the men allegedly used those proceeds to pay off a loan from a separate real estate deal in which Hathaway was the closing attorney for the seller. Losses caused by the scheme exceed $500,000, according to prosecutors.

The indictment also charges that Kottage, Hathaway and Durso conspired to commit bank fraud by filing a false loan application to Washington Mutual to refinance a condominium in Hillsboro Beach, Fla. Durso allegedly served as the straw owner for the condo in order to obtain the fraudulent loan proceeds for the benefit of Kottage and Hathaway.

The indictment also charges Hathaway with tax evasion in 2005 and Durso with filing false tax returns from 2004 to 2008.

Kottage and Hathaway are charged with two counts of conspiracy and Durso with one count, a charge that carries a maximum prison term of 30 years on each count. The indictment also charges Kottage and Hathaway with two counts of wire fraud, with a maximum prison term of 30 years on each count.

The three are each charged with one count of bank fraud, which has a maximum prison term of 30 years.

The one count of tax evasion against Hathaway carries a maximum term of imprisonment of five years, and the five counts of filing false tax returns against Durso each has a maximum prison term of three years.

The case was investigated by the FBI and Internal Revenue Service. It is being prosecuted by Assistant U.S. Attorney David T. Huang.

The U.S. Attorney's Office and FBI last year established a task force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Connecticut Mortgage Fraud Task Force focuses on emerging crime trends associated with the growing number of foreclosures, according to prosecutors.

People can report suspected mortgage fraud by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending e-mail to