FEDERAL COURT — A San Diego gang member who federal authorities said was the leader of a massive mortgage fraud scam pleaded guilty yesterday to participating in a racketeering conspiracy involving bank fraud, money laundering and other crimes.

Darnell Bell, 39, faces a maximum of 20 years in prison. Prosecutors said he was a chief orchestrator of a fraud and kickback scam that used straw buyers, fraudulent loan applications and bogus escrow documents on more than 100 properties in San Diego County.

The scheme resulted in real estate losses between $20 million and $50 million.

He’s the fourth person, and second principal, to plead guilty under an indictment naming 24 people that was unsealed last year.

Earlier, Michael Ivy pleaded guilty to a conspiracy charge. Ivy was the owner of The Real Estate Center of La Mesa, which authorities said played a central role in the scam. He is awaiting sentencing.

The ring identified properties that had been languishing on the market for months. Then, using “straw buyers,” ring members used 100 percent borrowed money and paid more than the asking price for the homes.

That overage amount was put into an account for a bogus construction company that Bell set up. The money was ostensibly to be used for retrofitting homes for disabled access, but no work was ever done.

The “buyers” later walked away from the homes, sending them into foreclosure and sticking the lenders with losses.

Bell, known as “D-Bell,” is a documented member of the Lincoln Park street gang in San Diego.

The indictment said he used his status in the gang to recruit other members and enforced discipline among the diverse web of conspirators.

They included an appraiser, a notary, an escrow officer, a tax preparer and a real estate broker.

When the ring was broken up, the bank account Bell set up contained $9 million in proceeds.

Ivy was alleged to have pocketed $200,000 during the time of the scheme, which took advantage of the lax lending standards widely at play during the real estate bubble years.

Because the case is still active, the U.S. Attorney’s Office declined to comment on the plea yesterday.

Two other principals still face charges. Stanley Gentry, a real estate broker, allowed the ring to have access to the multiple listing service and received a $10,000 fee per month, according to the indictment.

One other defendant, Billie Bishop, was the escrow officer on more than 100 transactions.

No trial date has been set, but court records show plea deals are on the table for some of the straw buyers.

The lawyer for one of those buyers said in a court filing that prosecutors have a “package deal” proposal for eight of the buyers, including her client, Ray Logan.

The others are not identified, and the indictment lists at least 13 straw buyers.

Damiani said they are weighing the offer, which, as a package deal, must be accepted by all defendants or none of them gets it.

She declined to outline the terms of the deal but said the penalty would be “significantly lower than what my client would face if he went to trial and was convicted of all the charges.”

One straw buyer, Marcus Dozell, pleaded guilty to racketeering conspiracy and was sentenced Feb. 16 to 46 months in prison.

The indictment said Dozell recruited other straw buyers and was paid $100,000.

Lucette Montane, 26, was arrested December 15, 2009 and arraigned in federal court on mortgage fraud charges. United States Attorney Karen P. Hewitt announced that Lucette Montane, a fugitive since June 2008, was arraigned on a 2008 indictment in federal court before Magistrate Judge Jan Adler.

On July 18, 2008, a federal grand jury returned an indictment charging Montane and five others with devising a plan to defraud and to obtain money and property by false and fraudulent means, related to mortgage fraud. According to court documents, in 2005, Montane and others started Creative Financial Solutions, Inc., (“CFS”), a mortgage brokering company located at 707 Broadway Avenue, Suite 1720, San Diego. CFS was in the business of sending loan application packages and other documents to lenders for review and funding.

The court documents further allege that CFS did not fund loans, but instead received commissions from the lenders when the loans closed. The defendants were loan officers at CFS and in addition to the commissions, they received payments from lenders, sellers, and buyers when loans closed.

The documents also allege that CFS obtained mortgage loans for unqualified borrowers by, among other things, concealing the true purchase price of the homes by submitting false purchase contracts; submitting false loan applications; intentionally concealing the fair market value of the home; using misleading appraisals; and submitting false bank statements and income documentation.

In total, the victim lenders funded more than $16 million in loans on properties that have been foreclosed or are in the foreclosure process. The lenders have lost over $3.9 million, with potential losses in excess of $5.1 million, due to the fraudulent loans.

Montane surrendered to Customs and Border Protection officials yesterday at the San Ysidro Port of Entry. Agents from the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation Division, arrested Montane based on a pending arrest warrant.

If convicted on the charges of conspiracy to commit wire fraud and conspiracy to launder monetary instruments Montane could face a maximum penalty of 20 years behind bars and a fine up to $250,000 for each charge.

The trendy Hard Rock Hotel of San Diego, the first ever condo for that city, was sued for fraud last month by a group of investors who claim that they were lured with a “bait and switch” scheme.

Investors bought suites and had the right to occupy them for a maximum of 28 days a year. For the rest of the year, they would be occupied by their clients, time-share owners.

Plaintiffs, Tamer Salameh and Real Estate 4 Hospitality LLC claim they have lost a bundle of money on their investments. The suit will attempt to become a class action. Defendants include Irvine’s Tarsadia Hotel, officials Tushar and B.U. Patel, and 5th Rock LLC.

The suit charges that the investments were not registered with either the Securities and Exchange Commission or the California Department of Corporations.

The promoters allegedly used bait and switch techniques in selling the investments. Plaintiff’s attorney Mia Severson says that investors were told the rental program was not mandatory, but it was. It was not feasible for investors to operate their own rental management system, as they were promised, the suit says.