Zack Dyab, a 46-year-old man from Golden Valley, and Julia Rozhansky, 46, of Minnetonka, pleaded guilty Tuesday in federal court in Minneapolis to orchestrating a house-flipping scheme through which they defrauded lenders of at least $2.5 million, according to the U.S. Attorney's Office in Minnesota.

Dyab owned mortgage brokerage company American Choice Lending, Inc., and Rozhansky was his assistant. Dyab pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering-which involved obtaining fraudulent loans to purchase 24 homes in the Twin Cities.

Between 2003 and 2007, Dyab and Rozhansky-who were indicted in December-allegedly arranged for “straw buyers” to purchase properties from Dyab or his company at inflated prices.

According to the indictment, Dyab and Rozhansky induced mortgage lenders from across the country to loan “substantial sums to unindicted co-conspirators”-who were relatives of Rozhansky-by submitting false loan applications to the lenders.

Dyab admitted that he submitted mortgage loan applications that exaggerated the monthly income and bank account balance of the buyer. Also, he would sometimes deposit funds into the buyer's bank account to deceive lenders by creating the appearance that the buyer had adequate funds.

In addition, Dyab convinced lenders that the buyers intended to live in the homes they purchased, when he knew that they planned to sell them to third-party buyers within one year. Those third-party buyers defaulted on their mortgage loans following the sales.

Dyab and Rozhansky had sellers pay them a portion of the sale proceeds. Dyab also admitted to stealing proceeds for his personal use.

Dyab faces a maximum penalty of five years in prison for the conspiracy charge and 10 years for money laundering. Rozhansky, who pleaded guilty to one count of conspiracy to commit wire fraud, faces up to five years in prison, according to a U.S. Attorney's Office spokesman.

Both Dyab and Rozhansky will be sentenced by U.S. District Court Judge Joan Ericksen at hearing that has not yet been scheduled.