09/28/2011 05:56 pm ET Updated Nov 28, 2011

Hells Angels Mortgage Fraud Racket Charged With Defrauding Banks Out Of Millions

When the Hells Angels cultivate their infamous outlaw image, mortgage fraud is usually not the type of law-breaking that comes to mind.

A federal grand jury has released an indictment against a San Francisco mortgage broker and seven of his clients, including two leading members of the Hells Angels, for arranging to scam banks out of $10 million in fraudulent home loans through the creation of documents with falsified bank balances and employment histories.

The San Francisco Chronicle reports:

Among those charged was Jacob Moynihan, 30, of San Francisco, who owned a company called Xanadu Global Investments and also worked at several San Francisco mortgage brokerage firms, prosecutors said.

The indictment said Moynihan and his clients submitted fraudulent applications for loans, some for more than $1 million, to buy property in Santa Rosa, Petaluma and Healdsburg. The clients included two local Hells Angels leaders, Raymond Foakes, 48, of Rohnert Park and Josh Leo Johnson, 35, of Santa Rosa, prosecutors said.

The properties in question were purchased in San Francisco and Sonoma counties between 2005 and 2007. Some of the homes were eventually turned into marijuana grow operations.

"In many cases, bank statements were physically altered to reflect inflated balances and deposit activity," U.S. Attorney spokesperson Jack Gillund said in a statement to the Associated Press. "These falsified documents were then submitted to mortgage lenders to obtain mortgage loans, some in excess of $1 million, on terms that the lenders would otherwise not have funded."

Earlier this year, the president of the Sydney, Australia chapter of the Oakland-based motorcycle club was arrested as part of a $150 million mortgage fraud investigation.

Sydney police superintendent Arthur Katsogiannis told the Sydney Herald that the down under mortgage fraud racket represented a new, more sophisticated angle for bike gangs around the world. "These gangs … are using professional advisers or facilitators, like accountants and lawyers, to assist them with their money laundering and financial activities,'' said Katsogiannis.

All but one of the defendants in the Bay Area case have plead not guilty to a litany of charges ranging from wire fraud and money laundering to assorted drug charges. Most have been released on bail.