The top two executives of a Honolulu mortgage company accused of orchestrating a foreclosure bailout scheme that stole hundreds of thousands of dollars from banks and distressed homeowners pleaded not guilty in federal court yesterday.

John M. Dimitrion, founder and chief executive of Mortgage Alliance LLC, and his wife, Julie A.B. Dimitrion, the firm's chief financial officer, are accused of conspiracy to commit mail fraud, wire fraud, money laundering and making false statements on loan applications to obtain $1.3 million in new loans between 2005 and 2007.

The Dimitrions were indicted along with Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson. Thompson pleaded not guilty Wednesday and posted $25,000 bail. Pa was found by FBI agents in Iowa and is scheduled to turn himself in on Tuesday.

Of the fraudulently obtained loan money, $139,114 was used at the discretion of John and Julie Dimitrion and an undisclosed amount went to Mortgage Alliance, Pa and Thompson, court documents show.

The Dimitrions pleaded not guilty before U.S. Magistrate Judge Kevin S.C. Chang, who set their bail at $50,000 each. They are scheduled to go to trial April 14 and have been ordered to live with John Dimitrion's father, Honolulu physician Michael Dimitrion.

If convicted, the Dimitrions, Pa and Thompson each face up to 20 years in prison on each charge.

"We are committed to continuing these kinds of investigations and bringing these defendants to justice," said assistant U.S. attorney Clare E. Connors, who is prosecuting the case.

John Dimitrion's attorney, Michael Green, said he had yet to review all of the evidence the government submitted in the case.

"It looks like everyone (the alleged victims) sat down, went over everything and signed (loan agreements)," Green said.

The arrests Wednesday are the result of a more than a year-long FBI investigation that has resulted in the indictments of nine people.

In May 2008, five people — John Gilbert Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert A. Alimoot Jr. and Evan M. Koizumi — were indicted as a result of the investigation. Mendoza and Altwegg were former employees of Mortgage Alliance LLC.

Alimoot and Koizumi have plead guilty to conspiracy and face up to five years in prison when sentenced April 27.

The FBI launched the probes in response to the subprime mortgage meltdown that spurred a sharp increase in mortgage fraud complaints.

"A lot of people got in over their head with mortgages they couldn't afford. There were a lot of people vulnerable to these types of scams," said FBI special agent Brandon Simpson. "This is one of the more prevalent scams we've seen."

Greg Ravelo, president of the Hawaii Association of Mortgage Brokers, said the Dimitrions falsely used the HAMB logo in advertisements on their Web site since 2005, the last year they paid their dues.

"If their activity is true, that's beyond anything I've ever heard of," Ravelo said.

Dimitrion and his associates are accused of finding homeowners on the cusp of foreclosure and offering help if the homeowners agreed to a temporary sale of the house to a third-party "investor" who worked for John Dimitrion, according to court documents.

They allegedly told the homeowners they could remain in their homes and their title would be returned to them after a set period of time.

Homeowners paid John Dimitrion $20,000 for the service, thinking their mortgage payments would be handled by Dimitrion's company, court documents said.

John Dimitrion and his associates applied for larger loans than what the homeowners owed and allegedly stole the proceeds by funneling the money into fake escrow accounts created by Julie Dimitrion, the documents said.

In each case the homeowner was unable to make the payments on the larger loan, the documents show.

John and Julie Dimitrion took the money from the escrow accounts for themselves and failed to make all the monthly payments for the distressed homeowners, the documents said. When the loans defaulted, the "investors" who worked for Dimitrion initiated eviction proceedings against the homeowners, according to the court documents.