A third defendant has pleaded guilty to charges of running a mortgage fraud scheme that inflated the value of several high-end homes in the Riverbottoms area of Provo.

Two other defendants in the case, Bradley Kitchen and David Bolick, have already pleaded guilty. The U.S. Attorney's Office dropped charges against another defendant, Rebecca Ann Hadlock, because of a lack of evidence. There are two remaining defendants, Ron Clarke and Jeffery David Garrett. The U.S. Attorney's Office also seeks to recover $7 million jointly from Kitchen, Bolick, Cloward, Clark and Garrett.

Cloward owned an appraisal business that was part of the scheme. In the written plea agreement, Cloward stated that in 2005, he became an "investment partner" or straw buyer, for Paragon Investment Group, which was controlled by Kitchen and Bolick. He stated that Kitchen told him that he was "resetting the market in the Riverbottoms," which involved "contracting to buy a home at the current market price in the name of the Home Owners Group," which was controlled by Kitchen and Bolick. Then a straw buyer would buy the property at about double the Home Owners's contract price, get an appraisal to support the new contract price and seek loans at the higher price.

Cloward stated in the plea agreement that Kitchen would send his appraisal company a "wish list" of the values he wanted to see on the appraisals. Because the real estate Multiple Listing Service published pre-existing listing prices for the properties, which were as much as $1 million less than the loan amounts Paragon wanted for the properties, Cloward stated that his appraisers couldn't get the values Kitchen wanted. So Cloward asked Clarke, a real estate agent, to alter MLS data to make the list price for the properties disappear and be replaced with the higher Paragon price.

Cloward also admitted in the plea agreement to inviting another straw buyer into the scheme. In that transaction, he helped create the false impression that the buyer had made a down payment, and his appraisal company appraised the home at twice the value that Home Owners Group had contracted to pay for it. That appraisal was then sent to a lender and approved. That resulted in the wiring of more than $1.8 million in loan funds from a bank outside Utah to a title company in Utah.

Even though the mortgage scheme targeted between 20 and 30 homes in the Riverbottoms area, ultimately it affected the valuations of 550 homes because the scheme artificially inflated all home prices in the area, according to the Utah County Assessor's office.

Of the 550 affected homes, 460 had to have their property valuations adjusted in November 2007. That took place after 200 residents in the Riverbottoms area appealed their property tax valuations, which skyrocketed between 50 percent and 100 percent in just one year. The property valuations of most homes in other parts of Provo were up only 20 percent by comparison, said Utah County Assessor Kris Poulson.