Charter Homes owner Jerry J. Jaquess has been sentenced to two-and-a-half years in prison and ordered to pay restitution of $825,000 for his role in a $20 million mortgage fraud scheme.

Jaquess, 67, pleaded guilty to one count each of wire fraud and money laundering. Chief Judge David F. Hamilton issued the sentence Tuesday in Indianapolis.

After 30 months in prison, he will serve another three years on supervised release. The restitution will go to Homecomings Financial and Argent Mortgage Co., two of the victims.

The U.S. Attorney’s Office for the Southern District of Indiana in April charged Jaquess and six others with crimes connected with 149 fraudulent loan transactions totaling $19.7 million between 2003 and 2005.

The charges followed an investigation by special agents of the IRS Criminal Investigation Division, the U.S. Attorney’s Office and the FBI.

Scheme participants bought homes in Windsor Village near Arlington Avenue and 21st Street in Indianapolis for $50,000 each, the U.S. Attorney’s Office said. Then, with the help of inflated appraisals, they recruited investors to take out $96,000 loans to purchase the homes for $120,000 each.

No payments were made on the mortgages and the lenders lost the entire loan amounts, the U.S. Attorney’s Office said. Many of the duplexes were later resold for between $3,500 and $15,000.

Jaquess and Charter Homes were the subject of an IBJ investigative story last year.

The U.S. Attorney’s Office said Jaquess used another of his companies, Homevestors LLC, to negotiate the purchase and sale of the first 11 properties in Windsor Village. He listed three of the properties as having sold for $120,000 each on the Multiple Listing Service, allowing the sales to be considered as comparable on appraisals of the remaining properties.

After each closing, Homevestors issued a check of about $42,000 to Jaquess personally or to a family member, a check to the person “fronting” the down payments and a $4,000 check to the investor.

Jaquess has not been charged with crimes relating to Charter-developed neighborhoods including downtown’s King Park, Fishers Creek on the east side and The Reserve at Royal Oaks in Greenwood. But current and former Charter business partners who spoke to IBJ for stories in August and October 2008 described a similar scheme in which the company recruited and paid buyers to take out inflated mortgages on homes it built, promising to manage the properties as rentals and make payments for the owners.