A Sacramento man who was sentenced to two years in state prison for attempted extortion was among 11 people indicted this week in connection with one of the largest mortgage fraud cases to hit Sacramento.

Sergey Shchirskiy was convicted in 2005 of threatening the owner of a local auto body shop who had reported the theft of a customer's Mercedes-Benz.

On Thursday, a federal grand jury charged Shchirskiy with wire and mail fraud as part of a wide-ranging federal investigation into mortgage fraud in the Sacramento region that has so far yielded indictments against 45 people.

Many of the defendants are members of the local Russian American community. Collectively, they are charged with defrauding more than $16 million from several lenders.

"The investigation is still ongoing, and more indictments are still to come," said Assistant U.S. Attorney Steve Lapham.

Shchirskiy, 35, pleaded not guilty on Friday to the charges before U.S. Magistrate Judge Kendall Newman.

Newman ordered Shchirskiy and two other defendants detained after federal prosecutors argued they were possible flight risks.

Lapham said federal immigration officials had issued a deportation warrant against Shchirskiy due to his conviction on the state extortion charge.

Shchirskiy, an immigrant from the former Soviet Union, has been living in the United States under a green card.

Court records show that he was convicted by a jury in Sacramento Superior Court in August 2005 after he threatened a local auto body shop owner. The body shop owner had reported the theft of a Mercedes-Benz from his shop. Court records say Shchirskiy demanded $10,000 for the return of the vehicle and threatened to burn it.

Police later recovered the fire-damaged Mercedes.

In addition to Shchirskiy, Sacramento residents Khadzhimurad Babatov and Roman Malakhov were ordered detained by the federal court.

Public records show that Babatov, 32, is part-owner of a North Highlands restaurant called Kavkaz VIP. He also is co-owner of a mortgage company called M & A Marketing. Malakhov, 31, was an M & A employee.

According to the grand jury, M & A recruited so-called "straw buyers" who took out mortgage loans using phony documents for homes that later went into foreclosure.

The latest group to face indictment bought seven homes in Sacramento, West Sacramento and Lincoln and obtained home equity loans on the properties before walking away from them. The foreclosures resulted in losses of more than $1.5 million to lenders.

According to the grand jury, Shchirskiy helped recruit straw buyers for homes in Sacramento and Lincoln and got a $10,000 fee from local tax preparer Vera Kuzmenko, a central figure in the ongoing federal probe.

The grand jury indicted Kuzmenko in May, alleging that she recruited dozens of straw buyers and helped them fill out bogus loan applications.

Kuzmenko, who has pleaded not guilty, has denied personally handling any of the loans and property sales and has blamed the problems on the lender.

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