Officers of Federal Mortgage Corp., a firm that prosecutors say was a racketeering enterprise to defraud lenders, borrowers and investors, have been charged with a total of 18 felony counts.

Lending institutions claim they have lost millions of dollars because of the Orem company.Following a four-month investigation by the Utah County attorney's office, 18 felony counts were filed Tuesday that allege racketeering, computer crime, communications fraud, theft by deception, forgery and credit card fraud between March 1987 and last month.

It is the second time in as many weeks that the Utah County attorney has filed fraud-related charges against local businessmen.

Federal Mortgage President Craig J. Harris and his twin brother, Jeffery M. Harris, the firm's vice president, face five counts each. The men, 29, are from Highland. Craig Harris also faces a related third-degree felony charge of witness tampering, filed last month.

Firm Secretary/Treasurer Robert D. Baker faces four charges, while Federal Mortgage, represented by Craig Harris, also faces four charges. All charges are second-degree felonies, each punishable by up to 15 years in prison and a $15,000 fine.

The defendants, who appeared Tuesday before 4th Circuit Judge John Backlund, waived their preliminary hearings and were bound over to 4th District Court for arraignment May 5.

Tuesday's action comes on the heels of a 56-count criminal indictment filed against former grocery store magnate Deon Dove, who is accused of bilking the state out of more than $5 million in unpaid sales tax.

County Attorney Steve Killpack said additional people could be charged in the Dove and Federal Mortgage cases, and charges are forthcoming in other fraud investigations in Utah County.

Killpack said the Federal Mortgage defendants have been cooperative.

"We are alleging that Federal Mortgage was operated as a racketeering enterprise," Killpack said. He said the charges allege that the firm was run as a "highly sophisticated conspiracy" to defraud lending institutions, borrowers and investors and that the operation eventually turned into a pyramid scheme in which new loans were used to pay off old construction projects.

"The initial complaint which began the investigation alleged that several of the houses under construction by Federal Mortgage Corp. in the Provo Riverbottoms area of northeast Provo were sustaining several thousands of dollars in fictitious or phony construction loans," Killpack said.

Dick Casto, chief investigator in the attorney's office, said "dozens of properties and loans" are involved. With help from local contractor Dave Olsen, he said, authorities discovered that construction loans had been made to non-existent individuals and obtained through use of false information, credit reports and Social Security numbers.

The witness tampering charge against Craig Harris stems from Olsen saying he was asked to alter his testimony to investigators.

Mountain America Credit Union, which issued many of the loans to Federal Mortgage, has filed a multimillion-dollar lawsuit against that firm and against Ultimation Construction and Development Co. of Provo, which was run by Baker. The lawsuit alleges more than $2 million in losses.

Killpack said several of the construction loans also came from Goldome Mortgage and American Charter Mortgage.

"American Charter has now gone out of business in the state of Utah because of the enormous loss of money fraudulently received by Federal Mortgage," he said.

Total losses to the three institutions is unknown, Killpack said, but Goldome and American Charter believe their losses are in the hundreds of thousands of dollars.

"We're serious about mortgage fraud in Utah," Casto said. "We've had a real problem with it in Utah County, and we intend to address it as we become aware of it."