Eve Mazzarella was a Las Vegas success story. The high-school dropout and former housemaid moved to the Nevada city in 2000 from Seattle...

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Eve Mazzarella was a Las Vegas success story. The high-school dropout and former housemaid moved to the Nevada city in 2000 from Seattle, got a certificate from the ABC Real Estate School and started selling houses in what would become the hottest market in the country.

In 2006, Mazzarella recorded sales of $13.8 million and made the National Association of Realtors’ “30 Under 30” list, which names the best young agents in the nation. Mazzarella had started her own company, Distinctive Real Estate & Investments Inc., in December 2003. She whipped around town in a Mercedes-Benz sport-utility vehicle.

Her competitors were impressed. “She was an up-and-comer with a brilliant future,” says Forrest Barbee, a broker at Prudential Americana Group, a Las Vegas agency where Mazzarella once worked.

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The dream ended at about 5 a.m. on March 13, when federal agents smashed through the door of a stucco home on a quiet, grassy cul-de-sac looking for Mazzarella, 31, and her husband, Steven Grimm, 45.

The day before, the U.S. Attorney for Nevada had indicted the couple on six counts of bank fraud, later revised to 13 counts. Prosecutors say the pair recruited fake — or “straw” — buyers to apply for loans to purchase 227 properties worth $107 million. They told the straw buyers they would pay the mortgages. Then they skimmed thousands of dollars from each of more than 432 transactions, the indictment says, stashing the cash in 80 bank accounts.

They allegedly arranged fake sales on some houses five times. Then, according to the indictment, they walked away from the mortgages, leaving lenders in the lurch.

If prosecutors are right, Mazzarella and Grimm were the Bonnie and Clyde of mortgage fraud — among the greediest of a band of swindlers who took advantage of lax lending standards at profit-hungry banks that stopped verifying income and assets for even questionable borrowers.

Similar schemes across the country helped pump up a housing bubble whose rupture has triggered a global banking crisis, prompted government intervention not seen since the Depression and helped precipitate what economists predict will be a long and painful recession.

Mazzarella and Grimm have pleaded not guilty to conspiracy and bank fraud in Nevada federal court in Las Vegas. They couldn’t be reached for comment on this story. Mazzarella’s attorney declined to comment; Grimm’s didn’t return phone calls.

Mazzarella’s father, a real-estate lawyer in San Diego, says his daughter is innocent. “She was putting money in Las Vegas real estate like everyone else,” Mark Mazzarella says.

Mazzarella and Grimm’s alleged scheme was just one of many in Las Vegas, where, throughout much of this decade, people wagered on houses like they were numbers on a roulette wheel. The advent of no-document “liar loans” fueled the frenzy.

According to the Southern Nevada Mortgage Fraud Task Force and accounts from straw buyers, the couple’s operation worked like this: They recruited people with good credit — often their own employees — to pose as buyers in exchange for a fee of about $5,000.

The straw buyer would offer more than the asking price, convincing the seller to send the extra back to Grimm and Mazzarella after being told it would be used for repairs or remodeling. Grimm and Mazzarella would apply for a mortgage for the straw buyer, inflating his income and assets to support a loan to match the higher sale price.

Then the buyer would transfer the property itself into a company controlled by Grimm and Mazzarella. The couple would often keep reselling the house at higher prices via straw buyers until there were no higher bids. The last straw buyer, his name on the loan, faced default notices, foreclosure, ruined credit and, sometimes, bankruptcy.

Nevada added an estimated 275,000 new homes from 2000 to 2007, a 33 percent increase that was the highest in the country, according to the U.S. Census Bureau. Today, Nevada is No. 1 in a grimmer category: It’s the most-foreclosed state in the nation. One in every 82 Nevada housing units got a foreclosure notice in September, according to RealtyTrac Inc., putting the state at the top of the list for the 21st straight month.

The couple’s trial is scheduled to begin on Oct. 19, 2009. Assistant U.S. Attorney Brian Pugh says they stole a total of $8.7 million. Only $50,000 is left in accounts that the government has found. Grimm and Mazzarella are living in the San Diego area now, after having surrendered their passports.

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