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Two Tucson men were arraigned Thursday in federal court, accused by prosecutors of running a $13 million, fraudulent property-flipping scheme that took advantage of a booming housing market.

Frank Padilla, 36, and Carlos "Charlie" Bent, 35, were indicted on charges of conspiracy to commit fraud and money laundering, according to a press release from the U.S. Attorney's Office.

Padilla was arrested last month, and Bent was arrested on Aug. 4, said Rich Tracy, a U.S. Marshals Service spokesman. Prosecutors consider both men to be flight risks, and they were being held Thursday night at Tucson's federal prison, 8901 S. Wilmot Road.

The two men were arraigned before U.S. Magistrate Judge Charles R. Pyle. The indictment, filed Aug. 16, remained under seal Thursday evening, and their pleas were unavailable.

According to the press release, between September 2004 and June 24, 2006, the suspects conspired to commit wire fraud and engage in illegal monetary transactions great-er than $10,000.

Prosecutors allege that the two men approached owners of 21 residential properties in and around Tucson who had their homes listed for sale for "substantial periods of time." The owners were told their properties were worth more than the listed price and that buyers could be found if they agreed to a "net listing" of the property.

Under the agreement, Padilla would be allowed to keep proceeds above the asking price. The two men would then find "straw buyers" for the homes.

Neither Padilla nor Bent is licensed by the Arizona Department of Real Estate.

Prosecutors say false documents — including employment verifications, mortgage loan applications, bank statements and contractor's licenses — were used to qualify straw buyers for 23 mortgage loans from financial institutions totaling more than $13 million.

Two homes were each sold twice. Minimal or no mortgage payments were made on the 21 homes, sending the homes into default and foreclosure proceedings.

Padilla is also accused of negotiating more than 30 checks from title companies for $1,325,795.

With rapid appreciation in U.S. housing markets, mortgage fraud "has become a growing problem, as some may try to capitalize on the circumstances and make an easy profit," Roland Mignone, assistant special agent in charge of the FBI's Tucson office, said in a written statement.