3 Sheriff's Deputies Enter Plea on Federal Charges

Three Los Angeles County sheriff's deputies, all of whom are brothers, pleaded not guilty Tuesday to federal charges.

Billy, Benny and Johnny Khounthavong are charged with conspiracy to make false statements to two banks in connection with a "buy-and-bail" mortgage fraud scheme, according to the U.S. Attorney's Office.

The Khounthavong case is among five separate federal criminal cases charging 18 current and former sheriff's deputies with civil rights violations and corruption.

Sheriff Lee Baca announced Monday he will retire at the end of the month, denying that his decision was prompted by the possibility of federal charges against him.

One of the Khounthavongs' attorneys, Stephen G. Frye, said outside court that Baca's retirement would have no effect on the deputies' defense.

However, he suggested that the three men were targeted for prosecution because of their profession.

"It's unusual for the federal government to bring these charges," Frye said. "If they were not sheriff's deputies, they would not have been charged."

A 10-count indictment filed last month alleges that the Khounthavong brothers made false statements and reports to Flagstar Bank to purchase a 3,900-square-foot home in Corona.

Prosecutors contend the Khounthavongs also lied to Bank of America regarding another large house they owned in Chino. The deputies allegedly walked away from -- or "bailed" on -- the second home, in which they were "under water," meaning they owed substantially more than the house was worth, according to the indictment.

As a result of the scheme, the brothers dodged more than $340,000 of unpaid mortgage debt, federal prosecutors allege.

The Khounthavong brothers -- two of whom are assigned to LASD jail facilities -- are currently on leave from the department. If convicted of all charges, they each faces the possibility of multi-year prison terms.

The siblings, who are free on bond, left the courthouse without comment.