Ten New Jersey residents have been charged in a $40 million mortgage fraud scheme involving properties at the Shore and resorts in the South, federal officials said today.

Nine of those charged in an indictment handed up by a grand jury were arrested today.

According to federal officials, Joseph Witkowski, 66, of Flemington, and some of his alleged coconspirators sought out oceanfront condominiums overbuilt by financially distressed developers and recruited straw buyers for the properties.

The plotters then created false documents that made the straw buyers appear more credit worth than they were, the indictment alleges.

Working with brokers in on the scheme, the alleged conspirators obtained mortgages for properties at the Shore and in South Carolina and Georgia, according to federal officials.

"Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Witkowski and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled," U.S. Attorney Paul J. Fishman's office said in a statement.

"They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles," it said.

Besides Witkowski, those charged in the indictment are:

Robert Serao, 46, of Bayville;

Catherine Pearson, 53, of West Orange;

Isatu Tejan-Sie, 54, of Long Branch;

Crystal Brame, 42, of Irvington;

Karen Yokely, 59, of Plainfield;

George Lachenmayr Jr., 79, of Irvington;

Aku I. Muhammad, 42, of Newark;

Mark Kreischer, 33, of Elmwood Park;

and Marc Jacobs, 47, Hackettstown.

All but Brame are in custody, officials said.

Five other people previously pleaded to charges growing out of the investigation.