Laura Ann Eby, 38, and Cary Melvin Goodman, 37, pleaded guilty in the Yukon Supreme Court to several counts of fraud relating to loans.

Eby also pleaded guilty to one count of breach of trust.

The two loans, which totaled $318,575, were issued by Eby while she was working as a program manager for the Yukon Housing Corp (YHC).

One loan was issued under the YHC's Home Completion Program while the other was part of the Home Ownership Program.

Both loans were issued without any inspections, reports or receipts.

One of the loans was issued to Goodman, who co-owns Yukon Appliances Ltd. and Goody's Gas in Porter Creek.

The other loan was issued under another name to a woman who was unaware of the existence of the loan.

The court heard this morning the RCMP began to investigate the matter in August 2002 after receiving a complaint from the YHC.

Both Eby and Goodman voluntarily provided statements to the RCMP on Aug. 14 and Aug. 22, 2002, respectively.

Eby is related to Goodman by marriage and also did some work for him.

She became aware that Goodman was experiencing financial difficulties related to the cost of building Goody's.

Eby was led to believe Goodman required an infusion of capital if his business was to survive, Justice Ron Veale heard.

It was these conversations, the judge was told, that resulted in Eby and Goodman deciding to submit falsified applications to obtain the first loan.

The loan was for a mortgage registered against title land owned by Goodman, though a mortgage would not likely have been approved by YHC using legal means, the court heard.

After the fraudulent loan was received, payments were made against it and were in good standing.

With the success of the first falsified loan, the two then developed a second plan for a loan that this time was meant to help pay off Goodman's creditors, the court heard.

Eby used a previous application made to YHC and simply changed the numbers in the application to suit the needs of Goodman's business. The rest of the details regarding the property were invented.

For the purposes of the second loan, the services of a third party were used to assist with the transactions. However, the woman did not know her help was for fraudulent activity and was led to believe her help was aiding Goodman's business, the court was told.

After an investigation by the YHC, Eby was fired on Aug. 16, 2002 and she soon after sent a letter apologizing for her illegal activities.

Eby and Goodman negotiated with YHC a repayment schedule for the loans and also paid the corporation's legal fees.

One of the loans was paid off in full in September 2003 following a piece of property being sold by Goodman.

Crown attorney Peter Chisolm argued Eby was in a breach of trust with her issuance of the loans, however did not have anything to gain from the plan. Goodman, on the other hand, had quite significant personal gain.

Due to the juxtaposition of the pair's activity, Chisolm suggested they be treated similarly in terms of sentencing.

The court should treat these types of offenses very seriously, said Chisolm, because the total value of the loans exceeded $200,000.

However, Chisolm acknowledged both Eby and Goodman accepted responsibility for fraud very soon after being found out and voluntarily provided statements to the RCMP.

Chisolm also acknowledged neither have a criminal record and have made continuous payments against the amount owing on the loans.

But Chisolm said they needed to put money against the loans if they weren't to be discovered.

'It would have been quite obvious that a fraud had been committed if the payments were not made,' he said.

Chisolm added that because the repayment of the loans were based on Goodman's ability to maintain his business there could have been the possibility that all the money was lost. He added that there were other options for Goodman to overcome his financial woes, including franchising his business.

There was also a complexity to the scheme, said Chisolm, saying there was no real property, dummy files and deception extended to parties close to the offenders.

Chisolm suggested the judge consider a conditional sentence that included house arrest and restitution.

'House arrest should be the norm, not the exception,' he said.

He indicated he would prefer a house arrest extending from four to six months with a suggested curfew of 9 p.m. to approximately 7 a.m. He also suggested the sentence include 120-150 hours of community service.

Defence lawyer Ed Horembala is currently providing Veale his suggestions on sentencing.

He noted that significant payments have been put against the loans and that both Eby and Goodman are seen as being of good character and strong contributors to the community.

He added that in a small community setting, like the Yukon, the social stigma attached to their crimes will follow them long after their sentence has concluded.