Two officials of a Long Island, N.Y.-based mortgage company have been charged with one count of allowing false qualifications to be included in applications for FHA mortgage loans, after an investigation by the U.S. Department of Housing and Urban Development.

Ronald Friedman, president and chief executive officer of PMCC Financial Corp., and Kenneth Mann, one of the company's loan officers, were arrested Tuesday and released on $10,000 bond.

In a statement Wednesday, Mr. Friedman vigorously denied that he and Mr. Mann had allowed false information in applications for FHA loans.

"We are confident that Mr. Friedman will be cleared of these charges," said Joseph Ryan, Mr. Friedman's attorney, in a statement. He added that "the government's actions in conducting a 'Hollywood'-style search and seizure of the company's files were totally unwarranted, since most of these records are readily available for review by any state or federal regulator."

PMCC's headquarters in Roslyn Heights, N.Y., were raided Tuesday, according to Stephen D. Axelrod, a spokesman for the company.

Other Long Island mortgage bankers have also been arrested in connection with the investigation and released on bond. Ernst Bartels, president of Executive Mortgage Bankers in Farmingdale, N.Y., and Victoria Sweet, a loan officer with Melville, N.Y.-based Smith-Haven Mortgage Corp., were accused of falsely bolstering FHA loan applications, according to a report in Newsday, a Long Island daily newspaper.

At issue are employer and income verifications to HUD for home buyers seeking loans for residences built by developer Isaac Toussie of Brooklyn, N.Y. Mr. Toussie was arrested last month in connection with the fraud allegations after HUD became curious about the high rate of default among buyers of his homes, Newsday reported.

PMCC said Wednesday that it would cooperate with the HUD investigation.

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