Among those alleged to have carried out the offence are brokers, lawyers and bankers, as well as a mortgage company.
According to Manhattan district attorney Robert Morgenthau, the scheme was run by AFG Financial Group and involved borrowing money to fund real estate purchases that were never completed.
"This kind of activity is what led to the mortgage crisis," Mr Morgenthau told the Associated Press, adding that 12 of the 25 have pleaded guilty to the charges.
"Most of them are facing state prison time," he remarked.
One lender that was hit by the fraud is New Century Mortgage Corp, which lost $32.2 million to the scheme.
In related news, defense lawyers working on the fraud case involving former Countrywide executive Angelo Mozilo are likely to argue the firm's operations were fully disclosed through statements and conference calls, the Los Angeles Times reports.