Philly Feds Pinch Mortgage Outfit/Title Agency Owner For Pocketing Nearly $13 Million In Customers' Refinancing Proceeds While Failing To Pay Off Their Existing Loans At Real Estate Closings; Over Two Dozen Unwitting Homeowners Left Stuck With Two Mortgages On Their Homes

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):

• An Indictment was unsealed [] charging George Barnard, 45, of Newtown Square, with 24 counts of wire fraud, four counts of bank fraud, and three counts of filing a false tax return, announced United States Attorney Zane David Memeger.
  
  The indictment alleges that Barnard, who from 2005 to March 2013 was one of the two owners of Capital Financial Mortgage Corporation ("CFMC"), based in Delaware County, Pennsylvania, and also was the owner of several title companies, defrauded banks out of almost $13 million dollars and instead of using the money to fund mortgage loans for borrowers and pay off the borrowers’ existing mortgages, he took the money for his personal benefit, including buying yachts, luxury cars, multi-million dollar beach homes in Avalon, New Jersey, and paying the salary of a yacht captain.
  
  The indictment further alleges that in order to continue to have access to a large pool of money to fund his extravagant lifestyle, Barnard orchestrated a massive fraud scheme, which included selling other banks the mortgages that CFMC had written and representing to the lenders who purchasing those mortgages that they were first mortgages, when in reality they were worthless second mortgages.
  
  The indictment alleges that while the tax returns Barnard filed with the IRS showed hundreds of thousands of dollars in losses, in reality Barnard had more than $2,300,000 in unreported income, and in order to convince other banks to issue mortgage loans to him so he could purchase yachts and multi-million dollar beach homes, Barnard gave false tax returns to the banks with inflated income figures, and on at least one occasion, told the bank that he was buying the beach home for more than $3,000,000 when in reality the sales price was $2,000,000. The indictment alleges that Barnard was able to conceal this deception by using his own title company to handle the closing of that loan and falsifying closing documents.
  
  The indictment alleged that as a result of Barnard’s actions, lenders suffered losses of more than $12,700,000, and more than 25 borrowers who obtained refinance loans from CFMC were stuck with two mortgages on their homes after Barnard’s companies failed to pay off the borrowers’ existing first mortgages.

Source: Newtown Square Owner Of Mortgage And Title Comapnies Charged With Defrauding Lenders Of Almost $13,000,000.