A Pennsylvania man who was the co-owner of a mortgage firm and several title companies was charged Friday for his role in a $13 million dollar bank fraud scheme, according to the United States Department of Justice (USDOJ).
George Barnard, 45, of Newtown Square, was charged with 24 counts of wire fraud, four counts of bank fraud, and three counts of filing a false tax return, announced U.S. Attorney Zane David Memeger.
Barnard is alleged to have operated the scam from 2005 to March 2013 through his co-owned brokerage, Capital Financial Mortgage Corporation (“CFMC”), based in Delaware County, Pennsylvania, and several title companies he owned.
He would close mortgage loans with the false intent that he would pay off the borrowers’ existing mortgages, but instead defrauded lenders out of approximately $13 million dollars that he used for his own personal benefit. The USDOJ said Barnard used the cash to purchase yachts, luxury cars, multi-million dollar beach homes in Avalon, New Jersey, and paying the salary of a yacht captain.
In order to fuel his fake ritzy lifestyle of living like the rich and famous, the defendant perpetuated the fraud by selling second mortgages to other lenders telling them that they were first mortgages, when in reality they were worthless second mortgages.
Barnard also lied about his income to the IRS by filing false tax returns showing losses in the hundreds of thousands of dollars, and also failed to disclose $2,300,000 in unreported income.
Lenders that were defrauded were said to have suffered losses of more than $12,700,000, and more than 25 borrowers who obtained refinances from Barnard were stuck with two loans on their properties because Barnard’s companies did not pay off the borrowers’ existing first mortgages, according to the USDOJ.
Barnard faces a maximum sentence of 669 years’ imprisonment, a five-year period of supervised release, a $12,300,000 fine, a $3,300 special assessment, and a likely advisory sentencing guideline range of 135 – 168 months’ imprisonment.