Newtown Square Mortgage Broker Charged In $13M Fraud Scheme

The owner of a Delaware County mortgage company has been charged with defrauding lenders of nearly $13 million, United States Attorney Zane David Memeger announced Friday.

George Barnard, 45, of Newtown Square has been charged by indictment with 24 counts of wire fraud, four counts of bank fraud, and three counts of filing a false tax return.

Barnard, one of the two owners of Capital Financial Mortgage Corporation and the owner of several title companies, used the money intended to fund mortgage loans for borrowers to fund a lavish lifestyle, the indictment alleges.

He bought yachts, luxury cars, multi-million dollar beach homes in Avalon, N.J. and even paid the salary of a yacht captain, according to information from Memeger's office. Barnard orchestrated a "massive fraud scheme" in order to have access to a large pool of money to fund that extravagant lifestyle, the indictment says.

That scheme included selling other banks the mortgages that his company had written and representing to the lenders purchasing those mortgages that they were first mortgages, when in reality they were worthless second mortgages, information from Memeger's office said.

Tax returns filed by Barnard showed hundreds of thousands of dollars in losses but in reality Barnard had more than $2,300,000 in unreported income, authorities allege.

"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," a press release from Memeger's office said.

Barnard was allegedly able to conceal this deception by using his own title company to handle the loan closing and falsifying closing documents, authorities allege.

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, the indictment says.

If convicted, Barnard faces as much as 669 years in jail, a five-year period of supervised release and more than $12 million in fines.