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Barry E. Horrow was charged by information in the Eastern District of Pennsylvania with four counts of bank fraud and one count of aiding and abetting.

The information alleges that Horrow was a CPA who owned and operated Horrow and Associates, first in Delaware County and then in Chester County, Pennsylvania.  From January 2005 through March 2013, George Barnard and David Fili, Jr. (both of whom were charged separately), began operating Capital Financial Mortgage Corp (“CFMC”) first as a mortgage brokerage and later as a direct mortgage lender.  Barnard also had a direct or indirect ownership interest in various title companies, including PA/NJ Abstract, Inc. dba East Coast Land Transfer, PANJ Land Transfer LLC, Tri-State Land Transfer LLC, Nationwide Land Transfer LLC, Atlantic Closing Services LLC and Gulf Coast Land Transfer Inc. CFMC and the title companies were clients of Horrow and Horrow prepared financial statements and the personal tax returns of Barnard and the corporate tax returns of CFMC and the title companies. The financial statements Horrow prepared for Barnard and CFMC were false. Horrow purported to conduct audits of CFMC and issued audit reports that he knew were being submitted to lenders to help secure loans for CFMC and Barnard when, in fact, he did not conduct any true audits and knew the audit reports were false.

The information further alleges that, in order to qualify for a loans to purchase homes at 221 65th Street, Avalon, New Jersey, 39 E. 25th Street, Avalon, New Jersey, and 670 First Avenue, Avalon, New Jersey, Barnard prepared and submitted various documents, including documents Barnard knew were false, in order to falsely inflate his income and cause the bank to believe his cash flow and net worth were greater than they were. The false documents included false tax returns prepared by Horrow.

Ignacio Huergo, 44, Miami, Florida, was sentenced to 2 years’ probation, with six months to be served on home confinement, for his conviction for concealing massive financial institution fraud.  Huergo was also ordered to pay restitution in the amount of $736,254.25 to M&T Bank.

Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that Huergo worked for the companies of Frank Garcia, Federal Guaranty Mortgage Company (FGMC) and Guaranty Realty and Investment (GRI) as a bookkeeper and tax preparer between 2006 and 2008.  During that time, Huergo became aware of the business practices of Garcia, and knew that Garcia used him and another person as straw buyers as part of this vast mortgage fraud scheme.  The defendant also knew that Garcia manipulated financial statements that Huergo drafted, which were sent to financial institutions, indicating that FGMC had a minimum net worth of over $1,000,000.  Knowing about the fraud and the two ways it was perpetrated, Huergo failed to notify the authorities of Garcia’s fraud, resulting in a $24 million dollar loss to various financial institutions.  One such institution, M & T Bank, was defrauded out of approximately $4.4 million.

Garcia previously pleaded guilty to his part in this $24 million financial institution fraud scheme.  Garcia is scheduled to be sentenced on August 24, 2015.

The sentencing is the result of an investigation by Special Agents of the Federal Bureau of Investigation under the direction of Special Agent-in-Charge, Brian P. Boetig.