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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.

Anthony R. Angelo, 69, Philadelphia Pennsylvania, was charged  by Information with wire fraud and bank fraud.

The Information alleges that Angelo was the owner of Aracor Search & Abstract Services, Inc., a title company that provided real estate title insurance services and transactions, located in Philadelphia, Pennsylvania.  Because Ararcor was in debt, Angelo caused funds from dedicated escrow accounts to be used to pay off other escrow obligations and operating costs, causing a loss of over $1 million to the victims.

If convicted the defendant faces a maximum possible sentence of 70 years in prison, a $1.5 million fine, a five-year period of supervised release and a $300 special assessment.

The case was investigated by Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Daniel A. Velez.

Richard C. Roney, Jr., 46, former title company owner, Laurel Springs, New Jersey, was charged by information with four counts of wire fraud related to an alleged scheme that cost lenders more than $750,000 and involved escrow theft.

Escrow theft, also known in the industry as escrow defalcation, causes significant and immediate losses to homeowners and lenders. On June 4, 2012, Demotech published a study on this form of fraud entitled Escrow Theft: Today’s Challenge in Title Insurance.  The Study examined the relationship between strong state regulations and escrow theft and concluded, unsurprisingly, that when states that adopted strong licensing requirements, strict oversight and financial responsibility regulations regarding escrow agents, escrow theft loss ratios were lower.  Continue Reading…