Indictment names ex-developer Barber

NWA Media/JASON IVESTER
Randall Coleman (right), FBI Special Agent in Charge, listens as Conner Eldridge, U.S. Attorney for the Western District of Arkansas, speaks during a news conference on Wednesday, March 20, 2013, inside the U.S. Attorney's Office in Fort Smith. Eldridge announced charges with federal crimes for Brandon Barber, Vaughn Knight, James Van Doren, Jeff Whorton and Brandon Rains. Barber was arrested earlier in the day in New York.

NWA Media/JASON IVESTER Randall Coleman (right), FBI Special Agent in Charge, listens as Conner Eldridge, U.S. Attorney for the Western District of Arkansas, speaks during a news conference on Wednesday, March 20, 2013, inside the U.S. Attorney's Office in Fort Smith. Eldridge announced charges with federal crimes for Brandon Barber, Vaughn Knight, James Van Doren, Jeff Whorton and Brandon Rains. Barber was arrested earlier in the day in New York.

Thursday, March 21, 2013

FORT SMITH - FBI agents arrested a once-prominent Fayetteville real estate developer in New York City on Wednesday, and federal prosecutors released indictments detailing his alleged schemes to defraud banks that financed his projects.

Brandon Barber, 37, of New York City was charged with 27 counts related to money laundering, bank fraud, bankruptcy fraud and conspiracy to commit those crimes.

Conner Eldridge, U.S. attorney for the Western District of Arkansas, said the charges involve about$30 million in loans and Barber’s $53 million Chapter 7 personal bankruptcy in 2009, debt Barber sought to have discharged because he claimed to have no assets.

“We are focused on finding fraudulent behavior wherever it occurs, and fraud occurs when someone purports to obtain money through a deception or concealment or misrepresentation, and that’s at the heart of what has been charged in this case,” said Eldridge.

The maximum sentence for a conviction on one count of bank fraud is 30 years in prison and a $1 million fine.

Barber appeared Wednesday afternoon before U.S. Magistrate Michael Dolinger in U.S. District Court for the Southern District of New York in Manhattan. Stephanie Cirkovich, a spokesman for the New York federal court, said Barber was released after the appearance on a $500,000 bond.

Barber is confined to his home and must wear an ankle bracelet, said Jennifer Queliz, a spokesman for the U.S. attorney’s office in the Southern District of New York. Barber’s travel is restricted to two judicial districts in New York and the Western District of Arkansas, she said.

Eldridge said Barber is to appear in federal court in Fayetteville on April 15 along with four other men charged in the case: James Van Doren, 37, of New York City; K. Vaughn Knight, 46, of Fayetteville; Jeff Whorton, 45, of Johnson; and Brandon Rains, 31, of Springdale.

Barber was a prominent figure in theNorthwest Arkansas real estate market. He changed Fayetteville’s skyline with the seven-story, $17 million Legacy Building off Dickson Street, which was completed in 2007, and planned a 15-story hotel down the street.

But the Divinity Hotel was never built, and by 2006 it appeared that Barber was having problems, both business and personal.

Barber was arrested on charges of driving while intoxicated in 2006 and again in 2008. Several Las Vegas casinos registered default judgments against him in Washington County Circuit Court for outstanding gambling debts from 2006-09.

In May 2009, Barber filed for divorce from his wife, Keri, who was awarded custody of their children - son Sloan, 8, and daughter Olivia, 5.

In July 2009, Barber filed for Chapter 7 personal bankruptcy, claiming no assets and more than $53 million in debt.

In the previous year, Barber had been a party in more than 34 legal actions, including 13 default judgments totaling more than $28 million against him, according to the documents filed with his bankruptcy petition.

Barber told the Arkansas Democrat-Gazette in 2011 that he had moved to New York City, where his ex-wife and children were living, and he was waiting tables in a restaurant. Barber didn’t response to a message Wednesday for comment.

Since the beginning of the year, a grand jury in Fort Smith returned two indictments alleging several schemes to defraud banks, creditors and the federal bankruptcy court. The first indictment on Jan. 16 named Barber, Whorton and Rains.

The second indictment on March 6 named Barber, Knight and Van Doren.

Those schemes, which according to the indictment generally occurred from 2005-09, include:

◊Providing false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy condominium building off Dickson Street in Fayetteville.

◊Providing false and fraudulent financial information and statements to Metropolitan National Bank of Little Rock and Enterprise Bank of St. Louis in connection withloans to finance the Bellafont project on Joyce Boulevard in Fayetteville.

◊Concealing assets and income from creditors and the bankruptcy court by transferring funds to Van Doren and Knight or accounts controlled by them and using those funds for Barber’s personal benefit and expenses.

◊Fraudulently representing purchase prices for real estate to First Federal Bank of Harrison to obtain loan amounts exceeding the actual purchase prices and thereby generating excess cash without the bank’s knowledge or approval.

Christopher Henry, special agent in charge with the Internal Revenue Service’s Criminal Investigation Division, said in a news release issued from Eldridge’s office that people who engage in fraud will be held accountable.

“Honest and law-abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money,” he said.

At a news conference Wednesday afternoon in Fort Smith, Randy Coleman, FBIspecial agent in charge for Arkansas, said agents here and in New York continue to investigate. Eldridge didn’t rule out additional arrests. Cases of this nature require a considerable amount of research, he said.

Glen Perciful, IRS supervisory special agent in Little Rock, credited his agency’s forensic accounting skills that help “put a stop to this and other types of white-collar fraud.”

Barber conducted business under several corporate entities that were managed by The Barber Group Inc., according to the news release.From June 2003 to October 2008, entities controlled by or affiliated with Barber secured more than $200 million in loans from various financial institutions, including Legacy National Bank of Springdale, Metropolitan National Bank of Little Rock, First Federal Bank of Harrison and Enterprise Bank of St. Louis.

One of Barber’s entities, Lynnkohn LLC, filed for bankruptcy in August 2008 after Legacy National Bank obtained a $9 million judgment against Barber the previous month, the news release stated. In July 2009, Barber filed for personal Chapter 7 bankruptcy protection. During that time, Knight was Barber’s bankruptcy attorney, and Van Doren was a business associate.

Before and after the bankruptcy filings, Barber, Knight and Van Doren worked together to conceal Barber’s assets from creditors and the court, according to the news release. These assets were hidden with various transactions and by using several bank accounts.

According to an indictment, at one point Barber delivered a briefcase containing $30,000 to an accomplice to keep the money away from his creditors.

The Jan. 16 indictment alleges that starting in August 2008, Barber, Whorton and Rains were involved in a conspiracy to defraud First Federal Bank. They made false and fraudulent statements to bank representatives regarding sales prices of property to obtain higher loan amounts and generate excess cash, which they concealed from the bank, the news release stated.

On March 6, a grand jury returned an indictment containing 27 counts and charging Barber, Knight and Van Doren. The indictment contains five counts of bank fraud, 15 counts of money laundering, four counts of bankruptcy fraud, and one count each of conspiracy to commit bankruptcy fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering.

Barber was included in all counts of the indictment except one count of money laundering.

Knight was included in one count of conspiracy to commit bankruptcy fraud, two counts of bankruptcy fraud, six counts of money laundering, one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Van Doren was included in one count of conspiracy to commit bankruptcy fraud, one count of bankruptcy fraud, one count of conspiracy to commit wire fraud, three counts of money laundering and one count of conspiracy to commit money laundering

The Jan. 16 indictment contains one count of conspiracy to commit bank fraud and two counts of money laundering. Barber was named in the charge of conspiracy to commit bank fraud, and Whorton and Rains were included in the bank fraud count and in one count of money laundering each.

The maximum penalties for each crime are: bank fraud - 30 years in prison and a $1 million fine; money laundering - 10 years in prison and $250,000 fine; conspiracy to commit bankruptcy fraud - five years in prison and a $250,000 fine; bankruptcy fraud by concealment of assets or false statements - five years in prison and a $250,000 fine; conspiracy to commit wire fraud - 20 years in prison and a $250,000 fine; conspiracy to commit money laundering - 20 years in prison and a $500,000 fine; and conspiracy to commit bank fraud - 30 years in prison and $1 million fine.

Front Section, Pages 1 on 03/21/2013