Former Northwest Arkansas developer Brandon Barber should be responsible for $550,000 in restitution for the millions out of which the government says he bilked banks, Barber's attorney argued Friday.
Asa Hutchinson III filed a response to the U.S. attorney's claim last week that Barber should pay nearly $16.2 million in restitution to three banks that loaned him money for the Legacy Building, Bellafont Retail Village and Executive Plaza projects.
U.S. District Judge P.K. Holmes III has scheduled a hearing for Jan. 5 in Fort Smith on what restitution Barber should pay as part of his sentence.
Barber was sentenced Oct. 28 to five years and five months in prison after pleading guilty in July 2013 to conspiracy to commit bankruptcy fraud, money laundering and conspiracy to commit bank fraud. Attorneys for the government and Barber were not prepared to address restitution at the sentencing.
According to court records, Barber borrowed a total of $22.2 million from Legacy Bank in three loans in 2005 and 2007. He owed more than $18.7 million on the loans when the bank foreclosed on the property. The bank bid $11.25 million for the Legacy Building property in a foreclosure sale, leaving $7.5 million on the loans that the government contended Barber should pay as restitution.
Likewise, Barber had borrowed $17.152 million from Enterprise Bank of St. Louis in 2007 but still owed nearly $15.2 million when the bank foreclosed on the Bellafont property. The bank bid $7 million for the property, leaving nearly $8.2 million that Barber should be held responsible for, according to the government.
Barber and others also overvalued the Executive Plaza property in its loan application to First Federal Bank of Fayetteville to receive a larger-than-necessary loan, the difference of which, $550,000, was distributed to four conspirators as kickbacks. The government claims that Barber should repay the money paid as kickbacks.
Hutchinson contends that the kickback money is the only restitution his client should pay.
Hutchinson wrote in his six-page response that the government did not prove that Legacy and Enterprise banks suffered losses "as a direct and proximate result of the defendant's conduct, i.e., submissions of falsified statements to the institutions."
Hutchinson wrote that the government did not produce any evidence that the banks were unaware that the financial statements Barber submitted for the loans were inflated or that his financial condition was not what he portrayed.
If they were aware, Hutchinson wrote, the banks still could have loaned him the money and simply charged a much higher interest rate or offered less favorable terms.
The government also did not take into account the effect on the banks' willingness to loan the money of the loans' being personally guaranteed by daughters of Johnny Chambers, owner of Chambers Bank, regardless of Barber's financial situation. The government also did not address the impact the worsening economy after 2005 had on the chances of Barber defaulting on the loans, Hutchinson argued.
Hutchinson asked Holmes that any restitution he orders to be paid to Legacy or Enterprise bank be credited against Legacy Bank's $8.5 million civil judgment against Barber and Enterprise Bank's $7.6 million civil judgment.
NW News on 12/14/2014