FORT SMITH -- A federal judge Tuesday ordered a new trial for the lawyer of former Northwest Arkansas developer Brandon Barber, ruling that the guilty verdicts against him were "tainted by legitimate concerns as to whether justice was properly served."

U.S. District Judge P.K. Holmes III ordered that K. Vaughn Knight of Fayetteville be retried on charges of conspiracy to commit bankruptcy fraud, bankruptcy fraud and five counts of money laundering.

Holmes acquitted Knight of aiding and abetting in making false statements, one of the eight charges on which the federal court jury convicted Knight last November after a nine-day trial in Fort Smith.

Holmes scheduled the new trial for Aug. 4 in Fort Smith, according to the federal court docket.

Knight's attorney, David Matthews of Rogers, who filed the motion for acquittal or new trial on which Holmes ruled, said Tuesday that he appreciated the consideration Holmes put into the motion, noting the judge's opinion and order comprised 102 pages.

He said Holmes did a thorough job of reviewing the testimony of 26 witnesses and thousands of documents in evidence from the trial. Matthews said he thought the government's case was "circumstantial at best and weak" and that Knight's only crime was being Barber's attorney.

"It showed that Vaughn was guilty by association, not of criminal activity," Matthews said of Holmes' ruling.

U.S. Attorney Conner Eldridge, who, with first assistant Wendy Johnson, led the government's prosecution of Knight, said Tuesday that his office was reviewing Holmes' order, and made only a short statement.

"We appreciate the jury's verdicts of guilty on all counts and we think they got it right," Eldridge said.

Holmes was critical of the government's case, writing he was troubled by the "nature, quantity and character" of the evidence that left him with "significant concerns that a miscarriage of justice may have occurred."

He wrote that the government relied exclusively on circumstantial evidence to attempt to prove Knight's criminal intent on the charges. It left jurors to speculate about Knight's guilt or innocence with little more than his status as Barber's attorney.

"While Knight may have exercised poor judgment in allowing Barber to use his trust account as a bank account, the evidence did not convince the court that Knight must therefore be guilty of criminal conspiracy, bankruptcy fraud and money laundering," Holmes wrote.

The facts in the case were complex and the law in the case was technical and confusing, Holmes wrote. The way lawyers presented the evidence didn't help to make things clear for the jury.

Matthews acknowledged Tuesday that the attorneys trying the case didn't do a good enough job to make the evidence clear for the jury.

After two weeks of trial and the large amount of evidence presented, the jury of nine women and three men took just six hours over two days to reach a verdict. Holmes wrote that the complexity of the case made it too difficult for jurors to sort through all the evidence to find the truth.

"Because of the difficulty of the task the jury faced, the relative speed of the verdict indicates that the jury may not have given the evidence the due deliberation that justice required," Holmes wrote.

Knight was charged in January 2013 with Barber and New York attorney James Van Doren in a 27-count indictment charging them with conspiracy to commit bankruptcy fraud, conspiracy to commit wire fraud, bankruptcy fraud, concealment of assets and money laundering.

Barber pleaded guilty in July to conspiracy to commit bankruptcy fraud and money laundering and is in the Washington County jail awaiting sentencing. No sentencing date has been set.

Van Doren pleaded guilty in August to money laundering. Van Doren, who is free on bond pending sentencing, has since petitioned Holmes to allow him to withdraw his guilty plea. Holmes has not ruled on the petition.

Initially charged with 19 counts, Knight went on trial in November on a superseding indictment of eight charges.

Most of the allegations in the charges centered on Knight's allowing Barber to use his lawyer's trust account as a bank account to, as the government alleged, hide money from his many creditors. In the time Knight served as Barber's attorney, more than $1 million of Barber's money passed through the account.

The government also accused Knight of helping Barber provide false information in his personal bankruptcy.

Holmes wrote that the government presented a lot of evidence of Barber's activities during the trial, but he called the evidence of Knight's involvement in Barber's schemes "thin at best."

"No witness testified to having personal knowledge of a conversation between Barber and Knight where a fraudulent scheme, an intent to defraud, or even a specific intent by Barber to file personal bankruptcy was discussed," Holmes wrote.

Knight denied in testimony during the trial his guilt on all the counts against him.

Holmes wrote that there was not enough evidence to support a conviction against Knight of directly committing bankruptcy fraud but that there was evidence to support his aiding and abetting Barber.

In deciding on the bankruptcy-fraud charge, Holmes wrote extensively about the role of "contemplation of bankruptcy," or the government's theory that Knight hid Barber's money in his lawyer's trust account in preparation for Barber filing personal bankruptcy.

Holmes wrote that the holding and passing of Barber's money through the trust account was not proof that Barber was contemplating bankruptcy, even though there was evidence that Barber and Knight discussed Barber filing for bankruptcy.

Holmes also pointed to testimony that Barber had no intention of filing for bankruptcy until the week before he actually filed and that there was evidence that Barber tried to continue to work his way out of his financial problems and avoid bankruptcy.

On the money-laundering charges, Holmes wrote that the testimony in the trial was that Barber's money transfers into Knight's trust account represented proceeds concealed from judgment creditors.

Holmes pointed out that the government did not charge Knight with concealment of assets from creditors but charged him under the bankruptcy fraud statute.

"The government must be held to that charge," Holmes wrote.

Holmes wrote that the government presented no evidence that Knight aided and abetted Barber in making of false statements in Barber's bankruptcy case.

The charge, Holmes wrote, centered on Barber's signing of a statement of financial affairs on the bankruptcy form that listed only about $3,000 in gross income for 2008, a figure the government said should have been closer to $1 million.

But Holmes wrote that Barber was the only person who signed the statement and there was no evidence that Knight influenced Barber to fill out the form as he did. Holmes also noted that others in Barber's organization, not just Knight, had a role in providing the information that went into completing the bankruptcy forms.

"The court finds that the evidence that Knight knew that Barber was making a false statement as to his 2008 income on the [statement of financial affairs] and committed an affirmative act to further the offense was insufficient to sustain a verdict of guilty," Holmes wrote.

A Section on 06/11/2014