FORT SMITH - A co-defendant of former Northwest Arkansas developer Brandon Barber wants to withdraw his guilty plea last year to a money laundering charge, claiming he was not truthful when he admitted to committing the crime.
Little Rock attorney Gary Corum filed the motion Thursday in federal court in Fort Smith on behalf of James Van Doren of New York City, who pleaded guilty in August before U.S. District Judge P.K. Holmes III to one count of money laundering in a plea agreement with the U.S. attorney’s office.
As of Friday, Van Doren was free on $25,000 bond and awaiting sentencing. No sentencing date has been set.
In the motion, Van Doren asks to withdraw the guilty plea, have his conviction set aside and reinstate the eight charges against him in the 27-count indictment that was filed in March 2013 against Barber, Van Doren and Barber’s attorney, K. Vaughn Knight.
Corum wrote that he proposed discussions with the government on the motion, but no meeting was held. He also wrote that the government will oppose Van Doren’s attempt to withdraw the plea.
The U.S. attorney’s office declined to comment on the motion Friday.
In the indictment, Van Doren was charged with conspiracy to commit bankruptcy fraud, conspiracy to commit money laundering, conspiracy to commit wirefraud, concealment of assets, bankruptcy fraud and three counts of money laundering.
The charges accuse Van Doren of conspiring with Barber to hide his assets from his creditors and the U.S. Bankruptcy Court.
Barber defaulted on $30 million in loans and filed for bankruptcy in July 2009, declaring $53 million in liabilities and more than 50 creditors.
The money-laundering charge to which Van Doren pleaded guilty stemmed from an incident in September 2008 in which Barber endorsed a check written to Barber for $64,000 over to Van Doren.
According to testimony by Van Doren in Knight’s trial last year, Barber told him he didn’t have a bank account so he asked Van Doren to deposit the money into his account and make payments from there totaling $42,000 to two of Barber’s assistants and to Knight. Van Doren wired the payments to the three people but kept $22,000 of the money as part of a debt Barber owed him.
“James should be allowed to withdraw his plea of guilty because he is not, in fact, guilty of any of the charges brought against him,” Corum wrote. “When all the smoke produced from initial reaction to this admittedly tardy request has cleared, the truth that emerges is that James Van Doren never intended to defraud any of Brandon Barber’s creditors, and James was not aware that Brandon Barber ever transferred money to James personally, or toEpsilon Investments LLC (an Arkansas LLC in which James was one of two equal members), with the intent of deceiving or otherwise defrauding Barber’s creditors.”
The motion states the government had no proof of the allegations in the indictment that Van Doren knew Barber was giving him the $64,000 check to conceal that money from his creditors or that Van Doren intended to conceal the transfer of the money from Barber’s creditors.
Instead, the motion states, Van Doren was forthcoming when asked about the $64,000. He disclosed the transfer of the money when questioned by the attorney for Legacy Bank, Barber’s largest creditor, and when interviewed in 2011 by an FBI agent investigating Barber.
Van Doren was not aware that Barber failed to disclose the $64,000 transfer in his bankruptcy filing until he read U.S. Bankruptcy Judge Ben Barry’s ruling in the case in 2010, the motion said.
Corum quoted a June 24 affidavit by Jill Jacoway, U.S. Bankruptcy Trustee for Arkansas’ Western District and a government witness in the Knight trial, in which she said she found no evidence of unlawful intent by Van Doren to defraud any of Barber’s creditors in his bankruptcy case or the bankruptcy court. She said she believed he was “candid and truthful” in disclosing information about his dealings with Barber.
Corum took a third of the 29-page motion to argue that the pressures of the federal criminal justice system drive innocent defendants to plead guilty to avoid the financially ruinous expense of mounting defense in trials that could result in a long prison terms and large fines. He noted in the motion that as of 2012, according to the U.S. Sentencing Commission, 97 percent of all federal criminal cases were settled by plea agreement.
He wrote that Van Doren learned that making a rational decision was not the same as making the right decision.
Just from the indictment, Corum wrote, Van Doren lost his job and was targeted for discipline by the financial industry. He incurred huge legal expenses, suffered damage to his reputation and had no prospect for a job until his legal troubles were resolved.
“When James was presented with the opportunity to cut his losses and reduce the risk of jail time, he made a rational, strategic decision to do so, and no one criticized him for this decision,” Corum wrote.
Barber pleaded guilty July 31 to charges of money laundering and conspiracy to commit bankruptcy fraud in the case in which Van Doren and Knight also were charged. Barber is being held in the Washington County jail awaiting sentencing after his bond was revoked in June.
In a jury trial in November in federal court in Fort Smith, Knight was convicted of conspiracy to commit bankruptcy fraud, bankruptcy fraud, making false statements and five counts of money laundering. His is free on bond awaiting sentencing and while his convictions are being appealed.
Barber also pleaded guilty July 31 in a second case to a charge of conspiracy to commit bank fraud. He was charged with Springdale builder Jeff Whorton, developer Brandon Rains and Rogers attorney David Fisher in a three-count indictment.
Whorton pleaded guilty in August to conspiracy to commit bank fraud and money laundering. Rains pleaded guilty in October to lying to federal agents.
Fisher, in a federal court jury trial in Fort Smith in October, was acquitted of conspiracy to commit bank fraud.
Northwest Arkansas, Pages 9 on 03/29/2014