FORT SMITH -- Springdale builder Jeff Whorton was ordered Wednesday to pay $100,000 in restitution for his role in a bank fraud scheme orchestrated by his co-defendant, former Northwest Arkansas developer Brandon Barber.
U.S. District Judge P.K. Holmes III ratified a settlement reached between the government and Whorton's attorney on the amount of restitution Whorton should pay. He has 30 days to pay the restitution, which will ultimately go to the bank, according to the court order.
Whorton's attorney, W.H. Taylor of Fayetteville, told Holmes during a brief hearing Wednesday his client paid back all the money involved in the $2.155 million loan from First Federal Bank.
After the hearing, Taylor said Whorton paid back the First Federal Bank loan, a $1 million loan he took out to buy Barber's home and more than $276,000 in interest.
"This was consistent with his behavior in the past -- that he paid every man he ever owed," Taylor said of his client.
The restitution ordered Wednesday concerned the federal Mandatory Victims Restitution Act.
Whorton pleaded guilty in federal court in August 2013 to conspiracy to commit bank fraud and money laundering.
In November, Holmes sentenced Whorton to 14 months of home detention and fined him $10,000. He scheduled the separate hearing for restitution for Wednesday, asking attorneys for the government and Whorton to submit briefs on the amount of restitution they believed he should pay.
Holmes said Wednesday the federal Mandatory Victims Restitution Act required restitution be paid when a defendant has been convicted of an offense involving fraud or deceit.
The government contended in its brief Whorton should pay $550,000. Taylor countered Whorton should pay $250,000.
Barber, 38, pleaded guilty to three federal charges in July 2013 -- conspiracy to commit bank fraud in the First Federal Bank loan case, and money laundering and conspiracy to commit bankruptcy fraud -- after a 27-count indictment regarding accusations of hiding assets from creditors and providing false information to the U.S. Bankruptcy Court.
According to court testimony and documents, Barber approached Whorton in 2008 wanting Whorton to buy his home. Whorton was reluctant but proposed that, in return, Barber buy shopping-center property Whorton owned in Springdale called Executive Plaza.
Barber put together a deal by which now-deceased real estate developer Gary Combs applied for a loan with First Federal Bank to buy the Executive Plaza property. Fayetteville developer Brandon Rains also bought one of the lots.
Whorton told the bank the value of the Executive Plaza was $2.155 million, which was $852,000 more than the value. Whorton distributed part of the difference -- $550,000 according to the government -- to Barber, Combs and Rains as kickbacks but didn't disclose that to the bank.
Holmes noted Wednesday that, according to the testimony and court records, had the bankers known about the plans for the kickbacks, they wouldn't have made the loan.
Barber was sentenced in November to five years and five months in prison.
Holmes held a restitution hearing for Barber last week, during which the government contended Barber should pay $16.2 million. Holmes hadn't issued his ruling on Barber's restitution as of Wednesday.
Rains pleaded guilty in October 2013 to lying to federal agents and was fined $5,000 in November.
NW News on 01/15/2015