Barber arrested in NYC; faces federal fraud charges

by The City Wire staff ([email protected]) 246 views 

Brandon Barber, once a high-profile developer during the heady days of seemingly non-stop Northwest Arkansas commercial development, was arrested Wednesday (March 20) on several federal charges related to fraud and his bankruptcy filing.

Conner Eldridge, the United States Attorney for the Western District of Arkansas, and Christopher Henry, IRS-Criminal Investigation Special Agent in Charge for the Nashville Field Office, and Randall Coleman, FBI Special Agent in Charge, issued a statement on Wednesday saying the Barber and four other men were charged with federal crimes stemming from schemes to defraud involving several Northwest Arkansas real estate transactions and Barber’s bankruptcy case.

Barber was arrested Wednesday morning in New York City. The other individuals charged are Fayetteville attorney K. Vaughn Knight, 46; New York attorney James Van Doren, 37; Jeff Whorton, 45, of Johnson, Ark.; and Brandon Rains, 31, from Springdale.

The four indictments, handed down from a Grand Jury seated in Fort Smith, are:
• Providing false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy Condominium building and project 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 with loans to finance the Bellafont project 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; and.

• Falsely and fraudulently representing purchase prices for real estate to First Federal Bank of Harrison, Ark., to obtain loan amounts exceeding the actual purchase prices and thereby generating excess cash without the Bank’s knowledge or approval.

The charged conduct generally occurred from 2005 through 2009.

“Prosecuting federal crimes involving fraud is an important priority in the Western District of Arkansas and for the Department of Justice. As alleged in the indictment, this case involves schemes to defraud financial institutions and our federal bankruptcy court. We will continue to pursue and prosecute cases involving schemes designed to defraud and deceive,” Eldridge noted in the statement.

As further alleged in the indictments, Barber was involved in residential and commercial real estate development, construction, and sales in Northwest Arkansas. Barber conducted business under several corporate entities that were managed by The Barber Group Inc. From June 2003 to October 2008, entities controlled by or affiliated with Barber secured over $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. In July of 2009, Barber additionally filed for personal Chapter 7 bankruptcy protection. During this time, K. Vaughn Knight served as Barber’s bankruptcy attorney and James Van Doren was a business associate. Before and after the bankruptcy filings, Barber, Knight, and Van Doren worked together to conceal assets from creditors and the court. These assets were hidden with various transactions and by utilizing several bank accounts, including Knight’s client trust account (also known as an IOLTA account).

The indictment also alleges that starting in August 2008, Barber, Jeff Whorton, and Brandon Rains were involved in a conspiracy to defraud First Federal Bank. During this period, the three made false and fraudulent representations to First Federal when they concealed and misrepresented the sales prices of property in order to obtain higher loan amounts and generate excess cash, which they concealed from the Bank.

The final round of Grand Jury indictments were delivered March 6.

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.