Feds Indict Brandon Barber

A former Fayetteville real estate developer has been indicted by a federal grand jury in Fort Smith on 27 counts of bank fraud, wire fraud, bankruptcy fraud and money laundering, according to a news release issued Wednesday by the Fort Smith office of U.S. Attorney Conner Eldridge.

Brandon Barber, 37, of New York has been charged with federal crimes because of his role in various schemes to commit fraud involving several Northwest Arkansas real estate transactions and his own bankruptcy case.

Eldridge said Barber was arrested Wednesday morning in New York.

Two separate indictments, which had been kept under seal, were unsealed Wednesday.

Others named in the indictments are Barber’s former attorney, Vaughn Knight, 46, of Fayetteville; James Van Doren, 37, an attorney and friend of Barber’s from New York; Jeff Whorton, 45, owner of Whorton Construction in Springdale; and Brandon Rains, 31, of Springdale, a former project manager for The Barber Group Inc. who now owns BR Management Services.

Those schemes, as outlined in the indictment, include:

• 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 overlooking Dickson Street 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 off Joyce Boulevard 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 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.

“This case involves schemes to defraud financial institutions and our federal bankruptcy court,” Eldridge said in the release. “We will continue to pursue and prosecute cases involving schemes designed to defraud and deceive.”

Barber, a Jonesboro native, was involved in residential and commercial real estate development, construction and sales in Northwest Arkansas.

He 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 more than $200 million in loans from various financial institutions, including Legacy National Bank, Metropolitan National Bank, First Federal Bank and Enterprise.

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 2009, Barber filed for personal Chapter 7 bankruptcy protection. During this time, Knight served as Barber’s bankruptcy attorney and Van Doren was a business associate.

The three men are accused of working together before and after the bankruptcy filings to conceal assets from creditors and the court. According to the indictment, these assets were hidden with various transactions and by utilizing several bank accounts, including Knight’s client trust account.

The indictment also alleges that beginning in August 2008, Barber, Whorton and Rains were involved in a conspiracy to defraud First Federal Bank by making false and fraudulent representations to the bank when they concealed and misrepresented the sales prices of property to obtain higher loan amounts and generate excess cash.

The grand jury handed down two separate indictments. The first was on Jan. 16, charging Barber, Whorton and Rains with one count of conspiracy to commit bank fraud and two counts of money laundering.

Barber was named in the charge of conspiracy to commit bank fraud, and Whorton and Rains were included in the bank fraud count and in one count of money laundering each.

The second indictment was returned March 6 against Barber, Knight and Van Doren, alleging five counts of bank fraud, 15 counts of money laundering, four counts of bankruptcy fraud and one count each of conspiracy to commit bankruptcy fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.

Barber was included in all counts of the indictment except for one count of money laundering.

Knight was included in one count of conspiracy to commit bankruptcy fraud, two counts of bankruptcy fraud, six counts of money laundering, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit money laundering.

Van Doren was included in one count of conspiracy to commit bankruptcy fraud, one count of bankruptcy fraud, one count of conspiracy to commit wire fraud, three counts of money laundering, and one count of conspiracy to commit money laundering.

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.