Feds: Barbers Dreams Morphed Into Schemes

In July 2006, Brandon Barber stood on an expanse of red dirt in Benton County, posing for a front-page photograph that would accompany a story about the $100 million, 22-story Westin hotel he planned to build there.

Barber wore a sharp black suit and open-collar shirt that day, his arms folded comfortably in front of him. Despite a cloudless summer sky, it’s hard to tell which was more slight — his squint or his smile.

Barber could be excused if his expression was taken as hubris. The Barber Group, of which he was chairman and CEO, after all, had six projects — with a total estimated cost of $790 million — in various stages of development.

Less than seven years later, however, those heady days are long gone. The Westin wasn’t built, the remaining six projects all suffered from some degree of turmoil, and on April 15, Barber is scheduled to appear in federal court in Fayetteville on 27 assorted charges, including bank fraud and money laundering.

Though unlikely, if Barber were to be convicted and receive the maximum punishment on all counts, he would be sentenced to 385 years in prison and face $3.5 million in fines.

“It’s really a matter of how far under the jail you want to put him,” said one local attorney familiar with such cases.

 

Court Dates

The 37-year-old Barber was arrested by FBI agents on March 20, after the unsealing of two federal indictments, and appeared before U.S. Magistrate Judge Michael Dolinger in Manhattan the same day. According to the U.S. attorney’s office for the Southern District of New York, Barber was released on a $500,000 bond later that day.

Bolinger, though, ordered Barber to home confinement and to wear an ankle monitor. He also ordered Barber to surrender his passport, and restricted his travel to two court districts in New York and the Western District of Arkansas.

Barber since has retained Asa Hutchinson III, managing partner of the Asa Hutchinson Law Group in Rogers, to represent him. As of press time, Hutchinson said he was waiting for approval from his client before making any comments.

“Unless [Hutchinson] has excellent evidence of innocence, he is unlikely to change the inevitable course ahead of Barber,” the source said.

Barber won’t be alone when he appears in the Fayetteville court. Others named in the two federal indictments unsealed March 20 are K. Vaughn Knight, 46, of Fayetteville; James Van Doren, 37, of New York; Jeff Whorton, 45, of Johnson; and Brandon Rains, 31, of Springdale.

Knight is Barber’s former attorney, while Van Doren is an attorney and friend of Barber’s. Whorton owns Whorton Construction in Springdale, and Rains is a former project manager for The Barber Group who now owns BR Management Services.

Each of the accused must have separate legal representation. As of press time, though, only Whorton’s attorney was known via court records.

Whorton’s summons was served to Steve Vowell, an attorney with Taylor Law Partners LLP in Fayetteville. A source said it’s likely Whorton will be represented by either Vowell, who he called “a very able criminal lawyer,” or W.H. Taylor.

“W.H. is an incredibly skilled lawyer,” the source said. “We are very lucky to have him in this market.

“In a multiple indictment case like this one, it’s usually, ‘Who gets W.H. first?’”

Also noteworthy, the source said, is the fact Rains’ hearing has been moved to 9:30 a.m. on April 15, while the other four will appear at 10 a.m. All five will appear before U.S. Magistrate Judge Erin Setser.

Such hearings are only moved with approval from the prosecutor’s office, the source said, and the move can be made for a variety of reasons. The person could have a medical appointment, the source said, or sometimes there can be conflict between defendants.

The source said it’s also possible Rains has been “severed by agreement of the prosecutor” from the other defendants. It’s possible, in other words, Rains “has flipped.”

 

A Host of Allegations           

The indictments, returned by a grand jury in Fort Smith, allege several schemes to defraud banks, creditors and the U.S. Bankruptcy Court. The schemes include:

• Providing false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy Building 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, according to a news release issued March 20 by the Fort Smith office of U.S. Attorney Conner Eldridge. When contacted for this story, Eldridge referred to the statement he gave March 20:

“Prosecuting federal crimes involving fraud is an important priority in the Western District of Arkansas and for the Department of Justice,” Eldridge said. “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.”

One indictment, against Barber, Knight and Van Doren, was issued in July and amended in March. It alleges 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 other indictment, returned Jan. 16, contains 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 maximum penalties for the crimes range from five to 30 years in prison and fines ranging from $250,000 to $1 million.

 

More Details           

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, Metropolitan, First Federal 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 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 case originally was assigned to Senior U.S. District Judge Jimm Larry Hendren, but he recused. It was reassigned to Chief District Judge P.K. Holmes III, according to court records.