David Saks: Real Estate Developer, 2 Attorneys, & 2 Other Men Indicted for Fraud

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Real Estate Developer, 2 Attorneys, & 2 Other Men Indicted for Fraud

 

Former Northwest Arkansas Real Estate Developer, Two Attorneys, and Two Other Men Indicted on Bank Fraud, Bankruptcy Fraud, Wire Fraud, and Money Laundering Charges

U.S. Attorney’s Office March 20, 2013
  • Western District of Arkansas (501) 340-2600
 

FAYETTEVILLE, AR—Conner Eldridge, United States Attorney for the Western District of Arkansas; Christopher A. Henry, IRS-Criminal Investigation Special Agent in Charge for the Nashville Field Office; and Randall C. Coleman, FBI Special Agent in Charge, announced today that Brandon L. Barber, age 37, of New York, 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, New York.

The other individuals charged are

K. Vaughn Knight, a 46-year-old Fayetteville attorney;

James Van Doren, a 37-year-old New York attorney;

Jeff Whorton, age 45, of Johnson, Arkansas;

and Brandon Rains, age 31, of Springdale, Arkansas.

A grand jury sitting in Fort Smith, Arkansas, returned two indictments alleging several schemes to defraud banks, creditors, and the Federal Bankruptcy Court. Those schemes, as alleged in the indictments, include:

(1) 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;

(2) providing false and fraudulent financial information and statements to Metropolitan National Bank of Little Rock and Enterprise Bank of St. Louis, Missouri, in connection with loans to finance the Bellafont project in Fayetteville;

(3) 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;

(4) falsely and fraudulently representing purchase prices for real estate to First Federal Bank of Harrison, Arkansas, 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.

United States Attorney Eldridge commented, “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.”

“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money. Individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable. IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money, and we are proud to work with our law enforcement partners by lending our expertise in these complex financial investigations,” stated Special Agent in Charge Henry.

“My office will continue to dedicate agents and financial analysts to investigating corporate fraud cases like this one,” stated FBI Special Agent in Charge Coleman. “This case is a monumental example in Arkansas that the FBI, working closely with our partners, will seek to bring to justice to those persons whom we believe have engaged in fraud for the purposes of personal enrichment.”

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 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 further 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.

A grand jury sitting in Fort Smith, Arkansas, returned an indictment on March 6, 2013, containing 27 counts and charging Barber, Knight, and Van Doren. The indictment contains 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 grand jury returned an indictment charging Barber, Whorton, and Rains on January 16, 2013.

This indictment 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 each crime are:

(1) bank fraud—30 years in prison and a $1 million fine;

(2) money laundering—10 years in prison and $250,000 fine;

(3) conspiracy to commit bankruptcy fraud—five years in prison and a $250,000 fine;

(4) bankruptcy fraud by concealment of assets or false statements—five years in prison and a $250,000 fine;

(5) conspiracy to commit wire fraud—20 years in prison and a $250,000 fine;

(6) conspiracy to commit money laundering—20 years in prison and a $500,000 fine; and

(7) conspiracy to commit bank fraud—30 years in prison and $1 million fine.

This case was investigated by the Internal Revenue Service-Criminal Investigation Division and the Federal Bureau of Investigation. United States Attorney Conner Eldridge, First Assistant United States Attorney Wendy Johnson, and United States Attorneys Glen Hines and Benjamin Wulff are prosecuting the case for the United States.

The charges in an indictment are only allegations. A person is presumed innocent unless or until he or she is proven guilty beyond a reasonable doubt in court.

source: FBI



David Saks



Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • March 21 2013 07:18AM

Comments

Good job Arkansas.  Realtors have a very shakey reputation all because of the actions of those few bad apples.

Posted by Chris and Dick Dovorany, Broker/Associate at Premiere Plus Realty ( Homes for Sale in Naples, Bonita Springs and Estero, Florida) over 7 years ago

No question about it, Chris & Dick. There's a crapload of lies in this business.

Here's the proof:

Real Estate Crimes

Posted by David Saks ((retired)) over 7 years ago

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