story by Michael Tilley
mtilley@thecitywire.com
Sentencing in the high-profile fraud case of former Northwest Arkansas developer Brandon Barber has been moved from Aug. 13 to Oct. 28. The delay may allow Barber attorneys and the prosecution more time to support their respective arguments as to if Barber should go to prison for five years or more than 24 years.
No reason was given for delay of the sentencing hearing. U.S. District Court Judge P.K. Holmes III is expected to preside over the hearing to be held in the Judge Isaac C. Parker Federal Building in Fort Smith. Based on memos from the prosecution and Barber’s attorney, the sentencing testimony may require more than a full day.
BRIEF CASE HISTORY
Barber in July 2013 admitted to guilt in various schemes to prop up his Northwest Arkansas real estate and development company between 2005 and 2009. The charges Barber plead guilty to included the following felonies - conspiracy to commit bankruptcy fraud, conspiracy to commit bank fraud and money laundering. The maximum sentence for all charges is 45 years, with fines possibly maxing out at $1.5 million.
Following were the specific charges to which Barber admitted guilt.
• Conspiracy to Commit Bankruptcy Fraud
Beginning in April 2008 and continuing through Nov. 9, 2010, Barber reached an agreement with K. Vaughn Knight and James Van Doren to conceal and disguise income and funds belonging to Barber in order to hide those funds from creditors.
• Conspiracy to Commit Bank Fraud
From around Aug. 2008 to around Dec. 2008, barber conspired with Jeff Whorton, Brandon Rains, David Fisher and others to defraud First Federal Bank. The parties falsely and fraudulently represented the purchase prices of certain lots known as "Executive Plaza" to be higher than the actual sales prices in order to obtain higher loans from First Federal Bank.
• Money Laundering
Barber engaged in money laundering when he conducted monetary transaction of criminally derived property through a financial institution. …Barber had agreed with Van Doren and Knight to conceal certain income and transactions from the bankruptcy court.
PROSECUTION PUSH
U.S. Attorney (Western District of Arkansas) Conner Eldridge supports the U.S. Probation’s Office sentencing range request of 19.5 years to almost 24 and a half years in prison. The prison term is based on a fraud amount of more than $32.343 million, and because Barber was the “leader” of a conspiracy that involved others.
“The United States agrees with the Probation Office that the defendant should be assessed a two-level enhancement for acting as an organizer, supervisor, or leader in exercising decision-making authority and directing the activities of his co-conspirators,” Eldridge and Assistant U.S. Attorney Wendy Johnson noted in their July 23 sentencing memorandum. (Link here for a PDF of the memo.)
The $32 million loss was calculated, according to Eldridge and Johnson, with the following information.
• $9.901 million
Legacy Bank losses in the Legacy Condominiums transactions
• $7.608 million
Enterprise Bank loss in the Bellafont Retail transaction
• $5.293 million
First Federal Bank loss in the Outfield, Spring Creek and Executive Plaza real estate transactions
• $3.689 million
Todays Bank (formerly First State Bank of NWA) loss in fraudulent loans to Barber personally and Lynnkohn, an entity controlled by Barber, which was used in the Legacy Condominiums real estate project
• $2.395 million
Bank of Fayetteville loss in real estate loans to SCB Investments, and Metro District, in which Barber submitted false financial information
• $1.8 million
First State Bank of Lonoke loss in The Peaks Condos real estate transaction in which Barber submitted false financial information
• $1.655 million
Simmons First loss in the Metro District transactions
Eldridge has never hinted he would favor leniency in the Barber case. A July 31, 2013 statement from Eldridge following Barber’s admission of guilt noted: “This is a significant step in bringing several individuals involved in committing fraud, including fraud on the federal bankruptcy court, to justice. This case indicates that we are serious about identifying, investigating, and prosecuting those who perpetuate fraud, swindle others out of money, and engage in financial crimes.”
‘DOWNWARD DEPARTURES’
Through his attorneys, Asa Hutchinson and Asa Hutchinson III, Barber is hoping for leniency. The 50-page sentencing memo submitted by Hutchinson III, with Rogers-based The Asa Hutchinson Law Group, details why Barber’s sentence should be set at five years. Reasons for the “downward departures” from the sentencing range pushed by the prosecution include:
• Barber’s guilty plea and subsequent cooperation with government officials;
• Lesser amount of financial damage than is being alleged by the prosecution;
• A “more complete perspective” of Barber’s downfall and his life prior to committing fraud;
• His charitable contributions prior to committing fraud; and
• Comparison of “national sentencing statistics” that apply to the Barber case history.
As to the financial damage, Barber’s attorneys argue that the damage is less than $20 million instead of the more than $32.343 million argued by the prosecution.
LETTERS OF SUPPORT
The memo from Hutchinson III also includes several pages describing the more than 40 letters from people providing background as to Barber’s “contributions to the community, his love for family and his own character.” The letters are part of documents provided to the court by Barber’s attorneys.
“These are respected and accomplished leaders and citizens who do not excuse Brandon’s conduct but do offer unique and important perspectives to the Court,” Hutchinson III noted in the memo. “These individuals have very personally described their history with Barber and the contributions he has made in the lives of individuals, charitable organizations and community projects. The letters are not form letters but they personally describe a person who is caring, committed to his children and hard working.”
One letter is from Richard Hudson, the recently retired top lobbyist for the University of Arkansas. Hudson noted: “Had the national recession not occurred, I believe Brandon would today be a highly successful and well-respected business leader in Northwest Arkansas.”
The recession is also a mitigating factor. Hutchinson III wrote: “Brandon Barber fought hard to avoid bankruptcy, to land on his feet, to keep his businesses going and in the fighting he erred and committed the fraud. Because he tried too hard and because he cut corners in his fighting, he lost everything and in his struggles he caused financial harm to others as well.”
Hutchinson III also argued that national statistics show sentencing of first time, white collar criminals “is far below Mr. Barber’s advisory guideline range” and he requested the court take this into consideration.
Link here for the sentencing memo from Hutchinson III.