FORT SMITH -- A U.S. District Court judge Tuesday sentenced former Northwest Arkansas developer Brandon Barber to five years, five months in prison for his role in lying to banks and the federal bankruptcy court to get bank loans and hide assets from the court and creditors.
During the 90-minute sentencing hearing before U.S. District Judge P.K. Holmes III, the 38-year-old Barber, appearing in court in orange jail coveralls, apologized to his family, friends, bankers and the Northwest Arkansas community for his behavior that he said "compromised my character, reputation and integrity maybe for the rest of my life."
Holmes sentenced Barber to 60 months on a charge, to which he pleaded guilty in July 2013, of conspiracy to commit bankruptcy fraud, to 65 months for conspiracy to commit bank fraud and to 65 months for money laundering, the sentences to run concurrently.
Barber will receive credit for the 19 months he spent in the Washington County jail for violating the terms of his pretrial release, Holmes said.
Potential fines for the charges against Barber ranged from $110,000 to $1.5 million, but Holmes said he was not imposing a fine because he anticipated ordering Barber to pay a large sum in restitution.
He said did not have enough information on which to base a restitution order Tuesday but will hold a hearing on Jan. 5 to announce his decision after receiving input from attorneys in the case.
He said Tuesday he determined that the amount of loss from Barber's conduct totaled $32,086,828.
Holmes said under federal sentencing guidelines, a loss of $32 million called for a sentence of 235 months, or more than 19 years in prison. However, he said he believed that the guidelines governing the punishment for loss were not appropriate in Barber's case.
He said the fraud in Barber's case did not involve repetitive occurrences, such as in a long-term embezzlement scheme, but derived from the large scope of the projects. Barber was able to borrow the millions he needed for huge projects he tried to build but the collapse of the real estate market was his downfall, Holmes said.
U.S. Attorney Conner Eldridge said the government was asking for the guideline sentence of 10 years in prison for the offenses to which Barber pleaded.
The government also asked for leniency because of Barber's assistance in preparing prosecutions against co-defendants. He also testified in one trial and was prepared, but was never called, to testify in another, Eldridge said.
Charges against Barber center on his attempt to keep his real estate development business intact after the real estate market weakened and collapsed beginning around 2005.
According to the U.S. attorney's office, he was accused of lying to bankers to get loans to finance construction of the Legacy building and Bellafont building projects in Fayetteville, concealing assets from the U.S. Bankruptcy Court and inflating the value of the Executive Plaza building in Fayetteville to get a larger than necessary bank loan, the excess of which he used for other purposes without the bank's knowledge or permission.
Holmes said during the hearing there was no information in the record to show how much of the $32 million loss attributed to Barber should be blamed on his fraudulent actions or to the general downturn in the economy and the collapse of the real estate market.
He said unlike other fraud cases that have come before him, Barber's was not repetitive in nature but began when he got into financial trouble as the real estate market began to soften.
"He seems like a good person who made some serious mistakes," Holmes said.
On the other hand, he said, many people lost their money and livelihoods when the economy went into recession and Barber could just have endured the losses rather than resort to lying and concealing assets to try to bail out his business. In doing that, he said, Barber harmed not only the financial institutions that lost money to Barber but contractors, subcontractors and workers who were never paid for work that they did on Barber projects.
Three people testified on Barber's behalf during the hearing. Former Fayetteville Chamber of Commerce board of directors Chairman Richard Hudson said Barber contributed to the growth of Fayetteville and if it had not been for the recession, Barber would be a highly successful developer today.
"No one saw the recession coming," he said.
Karon Reese of New Orleans said as head of the Washington County Willow Neighborhood Association, she opposed Barber in his effort to get Fayetteville's approval to build his Divinity on Dickson hotel/condominium project. She said he approached her at one point and asked how he could win her over.
When she told him that 12 stories was too tall a building for Dickson Street, he redrew the plans and made it six stories. She said he never tried to cheat her and treated her fairly and transparently.
After Barber went to jail, she said, she wrote him a letter hoping to add some light to his day. He wrote back saying he had taken life for granted, she said, and "'now I do not walk into the yard without feeling the sunshine.'"
Hudson, Reese and Springdale homebuilder Lee Scarlett testified about Barber regaining his Christian faith in jail but mostly the desire to see his children and his regret that they suffer because of his conduct.
According to Barber's attorney, Asa Hutchinson III of Rogers, Barber wanted to be assigned to the federal prison in Lewisburg, Pa., so he would be close to his children who now live in New York with their mother, Barber's ex-wife Keri.
Scarlett also testified about the charitable fundraising he and Keri Barber conducted. He said he recalled a lavish Christmas party the Barbers threw to raise money for the Northwest Arkansas Children's Shelter.
Holmes said it is common in criminal cases for offenders to appeal for mercy in regard for their children. But he said he couldn't treat Barber's case any differently from a drug dealer's.
"They love their children, too," he said.
Also, Eldridge argued to Holmes that the fraud Barber admitted to committing was going on at the same time he and his then-wife were raising thousands of dollars for local charities.
Eldridge said Barber's financial problems grew not out of a declining economy but from a pattern of fraud meant to deceive financial institutions and other creditors.
Barber was arrested in March 2013 when the U.S. attorney's office in Fayetteville unsealed a 27-count indictment charging him with conspiracy, bank fraud, bankruptcy fraud, wire fraud, concealment of assets and money laundering. Holmes, on Tuesday, dismissed all but the two charges in the indictment to which Barber pleaded guilty.
Barber's friend, associate and New York attorney James Van Doren was charged in the indictment with conspiracy, bankruptcy fraud and money laundering. He pleaded guilty in August 2013 to one count of money laundering, to which he unsuccessfully petitioned Holmes to withdraw the plea earlier this year. He is scheduled to be sentenced before Holmes in Fort Smith on Monday.
Also charged in the indictment was Barber's Fayetteville attorney K. Vaughn Knight on charges of conspiracy to commit bankruptcy fraud, bankruptcy fraud-false statements, bankruptcy fraud-concealment of assets and five counts of money laundering.
A federal court jury convicted Knight on all counts in November 2013, but Holmes overturned the jury's verdict and acquitted him on the false statements charge. Holmes ordered a new trial for Knight on the remaining seven counts, and the government is appealing the ruling before the 8th Circuit Court of Appeals.
Barber also was charged in a second indictment with conspiracy to commit bank fraud. In that case he was charged with Springdale builder Jeff Whorton, developer Brandon Rains and Rogers attorney David Fisher.
Whorton pleaded guilty in August 2013 to conspiracy to commit bank fraud. He is scheduled to be sentenced in Fort Smith by Holmes on Nov. 5.
Rains pleaded guilty in October 2013 to lying to federal agents. He is scheduled to be sentenced by Holmes in Fort Smith on Nov. 6.
A federal court jury acquitted Fisher of conspiracy to commit bank fraud in a trial in Fort Smith in October 2013.
A Section on 10/29/2014