A Fayetteville lawyer accused in the massive fraud case involving former Northwest Arkansas developer Brandon Barber has stringent restrictions of his own while waiting for the federal trial’s scheduled start date of June 17 in Fort Smith.
K. Vaughn Knight, Barber’s attorney at the time, is accused of helping the former star businessman hide assets from creditors and the court when Barber filed for bankruptcy in 2009. Knight faces 11 counts of money laundering and fraud, the maximum penalty being 140 years in prison and $4 million in fines if convicted.
An order from U.S. Magistrate Judge Erin Setser this week ordered Knight to report for supervision to the U.S. Probation Office and surrender his passport. It also restricts his travel to western Arkansas and prohibits him from contacting with any victims or witnesses in the massive fraud case, according to court documents.
Knight was also ordered to avoid using alcohol excessively and barred from possessing a firearm during the case. He must also avoid illegal drug use and may be tested for drugs or alcohol, the documents state.
Knight also had to pay a $25,000 collateral bond to the court clerk in case of non-appearance in court, documents show.
In the meantime, Knight continues to run his law office in Fayetteville.
Barber faces 27 counts of fraud involving several Arkansas banks. If convicted, he could spend the rest of his life behind bars. Barber’s restrictions include those imposed on Knight by the federal court.
Barber, 37, pleaded not guilty to all fraud and money laundering counts Monday in federal court in Fayetteville. The four other men charged in the case also pleaded not guilty Monday. They are Knight, James Van Doren of New York, Jeff Whorton of Johnson and Brandon Rains of Springdale.
Barber was arrested in March in New York, where he also stands accused of conspiring to commit wire fraud. Barber appeared in court Monday with his attorney Asa Hutchinson III in the U.S. District Court for the Western District of Arkansas.
Barber, who lives in New York, has been released on a $500,000 bond and is restricted to home detention except for such activities as work, family matters and religious services, according to Setser.
He is not allowed to possess firearms or consume excessive amounts of alcohol, the magistrate said. He also is not allowed to take out loans except from family members, and his work life is limited to his current insurance job at The Hotaling Group, a New York-based insurance firm whose website identifies it as having sports and entertainment clients.
Barber was arrested last month in connection with a years-long investigation by federal agencies into massive fraud allegations, but Barber was once a major rising star in the area.
When U.S. Attorney Conner Eldridge’s office announced the 27 counts of fraud and money-laundering charges Barber would be facing, it was the latest development in Barber’s saga that may ultimately land him behind bars for the rest of his life.
A Grand Jury in Fort Smith last month handed down federal indictments to Barber, Knight and three other men prosecutors say were involved in a massive scheme to defraud creditors out of millions of dollars. Prosecutors, the FBI and the IRS allege that Barber declared bankruptcy in 2009 after racking up $200 million in loans, then hid assets from the courts and creditors during the bankruptcy process.
Less than a decade ago, Barber, then in his 20s, was one of the most sought-after developers in the Northwest Arkansas. He founded the Barber Group in Springdale and tackled several high-profile area projects such as the Legacy Building and the Bellafont condominiums in Fayetteville. He even proposed the 15-story Divinity Hotel in Fayetteville in 2006.
At the height of his local career, Barber would throw lavish parties at a hangar at the Springdale Municipal Airport, inviting hundreds of guests at a time.
Court records show that as the money flowed, Barber took on massive debt, taking out millions of dollars in loans from local banks. Litigation from the financial institutions ensued, and years later, several court cases by banks and area entities against Barber remain unresolved, according to Washington County Circuit Court records.
Attorney Bill Clark represents Arvest Bank, which entered in a lawsuit against Barber in 2008.
In debt and collecting lawsuits, Barber filed for Chapter 7 bankruptcy in 2009, but is accused of hiding his assets from creditors. A year later, he was arrested on suspicion of driving while intoxicated for the second time in recent years, police records show. His development company also filed for bankruptcy, and he moved to New York.