The former Northwest Arkansas developer accused in a $200 million fraud scheme must remain in jail, a federal court judge ruled Friday, despite attorneys’ attempts to free Brandon Barber.
Federal Judge PK Holmes in Fort Smith affirmed a different federal court judge’s ruling from a month ago, in which Judge Erin Setser in Fayetteville ruled Barber violated the terms of his home detention and thus must return to jail until his fraud and money laundering trial, set for later this year.
Barber’s attorneys claimed Setser overstepped her bounds with her ruling, and that she had no definitive proof that Barber violated the conditions of his court-ordered house arrest. In his affirmed ruling Friday, Holmes disagreed, saying, “The Court bases its decision to detain Mr. Barber…based on Mr. Barber’s history of repeated violations of his conditions of release and his failure to be candid during these preliminary proceedings.”
Holmes goes on to doubt Barber’s ability to abide by any conditions of release and states the suspect may “Pose a financial danger to the community,” according to Holmes’ order.
A previous order from Setser on June 14 states evidence shows Barber violated his house arrest in New York by racking up near-daily charges on his debit card at various wine bars and restaurants. Setser states that Barber “had already committed upwards of (20) violations of his home detention” by the time of his May 6 court date in Fayetteville. The judge also chides Barber for his “lack of candor to the court.”
Barber, 37, was arrested in March in connection with a years-long investigation by federal agencies into fraud and money laundering allegations, whose potential maximum prison times for the 27 fraud counts could put Barber behind bars for the rest of his life. 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.
Barber was free on bond since his arrest, but Setser ordered the former developer back to Washington County jail after finding that he violated house arrest terms. Barber had been on house arrest because of alleged violations of his previous less restrictive home detention.
Setser asked defense attorneys in May why, if Barber was following his house arrest, the former developer’s bank account showed debit card transactions at places he had not been approved to go by the court. Defense attorneys responded that they did not know of the transactions, prompting Setser to call the response “puzzling”. She demanded Barber’s attorneys give a better explanation by June 7. Attorneys submitted a response June 7, although it was sealed from the public at the time.
The judge’s order filed later in June highlights the defense’s response, which first acknowledged that Barber had violated terms of his house arrest, and asked Setser to allow Barber to continue his house arrest.
Defense attorneys later suggested through cross-examination of an FBI agent that Barber may have given his debit card to “a friend” or to his fiancée, although records show his fiancée was out-of-state at that time, according to the court order. Defense attorneys never identified who the “friend” might be.
In addition to wine bar and restaurant transactions, “there were also expenditures on almost a daily basis for taxi and metro services. These expenditures were for varying amounts, indicating that they were not just for the same trip to and from work every day,” according to the court order.
Setser, in her court order, also took note of how Barber’s fiancée was suddenly unavailable to talk with court officials because she was working.
“The Court finds Ms. (Kristen) Foodim’s sudden unavailability somewhat suspicious, given that she traveled from New York to Arkansas with the defendant for both his arraignment on April 15and the violation hearing on May 6,” Setser states.
Rogers lawyer David Fisher earlier this month joined fellow Northwest Arkansas lawyer K. Vaughn Knight, whose office is in Fayetteville, as area attorneys indicted and accused of aiding Barber in his alleged multi-million scheme to accumulate debt, then declare bankruptcy and hide the profited money.
Fisher, Barber, Jeff Whorton and Brandon Rains have a trial set for Oct. 21 in federal court in Fort Smith, while Barber, Knight and James Van Doren have a separate trial set for Sept. 16, according to federal court documents.
Barber spent several days in the Washington County Detention Center last month, while the Fayetteville federal court and attorneys decided where Barber would live out his house arrest.
Knight, one of Barber’s attorneys, faces 11 counts of money laundering and fraud, the maximum penalty being 140 years in prison and $4 million in fines, according to court documents.
Rains was a project manager for Barber-managed Barber Group. He faces one count of money laundering and one count of conspiracy to commit bank fraud. In 2007, Rains was named one of the 40 most intriguing business and political leaders under 40 years old in the Northwest Arkansas Journal.
According to indictment paperwork, Whorton, the owner of Whorton Construction of Northwest Arkansas, made several real estate purchases with Barber. He faces one count of money laundering and one count of conspiracy to commit bank fraud.
Barber’s offices used to be on Old Missouri Road, a building that housed several other tenants. Barber owned the building.
Barber sold this property to Whorton Construction of Northwest Arkansas for $1.65 million.
First Federal Bank of Harrison lent Whorton $2.1 million for the property, $450,000 more than the actual purchase price, according to indictment.
Barber’s house which was also sold to Whorton was listed in the indictment.
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.
