Bankruptcy Didn't Stop Barber From Living the Good Life

by Mark Friedman  on Monday, Dec. 6, 2010 12:00 am  

Barber said at the hearing that the internal statements were always changing and he didn't know if those reports were final when he prepared his personal financial statement.

Ney said the difference between the values listed in the financial statement and each of his entities' balance sheets was $13.5 million, suggesting Barber's net worth was $3.9 million instead of $17.4 million at the time of the Lynnkohn loan.

In 2007, Barber received another loan from Legacy for $2.7 million, filing 2005 and 2006 personal financial statements with the application. Those statements showed the couple's net worth grew to $31.8 million in 2005 and was $20.6 million as of Sept. 30, 2006.

Those financial statements were also inflated by millions of dollars, Ney said.

Barber said that he was "confident" that he told bank officials that the financial statements were "fair market value" and not book value, which is the cost of the purchase minus depreciation of the assets.

His financial statements, though, don't indicate that the numbers were fair market value.

Barber said he used comparables and appraisals to determine fair market values for his companies, even though he couldn't produce any of the appraisals that he used.

"At that time, we were selling a lot of our property for more than the others were," Barber said in a deposition taken for the case.

But Barber's chief financial officer, Vera Crider, testified in a deposition taken for the case that she had a problem with Barber's personal financial statements. Crider said she told him that she wasn't comfortable with the inflation of values on his statements, according to Ney.

"I don't remember that, no," Barber said when Ney asked if he recalled such a conversation with Crider.   

Cracks Develop

In 2005, the northwest Arkansas real estate market started showing signs of trouble. Too many lots were being developed, outpacing the population growth.

 

 

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