FORT SMITH - Brandon Barber, a former northwest Arkansas developer, was sentenced Tuesday in federal court to 65 months in prison for bank fraud and money laundering.
U.S. District Judge P.K. Holmes sentenced Barber to 60 months for money laundering and 65 months for conspiracy to commit bank fraud and conspiracy to commit bankruptcy fraud, the sentences to be served concurrently. Barber, who will be credited for 16 months time served, must served 85 percent of sentence under federal guidelines and then will have three years of supervised probation.
U.S. Attorney Conner Eldridge had requested Barber be sentenced according to guidelines that called for a range of 235 to 293 months. Eldridge didn’t object to the 65-month sentence either in court or in a news conference later outside his office.
"This case has always been about fraud," Eldridge said.
The prosecution and defense agreed on $32,860,828 for the amount lost by Barber’s developments. Holmes said the amount inflated the guidelines to a range that "overstated the seriousness of his behavior."
Holmes said it was important to impose a severe sentence, though, as a deterrence for future white-collar developers who want to game the system.
"Financial institutions rely on developers’ honesty and integrity," Holmes said. "There is some fraud they can’t detect."
Barber, dressed in prison orange with his legs shackled at the ankles, addressed the court before his sentencing and apologized to his family and friends. He had wiped away tears when a former colleague testified on his behalf in court.
"Your honor, I come before you with a humble heart,” said Barber, sitting between his lawyers Asa Hutchinson III and Asa Hutchinson. "More than a half-decade ago, I made bad decisions based on my selfishness and pride. I failed those who loved and trusted me the most."
Barber pleaded to the charges July 31, 2013 after originally facing 27 charges related to schemes that provided false documents and information about loans and real estate to banks. The court dismissed the remaining 24 counts.
Barber will have to pay restitution to his victims but that amount wasn’t calculated Tuesday. Holmes scheduled a hearing for Jan. 5 on that matter.
Holmes said he was going to impose a sentence outside of the guideline range in part because he was unsure when Barber’s fraudulent actions began. Holmes said it appeared that Barber resorted to criminal acts after the real estate market in northwest Arkansas went "soft" and Barber’s fraud was designed to help him cover his losses, not obtain loans.
Eldridge disagreed with this in court and said Barber obtained several loans through fraud. Holmes said that probably wouldn’t have changed his sentence anyway.
"This was not a Ponzi scheme, not repetitive fraud," Holmes said. "When his business collapsed he could have done what honest businessmen did, take his lumps."
In his address to court before sentencing, Eldridge said the market collapse was not the issue in Barber’s crimes.
"This is not a story of a developer who suffered from a decline in the real estate market," Eldridge said. "If that had been solely the case, we would not be here. We are dealing with fraud."
Three people testified as character witnesses for Barber before Holmes imposed sentencing. Springdale home builder Lee Scarlett said he built seven homes with Barber and said Barber was always "very fair."
"Not a glitch, very transparent," Scarlett said. "I never had any money missing."
The most moving testimony came from former Fayetteville resident Karon Reese, who had butted heads with Barber about his plans to build a 12-story hotel on Dickson Street. Despite their opposition, the two became friends and Reese drove from New Orleans to testify for Barber.
Reese said Barber was "hipper" than her but always friendly and cooperative. Barber was a developer who always did what he said he would do, Reese said.
"I felt he was a very responsible citizen," said Reese, whose testimony brought Barber to tears. "He did great work. He dealt fairly and honestly with us. He did contribute to Fayetteville in a really important way."
Richard Hudson, a former chairman of the Arkansas Chamber of Commerce board of directors, said he believed Barber would still be a leading businessman in northwest Arkansas if not for the real estate market crash. Hudson had written a similar letter to the court for the pre-trial sentencing report.
Asa Hutchinson III said in court that Barber’s crimes were not self-serving. He said there were extenuating circumstances such as Barber’s crumbling marriage, an autistic son and a problem with alcohol, which Barber sought treatment for, Hutchinson said.
"We submit his motivation was not to line his pockets but to keep paying creditors," Hutchinson said. "That’s not a justification or an excuse. It doesn’t make anything he did correct."
A severe sentence, Hutchinson said, would over-punish Barber, who has already seen his reputation "destroyed," and would punish his children.
Hutchinson asked that Barber serve his sentence close to his children, who live with their mother in New York. Holmes said that wasn’t his decision but would make that recommendation.
"I can’t treat Mr. Barber any different than a drug dealer who loves his children as much as Mr. Barber does," Holmes said. "I think Mr. Barber is clearly remorseful. He is a good person who made serious, serious mistakes."
There are co-defendants in Barber's case. Here are the statuses of their respective cases:
- James Van Doren pleaded guilty on Aug. 23, 2013 and is set to be sentenced on Monday.
- Jeff Whorton pleaded guilty on Aug. 26, 2013 and is set to be sentenced on Nov. 5.
- Brandon Rains pleaded guilty on Oct. 17, 2013 and is set to be sentenced on Nov. 6.
- David Fisher was acquitted Oct. 23, 2013 of conspiracy to commit bank fraud.
- K. Vaughn Knight was convicted of eight counts of bankruptcy fraud and money laundering on Nov. 18, 2013. The court overturned that jury verdict on June 10. The case is on appeal.