First James Van Doren attempted to have his criminal trial separated from that of former northwest Arkansas real estate developer Brandon Barber and Barber’s lawyer, K. Vaughn Knight.
Now Van Doren and his defunct company, Epsilon Investments LLC, have sued Barber and Knight in Washington County Circuit Court. The complaint (PDF) filed by Fayetteville attorney Rick Woods on July 19 appears to be another attempt by Van Doren to separate himself from his co-defendants in a federal court trial for money laundering and bankruptcy fraud that is scheduled to start on Sept. 16.
Barber and Knight "have triggered a prosecution by the U.S. Attorney for the Western District of Arkansas against Van Doren as a direct and proximate result of Barber and Knight's actions," according to the suit.
Van Doren asks for unspecified compensatory and punitive damages.
The complaint describes a convoluted deal dating back to July 2007. Barber, according to the complaint, persuaded Van Doren to take possession of four residential lots in the Timber Trail subdivision of Fayetteville in July 2007 and to obtain financing for the construction of houses on the lots.
Construction delays forced Van Doren to pay $10,000 to settle liens filed by subcontractors, he claims in the suit. What's more, Van Doren alleges that Barber "significantly marked up the costs" of the Timber Trail properties "due to a credit crunch," so that the finished houses would sell for $30,000 to $40,000 less than Van Doren had been led to believe.
Ultimately, Van Doren claims, the four properties were sold on the last day of March 2008 in a "flip," first to a company called JDL LLC and then immediately to another company called Outfield Development LLC. But instead of settling accounts as outlined in an escrow agreement, Barber and Knight allegedly listed Van Doren's Epsilon Investments on closing documents as the recipient of the $688,937 settlement check.
More: Click here (PDF) to see exhibits in the case.
Van Doren says he did not learn that his company was listed on the settlement statement until two years later, when he was deposed by a creditor in Barber's bankruptcy case. He alleges in the civil suit that the money was actually paid to some "third-party entity or person" that was not party to the transaction but which was under the control of Barber and Knight.
Van Doren alleges that Knight and Barber put Epsilon on the settlement statement "to disguise the fact that the funds were actually going to Barber via Knight, which unnecessarily placed [Van Doren] under the scrutiny of federal regulators and law enforcement."
Woods, who is representing Van Doren in the civil case, could not immediately be reached for comment. Lance Cox is representing Van Doren in the criminal case and did not immediately respond to an interview request. Asa Hutchison III, who is representing Barber in the criminal cases, and David Matthews, who is representing Knight in the criminal case, did not immediately respond to interview requests. It is unclear if Matthews and Hutchison are representing Knight and Barber in the civil case as well.
On July 10, U.S. District Judge P.K. Holmes of Fort Smith denied Van Doren's motion to be tried separately from Barber and Knight. Van Doren and Barber first developed a friendship when growing up in Jonesboro. They later became business associates.
Federal prosecutors allege that Van Doren committed a crime by knowingly shielding money from creditors to help Barber pay for personal expenses. While Barber was charged with 26 counts, Van Doren was charged with seven: three counts of money laundering and one count each of bankruptcy fraud, conspiracy to commit bankruptcy fraud, wire fraud and conspiracy to commit money laundering. Each count carries potential prison time of between five and 20 years and fines up to $250,000.
