A Dallas man has been federally charged with allegedly scamming real estate investors out of over $26 million.
Timothy Lynch Barton, 59, was indicted on September 20, according to a press release from U.S. Attorney for the Northern District of Texas Chad E. Meacham. Barton was indicted for one count of securities fraud, one count of conspiracy to commit wire fraud, and seven counts of wire fraud.
He appeared before U.S. Magistrate Judge David L. Horan on Monday. The indictment alleges that Barton traveled to China in order to market Texas real estate investment opportunities to Chinese investors, according to the press release.
“During his presentations – which highlighted his supposed ties to U.S. politicians – Mr. Barton allegedly claimed that the properties in question were located in sought-after neighborhoods in the Dallas Fort Worth Metroplex,” the release states. “He introduced a builder, identified in court documents as S.W., who he claimed would purchase lots to build on to sell to future home buyers.”
“Mr. Barton allegedly promised investors annual interest payments for two years, followed by the return of their initial investment at the end of the second year. He allegedly claimed that the investors would contribute 80 percent of the funds necessary for the project, and he and others would contribute the remaining 20 percent. Mr. Barton also allegedly represented that no commissions would be paid out of investor funds.”
Barton allegedly inflated property costs by up to 195% for each property and sometimes did not purchase the property at all. The indictment also claims he funneled the investor money into other projects and used other funds for consultants and other expenses.
Investors allegedly lost over $26 million over the course of the scam.
Barton is the CEO of real estate investment firm Carnegie Development and President of real estate development firm JMJ.
The case is being prosecuted by Assistant U.S. Attorney Renee Hunter, and the investigation was conducted by the FBI’s Dallas Field Office, according to the press release.
Barton could face up to 20 years in federal prison for securities fraud, up to 20 years for conspiracy to commit wire fraud, and up to 20 years for every count of wire fraud.
The Securities and Exchange Commission (SEC) also announced parallel actions taken against Barton, as well as Haoqiang Fu (Michael Fu) and Stephen T. Wall.
Keefe Bernstein, supervised by B. David Fraser, will lead the litigation, according to the SEC announcement. The investigation was conducted by Carol Hahn and Jason A. Braun from the SEC’s Fort Worth Regional Office under the supervision of Eric R. Werner and Jim Etri.
The SEC claims the defendants “allegedly misappropriated nearly all investor funds for such undisclosed purposes as making Ponzi payments to other investors, purchasing real estate in the names of other Barton companies, paying sales commissions to Fu, and funding Barton’s personal lifestyle, including a private aircraft purchase. According to the SEC, the properties were never developed, and investors have not been repaid.”
The FBI and the U.S. Attorney’s Office for the Northern District of Texas are assisting in the action from the SEC.
