Receiver Appointed For 54 Real Estate Entities Caught Up In Alleged $26M Scam
Dozens of real estate-related entities and properties associated with a Dallas-based developer facing fraud charges were ordered into receivership by a federal judge, according to a new report.
U.S. District Judge Brantley Starr placed in receivership 54 entities with ties to Timothy Lynch Barton, president of development firm JMJ and CEO of real estate investment firm Carnegie Development, CoStar reported.
Barton was indicted on seven counts of wire fraud, one count of conspiracy to commit wire fraud and one count of securities fraud in September 2022. He has pleaded not guilty.
The indictment alleges that Barton traveled to China to convince investors to spend millions of dollars on home lots in areas of Dallas-Fort Worth that Barton said were highly sought after, inflating the cost by as much as 195%. In some instances, he never actually purchased the property, according to the U.S. Attorney’s Office for the Northern District of Texas.
Barton told investors he had partnered with builder Stephen T. Wall and Chinese businessman Michael Fu to purchase the properties for eventual development. The Securities and Exchange Commission has also charged Barton, Wall and Fu in civil court. All three are accused of violating anti-fraud provisions. Fu pleaded guilty for his role, according to CoStar.
The Chinese investors were promised two years of interest payments, followed by a return of their initial investment at the end of the second year, the news release says. Barton allegedly paid interest payments to early investors with later projects’ investment funds, paid commissions out of investor funds and funneled investors’ money into unrelated projects.
Investors lost more than $26M in the scheme, according to the indictment.
Barton “misappropriated nearly all the investor funds, misusing them to, among other things, purchase properties in the name of other entities he controlled, pay undisclosed fees and commissions to Fu, pay expenses associated with unrelated real estate development projects, and fund his lifestyle,” Starr wrote in a memorandum supporting the receivership, CoStar reported.
Starr also ordered the sale of three Dallas-area properties owned by the estate, CoStar reported. That includes Amerigold Suites, a 69-unit extended-stay lodging property at 13636 Goldmark Drive in North Dallas; Frisco Gate Property, a property of about 4.5 acres at the corner of the Dallas North Tollway and John Hickman Parkway in Frisco; and a 3,840 SF single-family home near Uptown.
Starr’s memorandum said he appointed a receiver to oversee the properties that “continue to be mired in liens, lawsuits, and foreclosures that threaten to further diminish the value of the assets,” CoStar reported.
“The court is also concerned about the real risk that Barton would conceal or dissipate assets if left in control,” Starr wrote, adding that investors’ funds have been used for mortgage payments, educational expenses, a personal credit card and the purchase of a plane, according to CoStar.
In June, Barton lost control of a site at 2999 Turtle Creek Blvd. in Dallas, which he once planned to turn into a $395M luxury hotel and condo tower. A federal court approved a settlement that transfers ownership to the lender.
The charges against Barton carry a combined maximum sentence of 180 years.