Opinion ID: 2756585
Heading Depth: 2
Heading Rank: 6

Heading: Barber’s 2006 and 2007 Loan Applications

Text: During the course of the criminal investigation, the IRS obtained copies of defendant Barber’s own tax returns. The IRS learned that Barber submitted his individual and corporate tax returns to apply for three business loans from Wachovia Bank (now known as Wells Fargo Bank), a federally insured financial institution. The November 13, 2009 search warrant executed at Barber’s Brevard 10 Case: 13-13023 Date Filed: 12/02/2014 Page: 11 of 32 Street office recovered a portion of KBA’s 2005 corporate tax return. This recovered return matched the 2005 corporate return in Wachovia’s records but not the 2005 corporate return filed with the IRS. Former Wachovia banker Sherwood Brown processed the loans for Barber, who was the guarantor for loans on behalf of KBA. Wachovia financed Barber’s purchase of the Brevard Street office. Barber submitted copies of seven tax returns as proof of income, as required for approval of the loans. Barber submitted his 2005 individual return for the first loan in the amount of $70,000, which closed in August 2006. Barber submitted his 2004 and 2005 individual and corporate returns for the second loan in the amount of $200,000, which closed in December 2006. Barber submitted his 2006 individual and corporate returns for the third loan in the amount of $60,000, which closed in 2007. The copies of the tax returns Barber submitted to Wachovia Bank reflected substantially greater income than the returns Barber filed with the IRS. Specifically, the differences in reported income between the returns given to Wachovia and the returns filed with the IRS were as follows: (1) $45,256 versus $16,148 (2005 individual);2 (2) $42,760 versus $20,061 (2004 individual); (3) $84,632 versus negative $3,360 (2004 corporate); (4) $99,923 versus negative $30,077 (2005 corporate); (5) $61,128 versus $16,128 (2006 individual); and (6) 2 As noted above, Barber submitted his 2005 individual tax return to Wachovia Bank on two separate occasions, in connection with both the first and second loans. 11 Case: 13-13023 Date Filed: 12/02/2014 Page: 12 of 32 $111,917 versus negative $25,648 (2006 corporate). According to Brown, Wachovia Bank would not have approved the first loan in August 2006 if it had seen the income figures actually reported to the IRS. On cross-examination, IRS agent Regina Merchant admitted that she could not tell the jury whether the larger income figures in the returns given to Wachovia Bank represented Barber’s actual income. Although the IRS did not investigate Barber’s actual income, it was apparent that Barber’s business earned substantial income each of the years under investigation.