Alleged affiliate of Tim Barton pleads guilty to SEC charge

Chinese national faces up to five years in federal prison on sale of unregistered securities

JMJ Development’s Timothy Barton (LinkedIn, Getty)
JMJ Development’s Timothy Barton (LinkedIn, Getty)

Haoqiang Fu, an alleged associate of Tim Barton also known as Michael Fu, pleaded guilty for his role in what has been described as an investment scam involving phony land deals for residential developments.

U.S. District Judge Ed Kinkeade

U.S. District Judge Ed Kinkeade

U.S. District Judge Ed Kinkeade accepted Fu’s guilty plea of one count of sale of unregistered securities; a sentencing date has not been set. As a result of the plea, Fu waives the right to have the case federal prosecutors built against him presented to a federal grand jury, as well as his right to a jury trial.

Barton has pleaded not guilty to the charges and is set for a jury trial in February in Kinkeade’s court.

Given this development, there’s now a likelihood that Fu could testify against others who may have been involved in the scheme, including Barton, according to the Dallas Business Journal. Under the terms of his deal, Fu is reportedly required to give “complete and truthful” information about his participation in the alleged Ponzi scheme as part of his plea agreement with prosecutors.

Fu now faces a sentence of up to five years in federal prison followed by up to three years of supervised release. There’s also possible fines of up to $250,000, which doesn’t include the costs of any future victim restitution or forfeitures.

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In the SEC suit that was filed against Barton in September, it’s alleged that Barton and his Dallas-based investment firm Carnegie Development partnered with Fu— as well as veteran Texas homebuilder Stephen Wall— to raise more than $26 million in “unregistered, fraudulent” securities offerings from more than 100 investors — most of whom are Chinese nationals.

The suburban land development deals that were allegedly pitched to investors were supposedly being built in popular North Texas areas such as Parker, Kaufman, Tarrant and Johnson counties. The SEC lawsuit alleges that the defendants chose to operate under Wall’s name to win investors’ trust in Wall, who had previously sold homes to Chinese investors solicited by Fu.

“These representations were false,” the SEC lawsuit says. “Of the approximately $26.3 million raised, only two Wall Entities (Wall 7 and Wall 9) actually purchased the property described in their agreements for a total purchase price of approximately $2.6 million.”

Court filings list Fu as a Chinese national and permanent resident of the United States who lives in Spring, a northern suburb of Houston. Due to his immigration status, Fu potentially faces deportation in what would be a separate case, according to a warning he received in plea documents he signed.

— Maddy Sperling