Developer, Engineer Facing Charges of Fraud in Condominium Project

As far as First-South Savings & Loan Assn. in Little Rock, Ark., was concerned, developer Peter A. Barron and engineer Robert K. Burdette Jr. were proceeding nicely with their 47-unit condo project outside Escondido in North San Diego County.

The thrift, which had approved a $5.25-million construction loan to Barron, had little reason to think otherwise.

Both Barron and Burdette had regularly kept First-South officials apprised of the project’s progress by sending receipts and vouchers and letters.

They informed the officials when the project broke ground, when it was graded, when storm drains and waterlines were installed. In November, 1982, Burdette even wrote First-South to say that rain and wet soil had caused some minor construction delays and problems at the project, known alternately as Barron Ranch and Oak Creek.

So when a First-South officer happened to be in San Diego County in early 1983 and decided to visit the project, he was shocked when he found only some minor excavation.

Barron Ranch it wasn’t. Barren ranch it was. And all of a sudden, First-South had reason for concern.

According to a 28-count federal grand jury indictment--issued last month but unsealed Tuesday--Barron and Burdette had, through late 1982, allegedly withdrawn more than $1 million from their $5.25-million construction loan.

Burdette, a civil engineer, pleaded not guilty Tuesday to 24 counts of mail fraud, wire fraud, aiding and abetting, conspiracy and interstate transportation of fraudulently obtained property. He was released on a $50,000 personal surety bond.

Authorities do not know the whereabouts of Barron, the general partner of the Barron Ranch limited partnership who was named in all 28 counts of the grand jury indictment.

However, the FBI, which has tried unsuccessfully to find Barron, believes that he is somewhere in Southern California, according to law enforcement sources.

Losses to First-South totaled about $2 million, according to Assistant U.S. Atty. Charles F. Gorder Jr., who claimed that Barron used most of the funds for his own expenses and for other real estate projects.

The grand jury indictment alleged that Barron and Burdette wrote at least 13 letters to First-South officials in 1982, explaining the purported status of the Barron Ranch project. The vouchers and receipts they turned in were for other projects, according to the indictment.

Tom Warwick, Burdette’s attorney, said Tuesday that the letters were actually written by Barron and that his client merely signed the progress reports.

First-South eventually took over the property after Barron filed bankruptcy and later sold the site, located next to Lawrence Welk Village just north of Escondido.

First-South’s fate was a bitter one as well.

Last month, federal regulators closed the S&L;, Arkansas’ second-largest thrift. It was the biggest federal seizure ever.

Insolvent First-South’s assets had grown to $1.8 billion from only $360 million in 1982, according to regulators.