Barnes' wealth built over the years

“Roy Barnes sued his way into being a multi-millionaire,” the former Democratic governor’s rival in next month’s election, Republican Nathan Deal, says on his website. Deal summarizes Barnes’ career outside politics under such headings as “Illegal Voters,” “Jackpot Jury Payouts,” and “Suing Georgia.”

To be sure, Barnes is rich, by most standards. And he is a trial lawyer who has taken on consumer credit companies and insurance firms, while opposing a Georgia law requiring voters to show photo identification at the polls and defending the head of an electric cooperative accused of impropriety.

Attributing Barnes’ affluence solely to his prowess as a litigator, however, oversimplifies reality, a review by The Atlanta Journal-Constitution found.

The AJC examined more than 1,500 pages of Barnes’ tax returns, financial disclosure statements and other records. The documents suggest Barnes has accumulated his wealth not only through his legal work, but also through shrewd investing and no small amount of good timing. At the end of 2009, according to his latest financial disclosure, Barnes and his wife, Marie, had a net worth of $16.6 million.

Since 1984, Barnes’ tax returns show, he has earned $27.3 million, an average of slightly more than $1 million a year. He has made millions on investments in the stock market, particularly in the banking sector that he sought to tightly regulate as governor, and has acquired dozens of rental properties, both residential and commercial, that further boost his income and his net worth.

In the process, he has faced massive tax liabilities. Barnes paid $7.7 million in federal and state income taxes from 1984 through 2009 — far more than the $4.4 million in total earnings that Deal, a former congressman, reported during the same period.

Barnes’ taxes would have been higher if not for $2.7 million in charitable contributions since 1984, all of which he has claimed as deductions, his tax returns show. Since he left the governor’s office in 2003, he has given more than $850,000 to his church, First United Methodist in Marietta. He has made other six-figure donations to such charities as the Cobb County YMCA and the Georgia Ballet.

In an interview this summer, Barnes said he owes his success to the work ethic he inherited from his father. Bill Barnes died in 2005 at 89.

“I am not going to apologize for being prosperous,” the former governor said. “I’m proud of everything I’ve been able to do. My daddy was not a wealthy man; he was a merchant. I never knew him to drive a car; he drove a pickup truck. When he died, I had to go buy a white shirt to bury him in.”

As the election draws near, Deal’s aides and supporters have raised questions about how Barnes amassed wealth his father couldn’t have fathomed.

They suggest that he gained unfair advantage in court cases before judges he appointed as governor, and that he completed expensive repairs on rental properties just before the campaign to avoid being perceived as a slumlord. They even hint that Barnes is culpable for illicit activity at extended-stay motels he owned with his brother.

But Deal’s aides have offered little evidence of irregularities, and most of their claims could not be confirmed.

Barnes says he avoided appearing before judges he had appointed until several years had passed, and nothing indicates he received preferential treatment even when he did. His aides say repairs to the rental properties were routine. As for the extended-stay motels, Barnes and his brother sold their interest 12 years ago.

The questions about Barnes’ law practice and business ventures follow intense scrutiny of Deal’s finances. On Sept. 15, the AJC reported that Deal and his wife lost $2 million on a business venture with their daughter and son-in-law and must repay another $2 million in loans for the failed company.

Investing in banking

Barnes didn’t get rich being governor.

Before and after, though, are different matters.

When he took office in 1999, Barnes placed his assets into a blind trust, administered by an Atlanta lawyer. The next four years would turn out to be among Barnes’ least prosperous of the past quarter-century.

Barnes reported income of $716,295 in 1999 — down 60 percent from 1998. The trust earned just $65,399 in 2000; his earnings that year totaled $347,671, including $116,459 from his salary as governor.

Barnes had been earning substantial sums since the 1980s, while serving in the Legislature all but two of those years. In 1986, for instance, his gross income totaled $588,124, about 80 percent from his law practice and the rest from investments. He first earned more than $1 million in 1992, largely by netting $560,000 on the sale of bank stock.

Perhaps his smartest financial decision came in the 1980s, when he and his brother Ray formed Georgia State Bank in Cobb County.

The payoff came when they sold their small bank to a larger one from Birmingham, Ala. Barnes acquired tens of thousands of shares of Alabama National Bancorp stock, much of which he has sold in several large blocks since the late 1990s. In 2006, for instance, he sold 33,000 shares for nearly $2.3 million — a profit of about $2 million. Barnes’ holdings grew more valuable when Alabama National was also acquired by a bigger institution, the Royal Bank of Canada. As of Dec. 31, Barnes owned 25,000 shares of RBC, then worth almost $1.4 million.

Barnes owned stock in six Georgia banks or bank holding companies at the end of 2009, his disclosure showed: Atlanta-based SunTrust, JBC Bankshares of Jasper, Piedmont Bancorp of Norcross, Vinings Bank of Smyrna, United Community Banks of Blairsville, and Columbus-based Synovus Financial Corp. He has held shares in those and other banks despite his efforts as governor to rein in predatory lending practices. He persuaded the Legislature to adopt the nation’s strongest protections for mortgage borrowers; lawmakers repealed the law the year after Barnes left office.

All of Barnes’ stock holdings, including such blue chips as General Electric and Caterpillar, were valued at $3.2 million last December.

Through the years, even Barnes’ riskier investments have paid off.

In 1996, the price of shares in ValuJet declined rapidly after the crash of an Atlanta-bound plane into the Florida Everglades. It reached an all-time low on June 18 of that year, after federal authorities grounded the airline. But that day, Barnes invested $31,025 in ValuJet stock. Shares quickly began increasing, and just 20 days later, Barnes sold his stake for $57,213 – a quick profit of 84 percent.

‘I make no apology’

After his unexpected loss to Sonny Perdue eight years ago, Barnes volunteered at Atlanta Legal Aid for six months, helping poor clients with mostly mundane legal troubles. Later, he opened his own firm in Marietta, the Barnes Law Group.

The firm focuses on consumer law, although Barnes also has represented plaintiffs in medical malpractice lawsuits and other cases.

It took five years for Barnes’ firm to turn a profit — $1.2 million in 2008, followed by $1.4 million last year. As a trial lawyer, Barnes generally works on contingency; if his client wins an award, he gets a share. In other cases, according to published reports, he has charged as much as $710 an hour, a rate comparable to Atlanta’s top corporate lawyers.

Deal’s campaign has alleged Barnes’ law practice prospered in part because he has tried cases in front of judges he appointed as governor. The campaign released a list of 37 cases in which Barnes was an attorney of record before 15 of the 59 judges he appointed. But in many of those cases, Barnes had no personal involvement, his campaign said, and Deal’s aides offered no evidence that Barnes or his clients received special treatment from his appointees.

For “two or three years” after leaving office, Barnes told an Albany television station this summer, “I wouldn’t try anything before a judge I’d appointed.” But he added, “Remember, these cases are assigned on a random basis,” and he could hardly avoid the dozens of judges he appointed.

In 2006, lawyers representing a hospital that Barnes’ firm was suing in a malpractice case asked Fulton State Court Judge Myra Dixon to recuse herself because Barnes had appointed her seven years earlier. Barnes’ son-in-law, attorney John Salter, argued in court papers that requiring judges to step aside just because Barnes had placed them on the bench would “effectively bar Mr. Barnes from practicing law in many courts of this state and punish him for being an experienced lawyer and long-time public servant.”

Another judge dismissed the recusal motion.

Deal’s campaign also points to a class-action suit over unwanted business solicitations sent by fax. The plaintiffs lost in the trial court, and then brought in Barnes to handle appeals. A three-judge panel at the Georgia Court of Appeals, including one Barnes appointee, sided with the plaintiffs. But the state Supreme Court, to which Barnes named no judges, reversed the decision and dismissed the lawsuit.

“The only time in three levels that a court rules in Barnes’ favor was when there was a judge that Barnes appointed,” said Brian Robinson, a spokesman for Deal’s campaign.

Republican-sponsored ads have criticized Barnes’ choice of clients. One ad said he had persuaded a jury to acquit a defendant accused of murder in 1980. It also said he had represented corrupt public officials and an accused child molester.

“There’s a lot of money to be made getting the guilty off the hook!” a Republican Governors Association website said.

Barnes fired back over the ethics of representing clients, even unsavory ones.

“I make no apology for defending, for exercising the rights under the Constitution of the United States and making sure the system works,” he said last month. Do I apologize for representing somebody in a civil matter? As opposed to, generally, big banks, big insurance companies? Somebody that generally has no voice?

“Absolutely not.”

Barnes’ finances by the numbers

Gross income

1984-2009: $27,304,288

2009: $5,067,013

Federal income taxes paid

1984-2009: $6,402,164

2009: $1,227,996

State income taxes paid

1984-2009: $1,324,494

2009: $269,758

Charitable contributions

1984-2009: $2,722,208

2009: $395,709

Barnes’ balance sheet

Assets

Cash on hand: $150,000

Real estate: $15,704,734

Stock and other securities: $3,185,477

Liabilities

Bank loan: $569,569*

Real estate mortgages: $3,944,558**

Total assets: $21,122,414

Total liabilities: $4,514,127

Net worth: $16,608,286

* Line of credit secured by stock.

* * Six separate real estate loans, ranging from $107,000 to $1,205,566, secured by Barnes’ residence, office buildings, rental properties and land holdings.

Major holdings and business interests

● 48 pieces of real estate

● Stock in 20 companies, including 12 banks

● Owner, Barnes Law Group

● Partner, ARC Properties/Charleston Properties

● Owner, Barnes Land & Investments

● Partner, Lawyers Realty

● Owner, Old Mable Town Properties

● Member, Williams Fund Associates*

* Barnes earned directors’ fees from this entity, including $68,750 in 2009 and $100,000 in 2008. His staff says he is no longer a director, and would serve on no corporate boards as governor.

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