The legal troubles are mounting for local developer Justin French.
Union First Market Bank filed a lawsuit filed last Friday seeking to place seven of his properties, for which they hold the deed of trust on, under receivership by court order. The total loan balance for the properties is more than $17.4 million.
Union First Market CEO Billy Beale said he could not answer questions about the case when reached for comment on Friday, adding that it would be in appropriate comment on pending litigation.
The loans were issued to French beginning in September 2006 and as recently as November 2009 by First Market Bank before it merged with Union Bankshares.
The suit, filed by attorneys with the law firm Blankingship & Keith of Fairfax, states that the action is “a result of an emergency which necessitates the immediate appointment of a receiver to collect rents due on August 1, 2010 and to preserve certain real properties and the personal property used in connection with each property, in which Lender has security interests and on which it has liens.”
The suit states that the notes are also secured by the assignment of leases on each property, with the exception of one.
French has defaulted on all of the notes, as well as other loans made by other local banks, in what he says is an attempt to cut the tax credit purchaser and business partner Markel Corporation out of the picture. On Friday RBS reported that French has defaced one of the buildings. You can read about that here.
The suit says that French, as controller of each property’s ownership entity, has been collecting rent from tenants and not using the money to pay the amounts due on the loans. It also states that the value of each of the properties is not sufficient to pay off the note.
UFMB seeks to appoint Stephen Brincefield of Thalhimer’s property services group as the receiver. The requested court order would grant Brincefield possession and control of the properties and the power to collect rent and manage the properties. The court order would also allow Brincefield to take control of banking and deposit accounts for the properties.
Brincefield did not return a request for comment from BizSense.
When reached for comment, French said he plans on filing a countersuit against the bank and Markel.
French said that when First Market Bank issued the loans, it wasn’t disclosed to him that the funds he was borrowing were partly funded by Markel.
Markel has continues to refuse to comment on its dealings with Justin French.
According to its most recent 10-K filing with the SEC, Markel had $27.3 million in commercial loan participations outstanding with First Market Bank as of Dec. 31, 2009. Before the merger with Union Bankshares, Markel owned a 40 percent stake in First Market Bank.
“Union First Market Bank acted in a way to benefit Markel, at my expense as their borrower, and continues to handle loans in a way that benefits Markel. They are behaving as if they are Markel,” French said.
French said he believes that Union First Market Bank violated federal banking laws by not disclosing to him that Markel was participating in the loans, as Markel was also French’s partner and tax credit purchaser for the deals.
Because of this, French said his countersuit would seek to invalidate the loan documents between him and Union First Market Bank. French said he is currently searching for legal representation that does not have a conflict of interest in the case.
The case filed by Union First Market Bank will appear before Judge Clarence Jenkins. A hearing date has not been set.
Below is a list of the properties and loan amounts in question:
1509 Belleville Street — $1,062,500
1510 Altamont Avenue — $3,320,000
212 E. Leigh St. — $3,515,000
207-211 E. Main St. — $1,777,500
2906 W. Clay St. — $2,100,000
3122 Clay St. — $1,350,000
1217 E. Cary St. — $4,559,500
Al Harris covers commercial real estate for BizSense. Please send news tips to [email protected].
The legal troubles are mounting for local developer Justin French.
Union First Market Bank filed a lawsuit filed last Friday seeking to place seven of his properties, for which they hold the deed of trust on, under receivership by court order. The total loan balance for the properties is more than $17.4 million.
Union First Market CEO Billy Beale said he could not answer questions about the case when reached for comment on Friday, adding that it would be in appropriate comment on pending litigation.
The loans were issued to French beginning in September 2006 and as recently as November 2009 by First Market Bank before it merged with Union Bankshares.
The suit, filed by attorneys with the law firm Blankingship & Keith of Fairfax, states that the action is “a result of an emergency which necessitates the immediate appointment of a receiver to collect rents due on August 1, 2010 and to preserve certain real properties and the personal property used in connection with each property, in which Lender has security interests and on which it has liens.”
The suit states that the notes are also secured by the assignment of leases on each property, with the exception of one.
French has defaulted on all of the notes, as well as other loans made by other local banks, in what he says is an attempt to cut the tax credit purchaser and business partner Markel Corporation out of the picture. On Friday RBS reported that French has defaced one of the buildings. You can read about that here.
The suit says that French, as controller of each property’s ownership entity, has been collecting rent from tenants and not using the money to pay the amounts due on the loans. It also states that the value of each of the properties is not sufficient to pay off the note.
UFMB seeks to appoint Stephen Brincefield of Thalhimer’s property services group as the receiver. The requested court order would grant Brincefield possession and control of the properties and the power to collect rent and manage the properties. The court order would also allow Brincefield to take control of banking and deposit accounts for the properties.
Brincefield did not return a request for comment from BizSense.
When reached for comment, French said he plans on filing a countersuit against the bank and Markel.
French said that when First Market Bank issued the loans, it wasn’t disclosed to him that the funds he was borrowing were partly funded by Markel.
Markel has continues to refuse to comment on its dealings with Justin French.
According to its most recent 10-K filing with the SEC, Markel had $27.3 million in commercial loan participations outstanding with First Market Bank as of Dec. 31, 2009. Before the merger with Union Bankshares, Markel owned a 40 percent stake in First Market Bank.
“Union First Market Bank acted in a way to benefit Markel, at my expense as their borrower, and continues to handle loans in a way that benefits Markel. They are behaving as if they are Markel,” French said.
French said he believes that Union First Market Bank violated federal banking laws by not disclosing to him that Markel was participating in the loans, as Markel was also French’s partner and tax credit purchaser for the deals.
Because of this, French said his countersuit would seek to invalidate the loan documents between him and Union First Market Bank. French said he is currently searching for legal representation that does not have a conflict of interest in the case.
The case filed by Union First Market Bank will appear before Judge Clarence Jenkins. A hearing date has not been set.
Below is a list of the properties and loan amounts in question:
1509 Belleville Street — $1,062,500
1510 Altamont Avenue — $3,320,000
212 E. Leigh St. — $3,515,000
207-211 E. Main St. — $1,777,500
2906 W. Clay St. — $2,100,000
3122 Clay St. — $1,350,000
1217 E. Cary St. — $4,559,500
Al Harris covers commercial real estate for BizSense. Please send news tips to [email protected].
Wow. This guy is just unbelievable. I really hope he loses it all. Apparently, French does not at all understand how investing works – you can’t pull a Robinhood and expect your investing partners to *not* hate you. It is French and his ilk who give a bad name to American business.
Here’s hoping Union FMB and Markel emerge as the winners.
“Before the merger with Union Bankshares, Markel owned a 40 percent stake in First Market Bank.”
That tidbit is interesting…
French is a fool
With that grin on his face, you know he is “__ __ __ __ ed!”
I have to agree with Daniel on this. I hope he loses it all. To think he can just default on loans and wait and then try to restructure them is crazy. What makes it even worse is he is still collecting rents on the properties and not paying the loans.
I would really like to know if it truly is the “Markel Corporation” investing and/or Tony and Steve doing it outside of the realm of the Corporation. That would make more sense. I am sure there are many more investors in other properties and I hope they see the writing on the wall.
I feel that the Markel’s being stoic speaks thousands.
Andrew — Don’t forget that, not only is he not paying the loans, he also isn’t paying his contractors or subcontractors. Wonder where the money is going… Something tells me that the story will continue to get bigger and bigger as investigations are made public.
According to the first article about this, French doesn’t feel Markel is holding up their end of the deal and he is purposely letting these properties’ loans default.
FLORIDA!!!!!!!!!
This entire situation is hilarious. Even the idea that developing in Scott’s Addition would be a successful and profitable venture seems pretty comical. It’s a run-down industrial cesspool. These are the kinds of projects that come to fruition when a market gets so overheated you have non-real estate businesses (Markel) trying to profit from the boom led by people who know nothing about development. How on Earth did Justin French go from law school dropout to convincing a corporation like Markel to fund his ridiculous projects? Both parties deserve all the headaches this is causing for their grossly inadequate due… Read more »
John…Where have you been? French has absolutely no credibility, so who cares what he thinks about Markel, I would be embarrassed to leave such a naive comment,
@Bill
Did you ever consider that John may not be following this story as close you do? You attack, what appears to be his lack of information, but you support your argument with nothing but opinion? Most people really don’t care about Mr French and his dealings nor find these stories as compelling, so why don’t you concentrate on supporting Mr French’s lack of credibility with some facts for those of us that have just started to pay attention. Please
Irony….Your prior statement that Markel owned 40% of First Market Bank before its merger with Union is factually inaccurate. Markel had a larger share of ownership; but this is totally irrelevent to the issue with French’s actions. Aside from recent published reports of his local activities, he and another individual contractually agreed to purchase property beyond this area, provided financial support to maintain the project ,then deferred settlement of sale while his financial affairs deteriorated. The sale never materialized, however, he sued to have his funding of the project returned with no merits for litigation at all. There is more… Read more »
Thanks Bill, but I didn’t make the statement, I quoted it from the article and found it interesting. If it is inaccurate then it is up to the author of the article to correct it or you can post the correction as a response to the article. “…but this is totally irrelevant to the issue with French’s actions.” Not in this article. While his behavior is appalling this article is not just about Mr French’s behavior, it also contains information on Union First taking legal action against him. “…anyone who responds to the article without knowing the facts is simply… Read more »
Enough. We’ll hear more in due course.
There is one typo- should read 207-211 E Main Street, not Leigh St.