As he sits in a Hanover jail awaiting sentencing on a tax credit scam, a battle over the ownership of some of developer Billy G. Jefferson Jr.’s Richmond real estate holdings is brewing in a local court.
William C. Boinest, a part-owner of the embattled developer’s Jefferson Investor Group, L.C., filed a lawsuit last month asking Chesterfield County Circuit Court to begin the process of shutting down the company and liquidating its assets. Those assets include a mini Richmond real estate empire assessed at $32 million.
The suit, filed on March 28, argues that Jefferson Investor Group must close because it cannot operate with its majority owner and managing member incarcerated. Jefferson owns a 76 percent stake in the business, according to court records.
“It is manifestly not reasonably practical to carry on JIG’s business under such circumstances,” the suit claims.
Boinest holds a 20 percent ownership stake in Jefferson Investor Group, according the lawsuit. ThompsonMcMullan attorneys Hugh Antrim and Adam Nelson represent him. Nelson declined to comment on the case.
The suit asks the court to step in and begin the dissolution and winding up processes for Jefferson Investor Group, which would essentially declare the business closed and start divvying up its remaining assets.
Among those assets are two Jefferson-operated LLCs, River City Renaissance and River City Renaissance III. They own a combined 31 Richmond-area properties assessed at a total of $32.17 million, according to city records. Jefferson Investment group owns 93.5 percent of both of those two entities, according to Boinest’s suit.
The push for the sale of the properties comes as Jefferson also has a large tab looming with the government. He’s on the hook for $13 million in restitution, along with a possible sentence of up to 20 years in prison. He pleaded after guilty in December to inflating reported construction expenses on several Richmond-area historic tax credit rehab projects.
LeClairRyan attorney Tom Wolf, who handles cases involving the dissolution of business interests, said if Boinest wins the case, Jefferson Investment Group’s assets would likely be sold off by a third party liquidating trustee. Wolf said the proceeds would go to pay creditors and any remaining cash would be distributed between Jefferson Investor Group members. It is unclear how much outstanding debt Jefferson has on the properties in question.
“I assume that all the assets would be liquidated and turned into cash through sales of various kinds,” Wolf said. “And then distributed in accordance with a court order to the people who are legally entitled to get the money from the company.”
Federal prosecutors specifically listed 10 properties owned by River City Renaissance and River City Renaissance III in the charges against Jefferson last December. They alleged that Jefferson claimed more than $19 million in bogus construction expenses between those projects in an attempt to fraudulently obtain about $7.78 million in credits.
Nine of the properties are apartments buildings in the Fan scattered between Grace Street and the Boulevard. The 10th is Jefferson’s River City Court apartment complex on Stuart Avenue.
Jefferson was released on bond after his Dec. 19 plea hearing. He was allowed to remain free to work on business deals in hopes of raising enough money to pay off the restitution.
But he was arrested again in February after allegedly flouting his bond conditions by moving millions of dollars through personal accounts, family members and a pair of Las Vegas casinos.
As of last month, none of the more than 40 Richmond properties owned by Jefferson-operated entities had been sold.
Jefferson is currently being held at the Pamunkey Regional Jail awaiting a May sentencing date. Prosecutors have recommended a 6.5-year prison sentence though Jefferson could face up to 20 years in federal prison based on his charges.