Billy G. Jefferson Jr. partnered with Justin French to rehab the Tobacco Factory at 700 Stockton St. (Photo by Michael Schwartz)
The fight over Billy G. Jefferson Jr.’s debts is getting personal.
Major lender U.S. Bank is coming after the imprisoned Fan landlord personally, claiming Jefferson lied about the profitability of one of his Manchester apartment complexes when taking out a $25 million loan for the property.
The loan, which is in default, is on the 225-unit Tobacco Factory on Stockton Avenue that Jefferson developed with Justin French, another imprisoned Richmond developer.
U.S. Bank claims Jefferson personally guaranteed the loan and should be on the hook for the balance plus interest. The bank asked for a judgment against Jefferson in a civil suit filed March 18 in U.S. District Court.
U.S. Bank’s complaint is the first civil case filed in federal court against Jefferson himself since his tax credit scam began to unravel and he was slapped with federal criminal charges. It also follows a similarly lucrative judgment U.S. Bank has already earned against the Jefferson-owned entity that owns the Tobacco Factory.
The latest suit by U.S. Bank stems from a loan it extended to Tobacco Factory owner TABAC LC in November 2012. The loan had a principal amount of $25.48 million with a 7 percent annual interest rate, according to the suit.
The lawsuit states that Jefferson gave U.S. Bank financial details stating that the Tobacco Factory was charging rents of $1,000 and $1,250 per month, when in fact the rents charged and collected where “in some cases less than half that amount.”
“U.S. Bank would not have made the loan to TABAC had it known the truth about the rents actually being charged and collected…” the suit states.
The financing included a pair of agreements intended to further guarantee the loan. In one, Jefferson “unconditionally guaranteed the full payment by TABAC of 50 percent of all principal and 100 percent of all interest,” court records show.
Jefferson also signed a provision through which he agreed to indemnify the bank from any losses incurred as a result of “fraud, gross negligence, or willful misconduct of TABAC with respect to the Property, including any breach of a representation or warranty made by TABAC.”
The bank is seeking a judgment against Jefferson of about $27 million, based on the loan’s full principal plus accrued interest and fees.
U.S. Bank is represented in the case by attorneys Richard Hagerty, Michael Lacy and Joseph Minock of Troutman Sanders. They did not return a call for comment by press time.
M.F. Connell Mullins Jr., a Spotts Fain attorney representing Jefferson in the case, last week was granted more time to respond to U.S. Bank’s claims. Mullins must now file a response in the case by April 30. He also did not return a call by press time.
The Parachute Factory Apartments at 307 Stockton St. (Photo by Burl Rolett)
This isn’t the first time U.S. Bank has accused Jefferson of lying about the state of one of his properties. Last year, the bank said Jefferson inflated occupancy rates at the Parachute Factory by claiming the building was fully leased when it had significant vacancies. The Parachute Factory is another Jefferson/French collaboration in Manchester.
The Tobacco Factory is being managed through receivership by Cushman & Wakefield | Thalhimer, pending a foreclosure that is in the works. The Tobacco Factory was 65 percent occupied when Thalhimer took over in January. The building is now about 72 percent leased, and Thalhimer is advertising apartments at $799, $899 and $999 per month on its website.
Attorney Tom Wolf of LeClairRyan, who works asset disposition cases, said the bank’s filing against Jefferson personally could be a strategy to jockey for position among his creditors.
The first party to win judgments against the developer can improve its chances of getting paid if Jefferson’s assets are eventually divvied up among his creditors, said Wolf, who is not involved in the Jefferson case.
While the $13 million in restitution he owes the federal government will come first among his debts, creditors can muscle their way to the front of the line by securing judgments.
If Jefferson has more major creditors, Wolf said, one or several of them could attempt to push Jefferson into an involuntary bankruptcy. That process would liquidate Jefferson’s assets and split the pot among creditors based on what percentage of the developer’s total debts each creditor owns.
A similar scenario played out when now-imprisoned Richmond developer Justin French faced criminal charges for a tax credit scam.
“That kind of freezes the priority list,” Wolf said of the involuntary bankruptcy proceeding. “I would think that if there are other substantial creditors out there that somebody, rather than let this bank take it all, would file for an involuntary bankruptcy petition.”
Jefferson is in jail awaiting sentencing after pleading guilty in December to a pair of federal felony charges. Those charges were related to a $13 million historic tax credit scam the developer orchestrated by inflating construction costs on several apartment rehab projects. He faces up to 20 years in prison.
Jefferson also lost control of the vast majority of his Richmond real estate empire and is likely facing a second round of criminal charges.
Prosecutors recently promised to bring more charges related to Jefferson’s alleged plot to build a cash and gift card hoard, shift money among foreign bank accounts and casinos, and flee to England using fake identification.
Billy G. Jefferson Jr. partnered with Justin French to rehab the Tobacco Factory at 700 Stockton St. (Photo by Michael Schwartz)
The fight over Billy G. Jefferson Jr.’s debts is getting personal.
Major lender U.S. Bank is coming after the imprisoned Fan landlord personally, claiming Jefferson lied about the profitability of one of his Manchester apartment complexes when taking out a $25 million loan for the property.
The loan, which is in default, is on the 225-unit Tobacco Factory on Stockton Avenue that Jefferson developed with Justin French, another imprisoned Richmond developer.
U.S. Bank claims Jefferson personally guaranteed the loan and should be on the hook for the balance plus interest. The bank asked for a judgment against Jefferson in a civil suit filed March 18 in U.S. District Court.
U.S. Bank’s complaint is the first civil case filed in federal court against Jefferson himself since his tax credit scam began to unravel and he was slapped with federal criminal charges. It also follows a similarly lucrative judgment U.S. Bank has already earned against the Jefferson-owned entity that owns the Tobacco Factory.
The latest suit by U.S. Bank stems from a loan it extended to Tobacco Factory owner TABAC LC in November 2012. The loan had a principal amount of $25.48 million with a 7 percent annual interest rate, according to the suit.
The lawsuit states that Jefferson gave U.S. Bank financial details stating that the Tobacco Factory was charging rents of $1,000 and $1,250 per month, when in fact the rents charged and collected where “in some cases less than half that amount.”
“U.S. Bank would not have made the loan to TABAC had it known the truth about the rents actually being charged and collected…” the suit states.
The financing included a pair of agreements intended to further guarantee the loan. In one, Jefferson “unconditionally guaranteed the full payment by TABAC of 50 percent of all principal and 100 percent of all interest,” court records show.
Jefferson also signed a provision through which he agreed to indemnify the bank from any losses incurred as a result of “fraud, gross negligence, or willful misconduct of TABAC with respect to the Property, including any breach of a representation or warranty made by TABAC.”
The bank is seeking a judgment against Jefferson of about $27 million, based on the loan’s full principal plus accrued interest and fees.
U.S. Bank is represented in the case by attorneys Richard Hagerty, Michael Lacy and Joseph Minock of Troutman Sanders. They did not return a call for comment by press time.
M.F. Connell Mullins Jr., a Spotts Fain attorney representing Jefferson in the case, last week was granted more time to respond to U.S. Bank’s claims. Mullins must now file a response in the case by April 30. He also did not return a call by press time.
The Parachute Factory Apartments at 307 Stockton St. (Photo by Burl Rolett)
This isn’t the first time U.S. Bank has accused Jefferson of lying about the state of one of his properties. Last year, the bank said Jefferson inflated occupancy rates at the Parachute Factory by claiming the building was fully leased when it had significant vacancies. The Parachute Factory is another Jefferson/French collaboration in Manchester.
The Tobacco Factory is being managed through receivership by Cushman & Wakefield | Thalhimer, pending a foreclosure that is in the works. The Tobacco Factory was 65 percent occupied when Thalhimer took over in January. The building is now about 72 percent leased, and Thalhimer is advertising apartments at $799, $899 and $999 per month on its website.
Attorney Tom Wolf of LeClairRyan, who works asset disposition cases, said the bank’s filing against Jefferson personally could be a strategy to jockey for position among his creditors.
The first party to win judgments against the developer can improve its chances of getting paid if Jefferson’s assets are eventually divvied up among his creditors, said Wolf, who is not involved in the Jefferson case.
While the $13 million in restitution he owes the federal government will come first among his debts, creditors can muscle their way to the front of the line by securing judgments.
If Jefferson has more major creditors, Wolf said, one or several of them could attempt to push Jefferson into an involuntary bankruptcy. That process would liquidate Jefferson’s assets and split the pot among creditors based on what percentage of the developer’s total debts each creditor owns.
A similar scenario played out when now-imprisoned Richmond developer Justin French faced criminal charges for a tax credit scam.
“That kind of freezes the priority list,” Wolf said of the involuntary bankruptcy proceeding. “I would think that if there are other substantial creditors out there that somebody, rather than let this bank take it all, would file for an involuntary bankruptcy petition.”
Jefferson is in jail awaiting sentencing after pleading guilty in December to a pair of federal felony charges. Those charges were related to a $13 million historic tax credit scam the developer orchestrated by inflating construction costs on several apartment rehab projects. He faces up to 20 years in prison.
Jefferson also lost control of the vast majority of his Richmond real estate empire and is likely facing a second round of criminal charges.
Prosecutors recently promised to bring more charges related to Jefferson’s alleged plot to build a cash and gift card hoard, shift money among foreign bank accounts and casinos, and flee to England using fake identification.