House flipper Romano fights back against lender lawsuit; trial set for March

Josh Romano, top right, during filming of the HGTV “Richmond Rehabbers” pilot in 2017. (Courtesy of Breese Romano)

Placing blame for their dispute on a real estate attorney, a bankrupt local house flipper looks to be headed to trial against one of his former lenders.

Josh Romano and Tuckahoe Funding LLC, a so-called hard-money lender owned by William Everette Starke Jr., are scheduled to face off in a two-day trial beginning March 22 in Richmond federal court.

Tuckahoe Funding filed suit against Romano in mid-August, accusing him of fraud and embezzlement for allegedly making misleading statements to their mutual real estate attorney that resulted in funds meant for certain residential rehab projects being misappropriated.

Romano has since filed a response to the suit, denying the allegations and putting the blame for any missing funds on the attorney, Page Allen of Midlothian-based S. Page Allen & Associates.

Romano claims that the funds — at least $750,000, according to Starke’s suit — were never disbursed to him and, as far as he knows, are still with Allen. He also maintains that any funding draws received from Allen were put toward properties that he and Starke had agreed upon, and that Starke’s lawsuit relies solely on representations from Allen’s firm that the funds were wrongly distributed to Romano.

The response requests that the lawsuit be dismissed with prejudice and that the court award Romano any relief it finds appropriate.

The lawsuit is playing out as part of Romano’s Chapter 7 proceeding that has been underway since October 2018. The complaint seeks to prevent the $750,000 that Starke is looking to collect from being discharged as part of the bankruptcy case.

Josh Romano

According to the suit, the amount was among funds that Starke had loaned to Romano’s Cobblestone Development Group by way of Allen’s firm, which was responsible for disbursing construction draws for work on 21 properties.

After about a third of the funds had reportedly been drawn, the suit states, Starke sought to take over draws to Romano in late 2017 and learned that the funds said to be remaining had, in fact, been disbursed to Romano without its authorization. The suit alleges that Romano gave the law firm explicit instructions to draw those funds for use on the properties but instead put them toward other projects or expenses.

In his response, Romano argues that it was he who brought the missing funds to Starke’s attention after becoming suspicious of Allen’s accounting when he requested draws and was told there were no funds available.

After having his own accountant and an outside forensic accountant investigate the matter, Romano says it was discovered that the law firm was not holding as much funds as its records reflected and was miscalculating interest rates on the funds, among other alleged discrepancies.

Starke’s lawsuit states that his LLC mitigated some of its alleged damages by reaching a settlement with the law firm, which it determined was unaware of what Romano was doing with the funds. Romano’s response states that Starke terminated its relationship with Allen and sued her firm for malpractice before settling the case with the firm’s professional liability insurance carrier.

BizSense reached out to Allen for comment for this story. A voicemail left at her office Wednesday and an email Thursday did not receive a response.

Chad Edwards of Virginia Beach firm Edwards Law is representing Romano in the case. He declined to comment. Tuckahoe Funding is represented by Williams Mullen attorneys William Bayliss and Joseph Blackburn III.

In his Chapter 7 filing, Romano listed nearly $770,000 in liabilities owed to 75 creditors. The filing came months after Romano began winding down his Cobblestone brand amid financial and legal troubles that had begun piling up in early 2018.

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Michael Dodson
Michael Dodson
21 days ago

Maybe HGTV can follow the trial for a new mini-series on the rehab business.

Erin Schoenberg
Erin Schoenberg
20 days ago

Seriously, does Josh Romano have some sort of interest in Richmond BizSense? Are you guys best friends? The amount of time you all give this guy and still stroke his ego is absurd. He is a crook, plain and simple. It’s always everyone else’s fault but his own. If the court awards him relief (insert ha f’in ha) will he pay back all the people he owes? Asking for friends.