A federal criminal case against former local house-flipper Josh Romano and a paralegal he worked with is headed to trial, after each pleaded not guilty to charges that they defrauded one of Romano’s former lenders.
Romano and Lindsey Passmore, the former paralegal who was authorized to disburse construction draws to Romano from the lender’s escrow account, were arraigned Wednesday on charges of conspiring to commit bank fraud and committing bank wire fraud against the unidentified lender.
Both requested a jury trial, which was scheduled for June 6-8. Magistrate Judge Elizabeth Hanes is presiding over the case. (May 18 update: Romano’s trial was rescheduled to start Oct. 17 due to his case being designated a complex case. A plea agreement hearing for Passmore was scheduled for May 27.)
The arraignment came two weeks after Romano was arrested on the charges, which a grand jury handed down in an indictment March 15. Passmore, who was issued a summons, made her first court appearance at Wednesday’s hearing. Both were granted a conditional bond release until the trial.
The indictment alleges Romano and Passmore, at the time a paralegal at local real estate law firm S. Page Allen & Associates, schemed to defraud the lender by drawing from escrowed funds that were meant for certain home renovation projects so Romano could put the money toward other projects and increase his chances for more loans.
The indictment followed the completion of Romano’s Chapter 7 bankruptcy, a three-year case that wrapped up last year.
The close of that case coincided with a ruling in Romano’s favor in a lawsuit brought by Tuckahoe Funding LLC, a so-called hard money lender that alleged Romano committed fraud and embezzlement that led to funds for certain projects being misappropriated. The LLC is owned by William Everette Starke Jr.
It isn’t clear whether the lenders in the two cases are the same. The lender in the indictment is referred to only as “Lender A.”
U.S. Bankruptcy Judge Kevin Huennekens dismissed the Tuckahoe Funding suit, siding with Romano in placing blame for the missing funds on S. Page Allen & Associates. The Midlothian-based firm, which employed Passmore at the time, is referred to in the indictment as “Law Firm A.”
The indictment alleges that Passmore wired the escrowed funds at Romano’s direction and without Lender A’s authorization. When the lender inquired about the funds, Passmore allegedly concealed the embezzlement by sending the lender emails with false escrow balances.
The reported account balances for six projects totaled more than $1 million, according to the indictment, whereas the actual funds that remained totaled $676.
If convicted, Romano, 39, and Passmore, 38, could face up to 20 years in prison, according to maximum potential penalties presented at the hearing. The defendants could also face forfeiture of property or assets, according to the indictment, which specifies a forfeiture money judgment of more than $1.2 million.
Romano is represented in the case by Vaughan Jones, a local criminal defense attorney. Gregory Sheldon of Henrico law firm Bain Sheldon is representing Passmore. Assistant U.S. Attorney Michael Moore is prosecuting the case.
At one point renovating and selling nearly 30 homes in a year, Romano’s Cobblestone Development Group firm hit a high point in 2017 when it was featured in an HGTV pilot called “Richmond Rehabbers,” which was not picked up for a series. Romano wound down Cobblestone in 2018 amid mounting debt and disputes with former clients.
Correction: The funds at issue in this case were in an escrow account managed by the law firm referred to in the indictment. An earlier version of this story incorrectly described a different type of financial account.