The federal criminal case against former local house-flipper Josh Romano is one day into what could be a weeklong trial.
Romano, whose Cobblestone Development Group wound down in 2018 amid mounting debt and disputes with former clients, is fighting a seven-count indictment that federal prosecutors brought against him in March.
Those charges, which were reduced to six counts during Monday’s hearing, allege that Romano conspired to commit bank fraud and committed wire fraud against one of his former lenders: Tuckahoe Funding LLC, a so-called hard money lender owned by William “Rhett” Starke Jr.
Federal prosecutors allege that Romano conspired with former paralegal Lindsey Passmore to defraud Starke by drawing from its funds so Romano could put them toward other unauthorized renovation projects. Passmore has pleaded guilty and is expected to testify against Romano during the trial.
Romano, who has pleaded not guilty, faces up to 20 years in prison if found guilty on the conspiracy count, as well as a $250,000 fine, full restitution, forfeiture of assets and three years’ supervised release.
Following jury selection that lasted through the morning, Monday’s session concluded with testimony from a key witness in the case: local real estate attorney Page Allen, whose Midlothian-based S. Page Allen & Associates was responsible for disbursing Starke’s escrowed funds to Romano for certain home renovation projects. The law firm was Passmore’s employer.
Allen said she was unaware that $1.2 million in funds had been misappropriated when Romano confronted her about it in 2017. Asked why she then agreed to pay Starke a $525,000 settlement, Allen said she did so because Romano had filed for bankruptcy and Passmore was likewise in no position to pay back the missing funds.
“Ultimately, she works for me and I’m responsible for her actions,” Allen said of Passmore.
Allen added that she kept Passmore employed at the firm for three more years because she never really knew how the funds were misappropriated. Allen said she added protocols to prevent a similar situation by requiring lenders to email disbursement authorizations to her and additional paralegals at the firm.
Of Passmore, Allen said, “I always found her to be an excellent paralegal.”
Allen is one of 18 potential witnesses who could be called to testify during the trial, which is expected to wrap up by the end of the week.
Other potential witnesses include Starke, his wife and Tuckahoe Funding partner Gabrielle “Brie” Starke, local builder Chris Jefferson, and Romano’s ex-wife Breese Anderson Romano, who contributed to Cobblestone and co-starred with Romano in an HGTV pilot highlighting the company.
Romano’s attorney, Vaughan Jones, referred to that pilot, called “Richmond Rehabbers,” in his opening statement Monday. He said the then-couple said publicity from the pilot made them “Richmond famous,” which Jones played off of in his remarks.
Arguing that Romano didn’t profit from the funds that went missing and at the time was living in his mother-in-law’s basement, Jones told the jury: “Despite being ‘Richmond famous,’ the adjectives ‘rich’ and ‘famous’ don’t always go together.”
Foretelling that prosecutors would be describing the case as “robbing Peter to pay Paul,” Jones added, “It’s important to figure out who’s Peter and who’s Paul and who’s committing the robbery,” arguing that Passmore is to blame and has pleaded guilty to the crime.
In his opening statement, Assistant U.S. Attorney Michael Moore put the blame squarely on Romano, arguing that the funds were misappropriated at his instruction and put toward other projects so he could pay back loans.
“Rhett and Brie Starke trusted Josh Romano,” Moore said. “In return, he repaid that trust by lying to them and stealing (over a million) dollars from them.”
Other witnesses who testified Monday included Kyle Benusa, a business consultant who worked with Romano for a few months in 2016; James Dillon, a contractor who worked as Cobblestone’s construction superintendent from 2012 to 2017; and Daniel Allen, who oversaw operations for Romano from 2016 to 2017.
Benusa testified that Romano’s business liabilities were in excess of assets by $1 million at the time he worked with him, and Allen said Romano continued to purchase properties against his advice.
U.S. District Court Judge Robert Payne ended Monday’s session halfway through the testimony of Page Allen, the real estate attorney. She is slated for cross-examination when the trial resumes today at 9 a.m.