Chris Harrison at the 2015 redevelopment announcement for the Ramada Inn project in Petersburg. (BizSense file images)
The developer facing federal embezzlement charges involving the Model Tobacco Lofts in South Richmond and an aborted redevelopment of the former Ramada Inn hotel in Petersburg has pleaded not guilty to all counts and is seeking a jury trial to prove his case.
Chris Harrison, principal of Maryland-based C.A. Harrison Cos., was arrested Oct. 17 – the same day his indictment was announced – and released on a personal recognizance bond after making an initial appearance at the federal courthouse in Richmond.
He was arraigned last week and pleaded not guilty to charges including wire fraud and mail fraud, engaging in monetary transactions with criminally derived property, and aggravated identity theft.
The charges carry a combined maximum prison sentence of 32 years, though actual sentences for federal crimes are typically less than the maximum penalties.
A former UVA and NFL football player who has been active in commercial real estate for two decades, Harrison is accused by the U.S. Attorney’s Office of skimming loan proceeds for the Model Tobacco project and a similar building conversion in North Carolina and putting some of the funds toward unauthorized expenses, including litigation costs related to his failed redevelopment of the since-razed Ramada Inn in Petersburg.
Harrison, 52, is alleged to have submitted more than a dozen falsified invoices and lien waivers in draw requests to Cedar Rapids Bank & Trust to secure over $3.6 million in loan proceeds that he put toward personal expenses and the Petersburg litigation.
According to the Oct. 15 indictment, which was initially sealed but has since been unsealed at prosecutors’ request, the personal purchases include a $12,500 mortgage payment to PNC Bank for Harrison’s personal residence, $10,000 to a jeweler for a down payment on a Rolex, and $9,600 to a law firm for legal fees related to the Petersburg litigation.
Other expenses listed in the indictment include $4,000 for tuition and tutoring of his minor-aged child, $3,000 for landscaping services at his residence in D.C., and $1,000 at a luxury fashion store.
The Model Tobacco building along Route 1 in South Richmond.
The funds allegedly stemmed from $22 million in loans from Cedar Rapids Bank for the Model Tobacco project and a project in Winston-Salem, another former tobacco building conversion called Whitaker Park. The loan agreements prohibited Harrison from using proceeds to pay himself or affiliated entities or from using the proceeds for personal expenses.
Harrison is alleged to have created a straw company called Virginia Demolition LLC that he said performed work on the projects – including work that predated the creation of the LLC – but, according to the indictment, had no employees, equipment or office.
He also is alleged to have doctored and inflated invoices in the name of a construction vendor for Model Tobacco, inducing Cedar Rapids Bank to disburse inflated loan amounts. The indictment says Harrison prepared some of those documents with a “co-conspirator,” who is not named in the document.
Harrison was appointed a federal public defender, Paul Gill, to represent him in the case, which is scheduled for a status conference by phone Nov. 4.
District Judge David Novak is presiding over the case. Kashan Pathan and Avi Panth of the Eastern District of Virginia U.S. Attorney’s Office are prosecuting the case.
Harrison completed the first phase of Model Tobacco, a mixed-use project converting the Art Deco-style building and 15-acre complex along Richmond Highway into 275 income-based apartments. The first phase involved 203 apartments and included plans for an entertainment venue. Harrison told BizSense in 2020 that the phase was estimated to cost about $59 million.
Two of his investors on the project sued Harrison in 2022, accusing him of committing fraud and money laundering to wrest control of the project. The lawsuit was dismissed last year after a confidential settlement was reached. Subsequent court filings related to that dispute showed the settlement involved a $6 million judgment.
The nine-story Ramada Inn building as seen along Interstate 95 in 2015.
The Model Tobacco settlement followed another settlement reached in 2022 between Harrison and the City of Petersburg. That agreement, which resolved litigation from Petersburg, saw Harrison sell back to the city the former Ramada Inn property that was once planned for a $20 million rehab.
Petersburg paid Harrison $1.25 million for the blighted property – $500,000 more than he paid for it four years earlier. The city has since razed the nine-story building, which was highly visible along Interstate 95, and is seeking to have the 2-acre site on Washington Street redeveloped.
In addition to Model Tobacco, Harrison’s other projects in Richmond have included the 75-unit 2001 East Apartments at 2001 E. Broad St. and the 66-unit Argon Apartments renovation at 3805 Cutshaw Ave. Harrison sold those properties in 2017 for $9.6 million and $10.2 million, respectively.
A “maximum sentence of 32 years”…he’ll probably get a couple of years with all but a few months suspended. With that in mind and considering that kind of money, Harrison likely decided “the juice IS worth the squeeze”.
Same old story…