The developer facing embezzlement charges relating to his Model Tobacco Lofts project in South Richmond has reached a plea deal with federal prosecutors.
Chris Harrison, whose Maryland-based C.A. Harrison Cos. led the multimillion-dollar apartment conversion of the former tobacco building on Richmond Highway, pleaded guilty last week to one count of wire fraud.
Harrison was accused of skimming loan proceeds for the project and another 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 hotel in Petersburg.
In entering the guilty plea, Harrison agrees that prosecutors at trial would have proven the case against him “beyond a reasonable doubt and with admissible and credible evidence,” according to the filing. It goes on to describe Harrison’s alleged actions as “in all respects knowing and deliberate” and “not committed by mistake, accident, or other innocent reason.”
Harrison, 52, initially faced a total of 12 counts, including four for wire fraud, in the indictment brought by a federal grand jury last fall. The charges carried a combined maximum prison sentence of 32 years, though actual sentences for federal crimes are typically less than the maximum penalties.
The wire fraud count in last week’s plea agreement carries a maximum sentence of 20 years. It relates to a 2021 invoice from a construction vendor for Model Tobacco that Harrison is alleged to have fabricated and inflated from about $35,500 to over $95,000 to induce Cedar Rapids Bank & Trust to disburse an inflated loan amount.
Prosecutors alleged that Harrison, a former UVA and NFL football player who has been active in commercial real estate for two decades, submitted more than a dozen falsified invoices and lien waivers in draw requests to CRBT to secure over $3.6 million in loan proceeds that he put toward personal expenses and legal fees for his litigation against the City of Petersburg over the Ramada Inn project.
According to the Eastern District of Virginia U.S. Attorney’s Office, Harrison spent the funds at luxury goods and fashion stores, including over $60,000 on Rolex watches; personal expenses including his home mortgage, landscaping expenses for his residence and tuition and tutoring expenses for his child; and the Petersburg litigation.
The October indictment charged Harrison with wire fraud and mail fraud, engaging in monetary transactions with criminally derived property, and aggravated identity theft. Harrison had initially pleaded not guilty to the charges.
In late December, Harrison filed for Chapter 11 bankruptcy protection for his Model Tobacco Development Group LLC, which owns the 15-acre complex at 1100 Richmond Highway that Harrison has partially redeveloped. An initial phase converted the property’s Art Deco-style main building into 200-plus apartments.
The bankruptcy filing was made three weeks after Virginia Housing filed a request in Richmond Circuit Court to put the property under receivership due to loan payments that it said haven’t been made since last May. Virginia Housing was listed in the bankruptcy petition as the Model Tobacco LLC’s primary creditor, with $34.7 million owed on a construction loan for the project.
The bankruptcy filing put a stay on Virginia Housing’s request, which would put a third-party receiver in control of the property ahead of a foreclosure sale or other disposition. Virginia Housing had alleged that the LLC failed to pay regularly scheduled debt service payments on the loan and allowed the property to fall into disrepair by failing to communicate and cooperate with the property management company, WPM Midsouth.
In recent weeks, BizSense heard from some Model Tobacco residents who said they were seeking to get out of their leases in light of Harrison’s legal issues and due to concerns about property management and security. Two residents cited issues such as damage to units resulting from a fire last March, car break-ins and other security concerns, and requested lease addendums concerning potential lead exposure that they said was not previously disclosed.
In a statement to BizSense, WPM, which has managed Model Tobacco since August 2023, said it wasn’t aware of any residents seeking lease terminations and said it has worked to address resident concerns. It said residents impacted from what it said was a grease fire have been reimbursed through renters’ insurance and repairs have been completed. It added that additional security has been implemented since two car break-ins were reported last year.
Harrison’s sentencing hearing is set for June 17 in the federal courthouse in Alexandria, where the case is being litigated. District Judge David Novak is presiding over the case.
Harrison is represented by a team from D.C. law firm Williams & Connolly. Assistant U.S. attorneys Kashan Pathan and Avi Panth are prosecuting the case, which had been scheduled for jury selection in April.
The developer facing embezzlement charges relating to his Model Tobacco Lofts project in South Richmond has reached a plea deal with federal prosecutors.
Chris Harrison, whose Maryland-based C.A. Harrison Cos. led the multimillion-dollar apartment conversion of the former tobacco building on Richmond Highway, pleaded guilty last week to one count of wire fraud.
Harrison was accused of skimming loan proceeds for the project and another 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 hotel in Petersburg.
In entering the guilty plea, Harrison agrees that prosecutors at trial would have proven the case against him “beyond a reasonable doubt and with admissible and credible evidence,” according to the filing. It goes on to describe Harrison’s alleged actions as “in all respects knowing and deliberate” and “not committed by mistake, accident, or other innocent reason.”
Harrison, 52, initially faced a total of 12 counts, including four for wire fraud, in the indictment brought by a federal grand jury last fall. The charges carried a combined maximum prison sentence of 32 years, though actual sentences for federal crimes are typically less than the maximum penalties.
The wire fraud count in last week’s plea agreement carries a maximum sentence of 20 years. It relates to a 2021 invoice from a construction vendor for Model Tobacco that Harrison is alleged to have fabricated and inflated from about $35,500 to over $95,000 to induce Cedar Rapids Bank & Trust to disburse an inflated loan amount.
Prosecutors alleged that Harrison, a former UVA and NFL football player who has been active in commercial real estate for two decades, submitted more than a dozen falsified invoices and lien waivers in draw requests to CRBT to secure over $3.6 million in loan proceeds that he put toward personal expenses and legal fees for his litigation against the City of Petersburg over the Ramada Inn project.
According to the Eastern District of Virginia U.S. Attorney’s Office, Harrison spent the funds at luxury goods and fashion stores, including over $60,000 on Rolex watches; personal expenses including his home mortgage, landscaping expenses for his residence and tuition and tutoring expenses for his child; and the Petersburg litigation.
The October indictment charged Harrison with wire fraud and mail fraud, engaging in monetary transactions with criminally derived property, and aggravated identity theft. Harrison had initially pleaded not guilty to the charges.
In late December, Harrison filed for Chapter 11 bankruptcy protection for his Model Tobacco Development Group LLC, which owns the 15-acre complex at 1100 Richmond Highway that Harrison has partially redeveloped. An initial phase converted the property’s Art Deco-style main building into 200-plus apartments.
The bankruptcy filing was made three weeks after Virginia Housing filed a request in Richmond Circuit Court to put the property under receivership due to loan payments that it said haven’t been made since last May. Virginia Housing was listed in the bankruptcy petition as the Model Tobacco LLC’s primary creditor, with $34.7 million owed on a construction loan for the project.
The bankruptcy filing put a stay on Virginia Housing’s request, which would put a third-party receiver in control of the property ahead of a foreclosure sale or other disposition. Virginia Housing had alleged that the LLC failed to pay regularly scheduled debt service payments on the loan and allowed the property to fall into disrepair by failing to communicate and cooperate with the property management company, WPM Midsouth.
In recent weeks, BizSense heard from some Model Tobacco residents who said they were seeking to get out of their leases in light of Harrison’s legal issues and due to concerns about property management and security. Two residents cited issues such as damage to units resulting from a fire last March, car break-ins and other security concerns, and requested lease addendums concerning potential lead exposure that they said was not previously disclosed.
In a statement to BizSense, WPM, which has managed Model Tobacco since August 2023, said it wasn’t aware of any residents seeking lease terminations and said it has worked to address resident concerns. It said residents impacted from what it said was a grease fire have been reimbursed through renters’ insurance and repairs have been completed. It added that additional security has been implemented since two car break-ins were reported last year.
Harrison’s sentencing hearing is set for June 17 in the federal courthouse in Alexandria, where the case is being litigated. District Judge David Novak is presiding over the case.
Harrison is represented by a team from D.C. law firm Williams & Connolly. Assistant U.S. attorneys Kashan Pathan and Avi Panth are prosecuting the case, which had been scheduled for jury selection in April.
I am sure he will get a couple of months in a federal country club and start up a new business once his federal probation is over.
Let me gently suggest that you hold onto your cynicism until we see what the court does. After the court issues the sentence, you can go online and look at the actual sentence and the court’s rationale for the sentence.