RICHMOND, VA (WWBT) – It was one week ago Friday that a prominent Richmond developer was arrested for allegedly forging public documents, among other charges. Tonight, Justin French, 39, is out of jail but the FBI still has a lot of questions about his real estate dealings.
On August 5th, FBI and IRS agents surrounded Justin French's consulting business in Shockoe Slip. Agents were seen carrying away computers and boxes of documents. 8 days later French was picked up at the Richmond International Airport with $11,000 in cash and a one way ticket. He was charged with 8 felonies: 4-counts of forging public documents, 4-counts of uttering those forged documents and one count of writing a bad check.
This isn't the first time French has faced charges. In the 90's, while a student in law school, he served two years in federal prison, after pleading guilty to firearm and cocaine trafficking. French has been quoted as saying he is proud of what he's done in life since that mistake.
French quickly rose to prominence in Richmond, amassing more than a hundred commercial and residential properties. According to city records, his home, the Old Douglas Freeman mansion in the West End, is worth more than $2-million. In recent years, French used state and federal historic tax credits to offset the cost of renovations. The program gives developers a tax break for restoring old or historic buildings.
Questions about French's use of the credit stalled several of his projects, like his plan to convert a warehouse into apartments on Summit Avenue off the Boulevard.
Kathleen Kilpatrick runs the state's historic tax credit program.
"This rehab program is excellent. The good that it has done can be seen in communities all across Virginia," Kilpatrick said.
She points to several success stories across the city, places like Centerstage, The National and Bowtie Cinemas. The developers of all three venues used historic tax credits.
She wouldn't speak directly about the French investigation. She would only say "We take abuse very seriously and have been aggressively pursuing this and what you see is the fruits of those efforts."
Battle with the Banks:
At his construction sites his signs say "a vision in progress", but in June, French's work to convert several buildings into apartments on Summit Avenue and Norfolk Street stalled. The project, called Scotts Addition, is in a neighborhood West of the Boulevard.
French told the online publication Richmond BizSense, he was in a dispute with one of his backers, Henrico based-specialty insurer Markel. Because of this feud with Markel, French said he deliberately defaulted on tens of millions of dollars of loans, on 14 properties with five local banks. He said he stopped making payments to force foreclosures and end his partnership with Markel.
"It is a large step to take. It's certainly a gamble," said Christopher Hoctor.
Hoctor specializes in commercial real estate with Gregory Kaplan law firm. He has no inside knowledge on French's situation, but says forcing foreclosures is not unheard of, but it's uncommon because banks have a lot of options to recover their money.
Union First Market Bank sued French. A judge ultimately appointed a third party to take control of 8 properties. Hoctor explains why the banks would ask a judge to stop in. He says, "They're trying to control the situation. They want to make sure that the properties aren't mismanaged. They want to make sure that the properties don't fall into disrepair."
Markel's managing director did not return our calls. We tried to reach French at his West End home. No one came to the door. He also didn't return our repeated phone calls or answer any of my emails.
He will be in court on November 2 on the state charges. The FBI investigation is still underway.