Director of agency that reported Justin French speaks

By Rachel DePompa - bio | email
Posted by Phil Riggan – email

RICHMOND, VA (WWBT) - Prominent developer Justin French is waiting to be sentenced for scamming federal and state historic tax credit programs. Basically stealing your tax dollars.

NBC12 is taking a closer look at the program he abused and the changes being made to make sure this never happens again.

Rachel asks, "Is it shocking to you that somebody tried to (fraud the program)?"

"Yeah, in a way, in a way," said Kathleen Kilpatrick.

She's the director of the State Department of Historic Resources, the department that runs the state's program. She's been the director  for 10 years and she still can't believe what happened.

"On the other hand we're dealing with human nature and whenever you get human beings and money in the same place you really have to be careful," she said.

The program's been around since 1997. It re-built modern Richmond -- Turning aging and abandoned buildings into offices and apartments.

Historic tax credits helped developers open The National, Movieland, Richmond CenterStage, entire sections of the city like Tobacco Row.

"It's not just an incentive to do renovation of a historic building, but it enables people to do renovations of historic buildings," said Jay Smith, a partner with the public affairs firm, Capital Results.

Smith says his company never would have been able to move into the old Lucky Strike Garage in Tobacco Row without the credits. To Smith, Justin French's fraud is shocking.

"It is surprising that you could take advantage of the historic tax credit process, because it does seem that they do take good care and look at the design," he said.

French got loans from local banks. He renovated warehouses like this one on Belleville Street, but inflated the cost of the work to the Department of Historic Resources to get a larger tax break. Lining his pockets with money.

"At some point it just became clear that we needed some help from the outside," Kilpatrick said.

Kilpatrick's agency alerted the FBI, nearly than two years ago, launching the investigation that led to French's guilty pleas.

"The bottom line is a single case of fraud is cause for us to act. to strengthen the backstops that we had in place," she said.

Kilpatrick has stepped up sight visits to projects and is digging deeper into the documents provided by applicants. She says despite the increases in security, the vast majority of developers using the program are "good folks who are rebuilding our cities building by building. We can not let a single individual or a group of individuals, make us lose sight of that."

Kilpatrick likens the new procedures in place for reviewing documents to a full-scale audit.

Justin French will be sentenced in May. He faces up to 30 years in prison.

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