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In spring 2010, Justin French was photographed for R•Home’s Hot List. He made the list for creating the salvage store ReStore RVA in Shockoe Slip. Ash Daniel photo
Within weeks of making developer Justin French a partner in his solar-energy company, Blue Crump realized he'd made a mistake. Actually, he'd been wary after his first visit to French's office. "The two Fendi couches — it just exuded excess," Crump says. But in the spring of 2009 his firm, Cityspace Solar, needed cash, and French offered that in exchange for part ownership.
Soon after they became partners, Crump grew uneasy about French's business ethics. One of Crump's employees saw an invoice that inflated the cost of work done on a French property, Crump says. He believes that French falsified the document, using Cityspace's letterhead.
Editor's note: Although attempts were made to interview French, now 40, his lawyer, John Honey, said he was not available.
"These were the motivators that were moving us to get as far away from him as possible," Crump says. But he couldn't just walk away. Since Crump had signed a noncompete agreement, French could sue. Instead, Crump hired a private investigator to ferret out information damaging enough to keep French at bay.
Crump had to force French's hand. He wanted his freedom.
"At that point, no price was too high to put distance between me and French," Crump says. "If we had to lose a company that we'd started, that we put our hearts and souls into building, that's what we'd do."
In retrospect, Crump's tactic looks more pragmatic than Machiavellian. Few people — including those who invested in French's projects or took his money for their own ventures — really knew with whom they were dealing.
Though French came to town a stranger in 1996, he swept Richmond off its feet. Before the FBI raid on French's office in August 2010, the debonair developer was known publicly as a poster boy for Richmond's urban revitalization — a man with so much promise that powerhouse Markel Corp. backed him. French also was viewed as a young philanthropist who gave generously to nonprofits and as a sophisticated patron of the arts who bought the Douglas Southall Freeman mansion as a home for his wife and two children.
In reality, French was a con artist who had been imprisoned in 1994 for possessing both cocaine and AK-47s. While he cultivated a public image of enlightened property developer, he was rakish and aggressive in his business dealings and was known offstage as a late-night partier.
In May, he faces a sentence of as many as 30 years in prison for manipulating an historic-tax-credit program to scam no less than $7 million and as much as $20 million from state and federal governments — a denouement once unimaginable to the dozens of Richmonders, many of them wealthy, powerful, creative people, who swirled around him like wind around the eye of a hurricane.
Tom Robinson, a developer and broker who plays at the top level in Richmond business, says he marvels at the ease with which French transformed himself from ex-con into real estate prodigy.
"A man gets out of prison and walks across the street and puts on a $1,000 suit, drives away in a fancy car and lives in a million-dollar home?" Robinson asks rhetorically. "And nobody checked his credit? If I want to buy a used car, they check my credit."
David Gammino, the slender, well-groomed founder of the contracting and development firm City & Guilds, probably knew French as well as anyone in Richmond. The two men met in the fall of 2006 in Plant Zero, a café in Manchester; a mutual friend introduced them, telling Gammino he might be able to do business with French.
In fact, it was French who wanted to buy into Gammino's City & Guilds and then hire the firm to work on his renovation and restoration projects. Several months later, French was driving Gammino around Richmond, showing off his properties. As they passed the Jefferson Hotel, French told Gammino a story that would be instrumental in making up his mind.
French said that he'd worked at the Jefferson checking bags after moving to Richmond in 1997; at the time, French explained, he was living with his wife, Tanya, in the basement of his grandfather's house.
"I thought, ‘Here's this guy who checked bags for the Jefferson 10 years ago, and now I'm looking at all of the buildings he owns,' " Gammino says. "I'd been struggling to diversify and grow my business, and I thought, ‘This is the type of person I want to partner with.' I thought this could be the partnership that could bring my business to the next level."
By the summer of 2007, the two men had cut a deal: French bought 49 percent of City & Guilds, stopping just short of becoming a full partner, and the next three years were heady for both men.
City & Guilds' revenue would grow from $600,000 to at least $10 million annually, as Gammino and his workers repaired or rebuilt French's properties — the old Philip Morris warehouse, more warehouses in Scott's Addition and residential buildings in Church Hill. City & Guilds helped transform French's derelict empire into elegant but simple green urban spaces that were featured in magazine spreads and drew kudos from critics.
And Gammino was hardly the highest profile businessman beguiled by French.
French managed to ingratiate himself with Markel Corp., the national specialty insurance giant based in Richmond; Markel went into partnership with French on some of his projects. French got loans from many banks, among them Union First Market, Gateway, Paragon, Virginia Commonwealth, Virginia Business Bank, and the Bank of Richmond, according to media reports. Then he bought and bought and bought, owning as many as 100 properties at one time.
And with the heft of money behind him, he charmed even Richmond's old-family society set. In 2003, he spent almost $1.8 million buying the illustrious Douglas Southall Freeman mansion, then glammed it up with a sculpture garden and a black pool with arcs of flowing water. He and Tanya offered up the house, hosting exclusive social events.
One art enthusiast recalls meeting French and Tanya when they hosted a fundraiser for the Richmond Symphony Orchestra League. The interior of the house, too, was lavish, she says, awash in paintings by French artists that to her critical eye were worth as much as $50,000 each.
French and Tanya attended other high-society fundraisers, notably the annual art auction to benefit the Faison School for Autism, which was co-founded by Markel CEO Alan Kirshner. It was at the auction that French met Markel employees.
In a city where supporting creativity is de rigueur for wealthy people, the couple supported local artists and the ventures of talented people with ideas but not enough money to bankroll them. French put his money behind creative new restaurants; he supported nonprofits, among them Craig Dodson's Pro Cycling, whose members race but also undertake socially redeeming work, like tutoring inner-city youth. "Without French, our ship would have sunk," says Dodson, whose organization once worked out of a free office that French provided.
"To quote Tom Wolfe, he was a Master of the Universe, and we all bought it," says Gary York, who for some time basked in French's reflected glow as he worked with the developer to open a series of upscale restaurants, a plan that imploded along with French.
Throughout most of 2009, French's life still seemed to be a meteoric success story arising from entrepreneurial business savvy, socially progressive values and good taste. But while he was cutting deals from his office in Shockoe Slip, across town in the offices of the state's Department of Historic Resources, Elizabeth Tune was investigating his applications for historic tax credits.
Under the federal program, developers who renovate historic buildings can get tax credits equal to part of the cost of the improvements they make (see story on page 105). After the project is finished, they can then get money back by selling those credits to individuals or companies, which use them to offset high tax burdens.
Or they use the credits to secure loans or investment for construction up front. In this case, developers sell partnership stakes in the projects to investors in exchange for being able to use the credits to offset the investors' tax burdens.
In French's case, the historic-resources department suspected that he might be inflating his costs to get more credits than he deserved. For example, he submitted what turned out to be fake invoices for more than $1.5 million in renovations that actually cost him about $336,000, according to a statement from the U.S. District Court for the Eastern District of Virginia.
"Elizabeth [Tune] dug deeper and deeper," says Kathleen Kilpatrick, director of the historic-resources department. "And answers [from French] were always forthcoming. There was paper provided, but it was not confidence-inspiring in terms of its validity," she says.
For example, says Tune, the department once questioned roofing costs on a French project that seemed unusually expensive. "The answer we got was that, oh, well, the roof caved in, et cetera, et cetera." Tune says that often the costs in French projects that looked high were for electrical wiring and other work that couldn't be seen in the pictures of completed buildings that were turned in to the department.
The department did not approve 22 of the 36 projects that French submitted for tax credits; in some cases the applications weren't completed and in other cases "because of ongoing questions," Tune says. She says that it's not clear whether costs were falsified in the 14 projects that were approved. That question won't be answered until law enforcement officials are further along in their investigation, she says.
After the historic-resources department detected an "evolving pattern," Kilpatrick alerted the "appropriate state and federal authorities," she says. Then the department began collaborating in a continuing investigation of French's dealings that includes the FBI, the IRS, the state police of Virginia and North Carolina, and the National White Collar Crime Center.
The historic-resources department also stopped approving French's requests for tax credits, which slowed up his cash flow. He began repeatedly calling Tune, director of the department's tax-credit program, asking her when the credits would be approved.
By then, French had lost his tight relationship with Gammino. Since French owned almost half of City & Guilds, he argued he should pay only half of what he owed the company for completing work on buildings owned by French Consulting, Gammino says.
"If he owed us a million, he would say, ‘I really only owe $500,000,' " Gammino says, explaining that French would argue that if he paid the other half, it would be like paying himself. "My accountant sat down with him and said, ‘Justin, that's not how a business is run.' He was using City & Guilds like a line of credit — a million-dollar line of credit."
After numerous squabbles over managing cash flow, Gammino told French he wanted to buy him out. By June 2009, French let go of all but 10 percent of City & Guilds. (More than year a later, Gammino, who cooperated with officials investigating French, found out that his former partner had falsified City & Guilds invoices.)
As his relationship with Gammino dissolved, French turned to Crump, who owned not only Cityspace Solar but also Cityspace Construction. In March 2009, French courted Crump, hoping to buy into both the construction business and the solar-energy firm. Crump refused French's offer regarding the construction company, but he accepted French's investment in Cityspace Solar, which was badly in need of cash. He let French buy 50 percent of it, a decision that still makes him wince.
Not long afterward, Crump began to suspect that French might be inflating costs on applications for tax credits.
Crump looked into three years of French's records at the historic-resources department, becoming more anxious still. In November 2009, he hired the private detective to investigate French's background. By February 2010, he was ready to break away. He decided his only choice was to resign as CEO of Cityspace Solar, and informed French of this.
French began sending what Crump describes as threatening letters. In response, Crump used a weapon his private detective had found — a police report on French, who had pleaded guilty in 1994 to charges of drug possession and illegal weapons while in law school at George Mason University.
Crump had glimpsed French's secret side, the side that in time would lead to French's unraveling. According to the Federal Bureau of Prisons, he was charged in 1994 with possessing cocaine and AK-47s in the interest of "aiding and abetting drug traffickers." French was sentenced to five years in Petersburg's federal prison but managed to get the sentence reduced to two years, the federal prisons report says. In 1996, he was released into the custody of Richmond relatives, according to the report.
That year he filed for bankruptcy, according to federal court records. His creditors were typical of free-spending college-age kids: BMG Music, Discover, AT&T Universal, GE Rewards, as well as a student lender and numerous collection companies.
Crump knew only part of this story, but it was enough. He sent a photocopy of the police report to French. The letters stopped.
The slide began, Gammino speculates, when French left Tanya and his two children to move into a condominium in the River District at the end of 2008. After Gammino found out, he sent French a note, reminding him of the story about working in the Jefferson and living in his relatives' basement.
"I said, ‘That really informed my opinion of the man that you are,' " Gammino says. "I said, ‘Never forget that Tanya is the woman you married, the mother of your children.' "
The next time Gammino saw French, he asked the developer if he'd gotten the message. French brushed off the appeal to his former self. "Justin said, ‘Yeah, man, yeah, I got it — it really brought me down,' " Gammino says.
By the end of 2009, French's ability to charm lenders was failing him, according to Gary York, the restaurant developer. At the time, York was collaborating with French in plans to open a restaurant in a building that the developer planned to buy. French began asking for an unusual amount of financial information, York says.
"That signaled to my attorney that he was having trouble getting the purchase [of the building] financed," York says. "My lawyer told me there are problems there, and he advised me not to pursue the project any further."
York says French's dark side also began to become more visible: "He wanted to hang out with strippers while also hanging out at the Country Club of Virginia, and that's a very difficult thing to balance."
York recalls French bragging about attending a Faison School benefit. Then within days "he's hanging out with strippers and people that those [society] people wouldn't even acknowledge with a glance," York says.
As French careened through the months before the August 2010 FBI raid and his subsequent arrest in the Richmond airport, high living with a decadent crowd became a familiar part of stories told about him.
French would arrive for prolonged after-hours partying and dancing at the Republic, a Broad Street restaurant in which he was a partner, according to various people in Richmond's restaurant industry; the sources include former French associates or employees of the places he frequented. He often brought an entourage, sometimes a woman on each arm and a bodyguard, they say.
Pro Cycling founder Dodson says he was among the relatively few people who were still communicating with French in the months before the FBI raid. Dodson recalls French during this period as moving at warp speed.
"Justin was into all of these things," Dodson says. "I once asked him, ‘Man, how do you do it? You're like a can of Red Bull.' "
As Dodson describes French, the developer seemed not entirely aware of the depth of his troubles, even as federal officials were preparing to swoop down. "Justin had a little 5 o'clock shadow, a little scruff in the face," Dodson says of French, usually meticulously groomed. But he was also still "cool under pressure," Dodson says.
"I remember asking him, ‘How are you holding up?' And he said, ‘It's all good, it's all good.' "
On the day of the FBI raid, Aug. 5, 2010, agents arrived at French's office on Cary Street in Shockoe Slip, some wearing bulletproof vests, according to media reports. Investigators spent hours dragging out and confiscating computers and dozens of boxes of records.
Dodson, who had planned to meet French in his office that day, was there, and he says the developer's poise was uncanny.
"It was wild," Dodson says. "He's like, ‘The feds are taking my computers. It's all good.' It's like some Black Hawk Down in his office, and he's saying, ‘I'm going to lunch while you guys seize my computers — anyone want anything?' "
A week later, at about 5:30 a.m. on Aug. 13, French was arrested in the Richmond International Airport by Virginia State Police. In his pockets he had a one-way plane ticket and at least $10,000 in cash.
In January, French pleaded guilty to fraud and "engaging in unlawful monetary transactions," federal offenses that could reap a sentence of 30 years, according to the U.S. District Court for the Eastern District of Virginia. Both offenses are connected to renovation of 1509 Belleville St., one of the properties he cited in his applications for historic tax credits, the court record said.
French, who styled himself as urban Richmond's salvation, collected people as he did properties, and his sudden downfall has left some of them reeling or at least uncertain, as they try to dissociate themselves from a redeemer-turned-pariah. Crump says he worries most about the clients who may have passed him over because his name is so often linked with French's.
Gammino recounts a hard year in which he struggled to persuade potential clients that he isn't the man his former partner was. Still, Gammino says, "It's an intrinsically difficult reconciliation that I go through every day — that I wouldn't have the company I have, I wouldn't be doing what I'm doing without my relationship with Justin."
Though details are unclear, French also owned properties with Don Lacey, the former Henrico cop now in federal prison in Pennsylvania who admitted to stealing "millions from hundreds of people," according to the U.S. attorney for Virginia's Eastern District. Gammino saw some of those jointly owned properties on the real estate tour that French took him on in 2006.
In hindsight, prominent developer Tom Robinson is taken aback by how easily French put together a bid that rivaled a proposal from much-better-known Richmond developer Robin Miller. At the time — the early 2000s — Miller was known for his ability to reinvent blighted zones like Manchester, while French was a neophyte in Richmond's business community. Robinson says he's left to scratch his head in wonder.
"He wanted to buy the property that was owned by the Virginia Museum of Fine Arts in Manchester," marvels Robinson, who brokered a 2003 deal that included 120 parcels in a now-chic area of South Side. "Justin really wanted it."
Some of French's associates say they wish they'd examined him through a sharper lens or heeded their first instincts.
Kirshner, Markel's chief executive, told reporters last October that the firm did not vet French carefully enough and that its involvement with French was a mistake. In a brief voice message left at Richmond magazine in April, Kirshner says, "He seemed to showed a lot of promise."
Kilpatrick of the Department of Historic Resources chastises the banks that loaned French money, saying, "They didn't do the kind of due diligence that we would expect."
A top executive for one of those banks agrees. "When I first heard of French, the story scared me to death," says the executive, who spoke on condition of anonymity; he says he was not involved in approving early loans to French. The executive adds, "Here's a person who came from nowhere that I knew of, and all of a sudden he's the biggest player in Richmond real estate."
The executive says it's not impossible to acquire properties as rapidly as French did. However, the executive adds: "You don't do that unless you're John D. Rockefeller or something.
"The real question should have been, Where did [French] get all his money? I'm not sure that's ever been answered."