RICHMOND, Va. (WRIC) — A former guard for the Detroit Lions is facing a federal lawsuit in Richmond over claims that he defrauded investors in a proposed re-development of the Model Tobacco building on Richmond’s Southside.
The suit was brought by two investors through their respective companies, MK Richmond LLC and SS Richmond LLC. The two investors are identified only as “Mr. Snider” and “Mr. Kuehn” in court documents.
The 55-page complaint filed in the Federal district Court of Eastern Virginia alleges a web of fraud perpetrated by Chris Harrison, a former guard for the Detroit Lions and aspiring developer, not only related to the Model Tobacco project but also to a property in Washington, DC where the plaintiffs won a separate lawsuit last year.
Untangling the Web
The foundational claim by the plaintiffs is that Harrison solicited investments from them to fund the re-development of the Model Tobacco building on Richmond Highway, then withdrew money from a shared account without authorization and attempted to wrest control of the company away from them.
Harrison and the two plaintiffs were partners in the Model Tobacco Development Group (MTDG) a company that held their investments and through which Harrison was supposed to manage the purchase and renovation of the Model Tobacco building.
The plaintiffs had already loaned Harrison money to redevelop a property in Washington, DC in 2017, and Harrison convinced them to sign on to the Model Tobacco project as “passive partners” who would invest money, but not take an active role in the construction process.
The plaintiffs say there were two key parts to their agreement. The first was that Harrison was expected to make financial contributions to the company in addition to the money put up by the plaintiffs. The second was that any expense of over $50,000 had to be approved by both of the plaintiffs.
Over the next two years, the plaintiffs claim, Harrison violated their agreement repeatedly, withdrawing millions without approval, letting hundreds of thousands simply vanish into thin air, lying about his contributions to the company and ultimately trying to alter their agreement to remove all control the plaintiff had.
The complaint reads “he used company funds for personal purposes; he cooked the books to falsely inflate his own purported capital contributions; he brazenly ignored the operating agreement’s financial controls; he mixed Development Group’s money with money from across a web of limited liability companies he controls; and he defrauded additional investors.”
Delays and Debt
The plaintiffs say that Harrison promised them he would be able to purchase the Model Tobacco building – a beautiful art deco factory that had fallen into disuse and disrepair – by June of 2019, and that construction would begin shortly afterward.
In fact, the plaintiffs say, Harrison didn’t have the financing needed to purchase the property at the time he made these promises, and city records show he didn’t complete his purchase of the property until June 15, 2020 – a year after the promised date.
As a result, Harrison had to pay hundreds of thousands in fees to the sellers of the property as he repeatedly delayed the closing – costs he hid from the investors by claiming they were “deposits” that would count towards the final purchase price.
Finally, when the investors were presented with paperwork to complete the purchase of the Model Tobacco building, they allege Harrison slipped a signature page – titled “Operating Agreement of Model Tobacco
Development Group LLC” – into the packet. The investors, believing it was simply a restatement of the existing agreement, signed it.
Instead, they say Harrison attached the signature to an amended agreement that, through a complex series of financial maneuvers, would have allowed him to strip the investors of their controlling share in the project.
At the same time, the plaintiffs, under the moniker of Santorini Capital, were suing Harrison in Washington DC after he failed to make payments on the loan they made him. Ultimately, the circuit court there determined that Harrison owed them over $1.3 million – money that they say Harrison still has yet to pay.
Keith Forst, an attorney representing the plaintiffs, said, “We have only what we have so far ahead of discovery,” but added that they anticipate more financial wrongdoing will be uncovered as the case advances.
So far, seven claims have been filed against Harrison, including securities fraud, breach of contract and violation of the RICO act, a law most associated with organized crime, but which also applies to civil lawsuits.
Inclusion of the RICO claim, Forst said, could “lead to things like treble damages.”
In the meantime, the Model Tobacco project itself appears – at least publicly – to be continuing unabated. Model Tobacco Lofts recently posted about an open house, inviting potential residents to tour the building – but the post also mentions that hardhats will be required, suggesting the site is still under active construction.
Forst also insisted that his clients still wanted “to ensure that the Model Tobacco project is successful,” despite their legal clashes with Harrison.
8News reached out to Chris Harrison but did not receive a response before publication.