Judge rejects bid to recoup taxpayer money given to Chinese firm for scrapped Appomattox project
Virginia officials lost a key ruling Friday in a lawsuit seeking to recoup tax money spent on a failed factory project led by Chinese entrepreneurs.
Appomattox County Circuit Judge Donald Blessing ruled against the Virginia Economic Development Partnership, finding no legal basis for the main thrust of the partnership’s lawsuit. An agency lawyer said no decision had been made on whether to appeal.
The partnership filed the suit following the 2015 collapse of Lindenburg Industry’s plans to build a catalytic converter plant in Appomattox.
Gov. Terry McAuliffe approved a grant of $1.4 million in state taxpayer money to the Chinese company. The state’s economic development agency alleged Development Advisors, a Charlotte-based site consultant, had breached its obligation to Lindenburg and owed Virginia money.
Blessing rejected that argument. He said he would confirm his oral decision stated in open court with a written order. It will not take effect until then.
Unless successfully appealed, the ruling would release Development Advisors, or DAI, from the case, leaving only Lindenburg Industry to face a possible legal challenge for the money. Lindenburg, which was also sued, has not responded. The company’s corporate registration has expired. Company officials stopped communicating last year with their lawyer.
Aside from a suit against Lindenburg, there appear to be no other options in civil court for Virginia to recover the taxpayer money lost in the deal.
A partnership official has said the FBI is investigating and agency records include emails from an agent referring to meetings with officials about Lindenburg. The FBI has refused to discuss the matter. A state police criminal probe “remains ongoing at this time,” agency spokeswoman Corinne Geller said Friday.
McAuliffe did not respond to a request for comment Friday. He has said he is receiving neither briefings nor updates on the case from state police.
FBI and state police began inquiring about Lindenburg after The Roanoke Times reported in January 2016 that partnership staff members failed to vet the company before striking the deal. Officials instead relied on a company website filled with images and text lifted from another company.
McAuliffe announced the Lindenburg deal in November 2014, declaring he’d closed it during a marketing trip to China.
Project principal Yunshan “Stella” Li received a state flag from McAuliffe at a news conference in Appomattox, where she described plans to convert the shuttered Thomasville furniture plant into a catalytic converter factory. The company pledged to hire 349 workers and invest $113 million in return for a package of incentives that included the upfront, $1.4 million state grant.
Recommended by the partnership and approved by McAuliffe, the grant was paid to the company on the condition that the project would go forward as promised and the money repaid if it did not.
Lindenburg purchased the plant a short time before the announcement and hired a contractor to renovate the office area.
The project stalled thereafter.
An appeal would add to costs borne by the state-funded partnership for a succession of private legal firms to represent it in the case. Those expenses had reached about $33,000 as of Feb. 1. The billings of the third firm were not immediately available Friday.
McAuliffe was asked during a stop in Roanoke on Sept. 8 whether the state police probe would conclude before the end of his term Jan. 13. The governor said: “I have no idea. You don’t tell state police when to finish an investigation.”