Judge re­jects bid to re­coup tax­payer money given to Chi­nese firm for scrapped Ap­po­mat­tox project

Richmond Times-Dispatch Weekend - - Metro - BY JEFF STUR­GEON The Roanoke Times

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.”

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