A judge’s ruling in favor of Josh Romano in a dispute with one of his former lenders signals the end of the famous local pinball machine’s nearly three-year bankruptcy.
In an order filed late last month, U.S. Bankruptcy Judge Kevin Huennekens dismissed a lawsuit against Romano of Tuckahoe Funding LLC, a so-called hard money lender who alleged Romano had committed fraud and embezzlement that led to embezzlement for some home improvement projects.
Huennekens sided with Romano in attributing responsibility for the missing funds to S. Page Allen & Associates, the local real estate law firm that was responsible for disbursing construction projects to Romano’s Cobblestone development group. The funds were loaned by Tuckahoe Funding, an entity owned by William Everette Starke Jr.
Huennekens also pointed out that Romano reported the missing funds to Starke – as well as the Federal Bureau of Investigations – as an indicator that Romano had no intention of deceiving Starke.
“No party that is in that position would go and file all of their books and records with the FBI and say, ‘Please go through everything and look at this. “It just strains credibility,” Huennekens said in his ruling that closed a one-day trial held in July, a recording of which was obtained by BizSense.
“Trust was placed on the escrow agent, and it was placed there by both parties. This is where the court finds that this whole system has broken down,” Huennekens said, referring to S. Page Allen & Associates. “… If the blame is to be cast, this is obviously the first place it should be placed, as the escrow agent, whether it is a breach of contract or something else, didn’t do its job. “
Later, reiterating an opening statement from Romano’s lawyer, the judge added: “I think we have two victims here and the wrong person we are suing.”
The ruling dismisses the lawsuit with prejudice, meaning Starke can no longer press charges. Huennekens said Starke has the right to appeal the decision, although his attorney, Bill Bayliss of Williams Mullen, said last week he was unsure whether an appeal would be pursued.
In his argument at trial, Bayliss argued that Romano’s representations to Starke ended up costing his client more than $ 2 million.
“This man is not a victim. He is the author of a fraudulent scheme, ”Bayliss said of Romano at the trial, arguing that Romano knowingly used funds intended for certain jobs for other projects or expenses.
“He shouldn’t be rewarded for his artistry and be able to cheat everyone and make everyone trust him and then take that money and use it like he shouldn’t have. ‘use and leave my clients dry, with a bunch of unimproved goods that they had to borrow money from and pay for that cost (Starke) over $ 2 million, “Bayliss said.
Closing a bankruptcy case
The dismissal of the lawsuit closes Romano’s Chapter 7 bankruptcy case, which has been ongoing since Romano filed a lawsuit in his favor in late 2018.
Peter Barrett, a Kutak Rock lawyer appointed as trustee in the case after the withdrawal of original director Bruce Matson, said the case was over when asked about it last week.
Last November, three months after Starke’s complaint was filed, Barrett filed a trustee report asking to be discharged from the bankruptcy case as there were no funds in Romano’s estate to distribute. to creditors.
In his 2018 filing, Romano listed nearly $ 770,000 in debt owed to 75 creditors, compared to $ 7,300 in assets. Court documents show he changed his home address three times in the course of the case. Property records indicate that his last listed address is a house owned by family members.
Starke’s lawsuit was aimed at recovering at least $ 750,000 in alleged damages and preventing those funds from being discharged in connection with the bankruptcy case. While Huennekens’ decision allowed that debt to be discharged through Romano’s bankruptcy estate, that doesn’t mean such funds exist, according to lawyers involved in the case who discussed it in the background.
The Starke case was the latest in a string of lawsuits Romano had faced since shutting down his Cobblestone brand amid growing debt and disputes with former clients.
At one point, renovating and selling nearly 30 homes in a year, the fast-growing company peaked in 2017 when it was featured in an HGTV pilot called “Richmond Rehabbers,” which ultimately did not been picked up for a series.
“What we have here is a terrible parody”
In Starke’s case, his LLC mitigated some of its alleged damages by reaching a settlement with S. Page Allen & Associates, according to court records. Romano’s response to the lawsuit said Starke ended his relationship with the firm and sued him for malpractice before settling the case.
Romano argued that it was he who drew Starke’s attention to the missing funds after being suspicious of the law firm’s accounting when he requested drawings and was told that there were no funds available. After asking his own accountants to investigate the case, Romano’s response said it was discovered that the company was not holding as many funds as its records reflected and was miscalculating rates. interest on funds, among other suspected discrepancies.
In his remarks, Huennekens described the Allen Company’s loan documents as “woefully deficient from a lender’s point of view” and called the accounts the company subsequently created as “woefully deficient.”
“The loan documents we have have not been respected,” Huennekens said. “The deadlines for the start-up and completion of the works (were) not respected; there was never a call on any of the notes. All questions were dealt with somewhat informally.
“I think what we have here is just a terrible parody,” he said. “There is no doubt that there has been a lot of money that has been lost in this business.”
BizSense has reached out to company director Page Allen for comment on this story. Messages left this week at his office and an email to Allen were not returned.
Joined last week, Romano deferred commenting on this story to John Bedi, a Chesapeake lawyer who represented him against Starke.
Bedi said Romano lost money in the script as well and might consider legal action against Allen’s company. If Huennekens granted Barrett’s request to be removed from his position as trustee and officially closed the bankruptcy case, it would give Romano the opportunity to do so, Bedi said.
“I can assume this is something Josh would be very interested in looking into, depending on how he felt treated by everyone involved,” Bedi said.
As to any FBI involvement in the case, it is unclear whether the office continues to review Romano’s claims, as it traditionally does not confirm active investigations. Bedi said investigations of some sort may be ongoing or pending.
“I’m pretty sure, based on all the evidence that has been presented, that at least one or two agencies will look into this,” Bedi said.