The Roanoke Times has an article today about a lawsuit against a company that accepted a $1.4 million grant from the Commonwealth yet failed to follow through with its end of the bargain. Surprisingly, there is no claim made against the defendants for violations of the Virginia Fraud Against Taxpayers Act, which as regular readers know is the single most potent weapon in the litigation arsenal of the Commonwealth.
As regular readers also know, most states maintain economic incentives to lure industries to their state, and Virginia is no exception. Like all government programs, these programs are subject to abuse and, in fact, problems with the Virginia’s incentive grants programs are nothing new and have been covered here before on several different occasions.
BACKGROUND ON THE CASE AGAINST LINDENBURG AND DAI
In 2014, Governor McAuliffe announced the plan to open a plant building catalytic converters in Appomattox County. A Chinese company, Lindenburg Industry, LLC, teamed up with a North Carolina company called Development Advisers Incorporated for the project. Initial reports were optimistic, announcing that Lindenburg would invest $113 million into the project.
But that was only the beginning of the smorgasboard of public funds the project intended to reap. The Virginia Tobacco Indemnification and Community Revitalization Commission also approved a grant of $1.17 million for the project. Lindenburg was also all set to receive benefits from the Port of Virginia Economic and Infrastructure Development Grant Program. Funding and services to support the company’s employee training activities was to come from the Virginia Jobs Investment Program.
Talk about a potential goldmine of taxpayer money…and then it went south.
UNRAVELING THE FALSE CLAIMS — THE ROANOKE TIMES INVESTIGATES THE VEDP
A Roanoke Times investigation revealed a web of unsavory characters and unsavory activity that stretches across the world. It turns out that Virginia economic officials did minimal background research, apparently basing their decision to approve a $1.4 million grant on a fake company website. The litany of horrors is widely available for anyone to read, and in addition to the current lawsuit, the Virginia State Police have opened a criminal investigation into the matter, according to a news report.
The VEDP has had problems in Court and has had to change lawyers — it seems like the initial lawyers representing the VEDP were conflicted out of the case. The Virginia Economic Development Partnership, under its new counsel, notified Judge Blessing that it wanted to amend the Complaint in the lawsuit pending against Lindenburg.
But, there is no word on whether that amendment will include a claim under Virginia Code 8.01-216.1 et seq., otherwise known as the Virginia Fraud Against Taxpayers Act…it certainly seems like it should…more to come readers, stay tuned.