Belong to an HOA? Free Steak Diiner for you!
Date: November 25, 2007 06:26PM
Did HOA Funds Finance D.C. Restaurant?
Restaurant owner wants court to hold onto profits while allegations of Koger embezzlement are resolved.
By Nicholas M. Horrock
November 21, 2007
Homeowners Associations Named in Civil Lawsuit
Churchill Square Association, Inc.
Monroe Chase Homeowners Association
Ashburton Manor Homeowners Association
Brittany Regency Homeowners Association, Inc.
Oakton Woods Homeowners Association
Rollingwood Condominium Unit Owners Association, Inc.
Mount Vernon Square Townhouse Community Association
Villages of Mount Vernon Homeowners Association
East Stratford A&B Homeowners Association
A civil lawsuit filed in Washington, D.C.’s Superior Court in October 2007 claims that as much as $800,000 of funds allegedly embezzled from the clients of Koger Management Group, Inc. might have paid for a 49 percent interest in a posh Washington steak house restaurant on Capitol Hill. The lawsuit was filed on behalf of nine homeowners associations who may have been victims of embezzlement.
According to the lawsuit, in mid-December 2006 Amber Lynn Koger, using only the name Amber Lynn, agreed to make "capital contributions" up to $500,000 into JIC, LLC, a firm created to develop Jordan’s 8 Restaurant at 523 8th St. S.E., Washington, D.C. JIC, LLC has filed the suit, naming Amber Lynn Koger and nine homeowners associations that might have been victims of embezzlement.
The lawsuit alleges that Amber Lynn Koger, of Herndon, would be entitled to 80 percent of the profits until her "capital contributions" were reduced to $500,000 and that she "purportedly made capital contributions in excess of $800,000."
Amber Lynn signed all the agreements in the corporation under the name Amber Lynn, but the lawsuit said her full name is Amber Lynn Koger. She said the contributions would be paid on her behalf by her husband, Jeffrey S. Koger, known as "Jeff Koger."
ONE MONTH BEFORE Amber Lynn entered the restaurant agreement, November 2006, Robert Koger, chief executive officer of Koger Management Group, Inc. reported to the Fairfax City Police that he believed his son Jeffrey, had embezzled $800,000 through electronic transfers from clients of Koger Management Group.
The lawsuit filed in Washington, D.C. by Chadwick, Washington, Moriarty, Elmore & Bunn, P.C. of Fairfax City asks the court to take charge of any profits due Amber Lynn from JIC until it ascertained whether the original investment came from embezzled funds. The law firm also represents nine homeowners associations that may have been victims of the embezzlement, and consequently might have an interest in any profits from the restaurant.
The original allegation touched off a year of turmoil for Koger Management Group, perhaps the largest manager of homeowner’s associations operations in Northern Virginia numbering then over 400 clients. The investigation has widened from the Fairfax City Police to a federal fraud task force involving the Internal Revenue Service and the Department of Justice as well as the Alexandria Police Department.
Auditors and a monitor hired under a Virginia court agreement with the Department of Professional and Occupational Regulation reported last fall that the range of the embezzlement could be as high as $2.2 million. They traced money to Jeff Koger’s accounts and to accounts controlled by Tri-Fitness, a now defunct health club in Annandale operated by Amber Lynn, according to court documents.
On July 27, 2007, Koger Management Group, Inc. filed for bankruptcy protection under Chapter 11 of the federal code, represented by Thomas P. Gorman of Alexandria. Robert Koger has not made any comment on the case since last July and has instructed Gorman not to comment. Repeated efforts to reach Jeff Koger or Amber Lynn have been unsuccessful.
In a memorandum circulated among creditors in the bankruptcy, the Chadwick Washington firm reported the peculiar way it learned about the restaurant investment. In addition to representing several creditors, the firm has represented Jordan Cappolla "over the last few years," on several matters.
Cappolla is a Washington restaurateur who also owns Tapatinis, a chic bar a few doors from Jordan’s 8 near the U.S. Marine Barracks, came to the law firm with "concerns about Amber Lynn, as well as her husband."
The memorandum said "it came to light that Jeff Koger was Ms. Lynn’s husband and the likely source of her investment money in Jordan’s 8.
"MR. CAPPOLLA and JIC desires to cooperate with the investigation of Jeff Koger and to ensure that, if it turns out that Amber Lynn’s investment is tainted because the funds she invested were embezzled, that the rightful recipients of her interest in the profits of the restaurant will receive those profits," the memorandum stated.
"JLC, LLC, retained Chadwick, Washington to file a lawsuit in the District of Columbia that places Amber Lynn’s interest in the hands of Superior Court where any interested parties can establish their claims to a share of those funds," the memorandum stated.
Robert Koger testified during a hearing in connection with the bankruptcy that he had made no attempt to recover any of the stolen funds from his son or any other place. Lawyers for other creditor groups urged the judge to appoint a trustee to control the firm because they said Koger was not making any attempt to recover the losses. The main insurance company that had a $1 million policy on Koger last month alleged that Koger lied to it in his description of how money was handled at Koger Management and it was not going to honor any claims.
Creditors have until Dec. 4 to submit their claims and the next hearing will be held on Dec. 7, 2007.