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Investor facing bankruptcy push

A local real estate investor under investigation for fraud may be forced into bankruptcy by noteholders who claim he owes them millions of dollars.

Five members of the Higginbotham family, three of whom live in Spotsylvania County, filed an involuntary Chapter 7 bankruptcy case Monday against James Ashby Moncure.

Moncure, 41, is being investigated on claims that he borrowed money from people and did not use the funds for the stated purpose of making real estate investments in the area. On March 4, he sent a long email to noteholders indicating that he would not be able to repay the promissory notes despite his original good intentions. The email was included as an exhibit in the bankruptcy filing.

Since the email went out, Fredericksburg police and the FBI have been jointly investigating the case under code sections involving obtaining money by false pretense and securities fraud. Detectives have now identified about 45 people whose total losses exceeded $15 million, according to Fredericksburg police.

Though no charges have been filed, police say there could ultimately be a separate charge for each victim.

The Higginbotham family members—Brent and Doris Higginbotham of Spotsylvania and their three children, Katherine Higginbotham Brown of Spotsylvania, Forrest S. Higginbotham of Fairfax County and Thomas Higginbotham of Henrico County—claim in the bankruptcy filing that Moncure owes them about $2.66 million.

The claims derive from six separate promissory notes that members of the Higginbotham family made to Moncure between 2010 and 2013, according to the filing. Some of the notes were made to both James Moncure and his wife, Karen, while others were made just to James Moncure, according to their claim.

The claim says some of the notes were entered into by individual members of the Higginbotham family, while others involved multiple members. One of them was secured by deeds of trust on properties the Moncures own in Spotsylvania and Stafford counties, while others were unsecured, according to the filing.

The Higginbothams are represented in the case by Reston-based attorney Donald F. King of the Odin, Feldman & Pittleman law firm. The family is also asking that an interim trustee be appointed.

Involuntary bankruptcy cases aren’t as common as voluntary ones, but they are sometimes used to preserve assets that could be used to pay claims in cases where fraud is suspected. King said any creditor can join the petition.

Police say they are aware of the current whereabouts of Moncure, a Stafford native who graduated from North Stafford High School and Mary Washington College.

Since the investigation began, police have obtained warrants to search Moncure’s residence at 1200 William St. in Fredericksburg as well as nine banks for financial records: Virginia Partners Bank, Central Pacific Bank, J.P. Morgan Chase Bank, Union First Market Bank, Stellar One Bank, PNC Bank, Bank of America, BB&T and Wells Fargo Bank.

Moncure withdrew “large amounts of cash” from several banks the day before the email went out to noteholders and others in the community, according to a search warrant affidavit filed last week in Fredericksburg Circuit Court. The affidavit also indicates that $1.286 million was wired from one of Moncure’s accounts with Virginia Partners Bank to several other banks between this past Jan. 8 and Jan. 29.

Police have learned that Moncure received a loan for $100,000 just 10 days prior to the email being sent, according to the affidavit filed last week. The money was supposed to be used for land investment near the Quantico Corporate Center development in North Stafford. King said money that the Higginbothams lent to Moncure was also supposed to go to the QCC.

In addition to being a partner in the QCC along with his two brothers, Moncure owns all or parts of 16 different properties, most of which are in the area, according to a financing statement filed in Fredericksburg Circuit Court. The properties are owned either by Moncure himself or through limited liability companies including Moncure Valley, Saranna, Quantico Business Center, Quantico Business Center II, Moncure Brothers and Minor Moncure.

Union First Market Bank and a division of the Silver Cos. are among those with claims against Moncure, according to court documents. Silver is developing the QCC, which is on land the Moncure brothers received from Stafford in a land swap finalized a decade ago.

Silver Capital, a division of the development firm, this past August lent Moncure $400,000 in the form of a promissory note, according to the financing statement. The loan was to be repaid with proceeds from sales of real estate Moncure owns.

Union First Market Bank made four separate promissory notes to Moncure and Saranna between July 2012 and October 2013 totaling roughly $1.94 million, according to a confession of judgment that the bank filed March 11 in Caroline County Circuit Court. The judgment also requires Moncure to pay the bank 18 percent interest and costs.

Moncure is represented by attorney Steven T. Webster of the Alexandria-based law firm Webster Book LLP. Webster said in an email this month that he has been asked to make “appropriate arrangements” to repay Moncure’s lenders. He asked the community to withhold judgment until all the facts are known.

It is unclear how the borrowed money was used. In his March 4 email to noteholders, Moncure referenced that he used an Ameritrade account and became overextended. The email also noted the risks of using leverage and the options market.

Depending on the outcome of the case, there is a chance that Moncure noteholders could take advantage of a provision in the U.S. tax code that allows victims of fraudulent investment arrangements to take an ordinary deduction in the amount of the theft loss during the year in which the scheme was discovered—2014 in this matter.

Bill Freehling: 540/374-5405

bfreehling@freelancestar.com

Permalink: http://news.fredericksburg.com/newsdesk/2014/03/25/investor-facing-bankruptcy-push/

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