Some investors retreat from Louise Lucas' project plans

PORTSMOUTH

Portsmouth City Councilman Charles B. Whitehurst Sr. withdrew the $2,500 he invested in state Sen. Louise Lucas' conference center project.

But Chesapeake City Councilwoman Ella Ward plans to stick with the venture.

The split between these two leaders mirrors divided sentiments among the approximately 600 investors who collectively anted up $1.9 million in seed money for the project. That's only a fraction of the $60 million Lucas needs to build the conference center and a nearby hotel.

Lucas has yet to buy land for the project and plans to fund the conference center construction through a combination of commercial financing, tax credits and government subsidies, according to a document she recently sent to investors.

She began raising money for the project more than two years ago, selling shares primarily to black leaders, professionals and business people throughout Hampton Roads.

But the State Corporation Commission has alleged that Victory Conference Center LLC, of which Lucas serves as the chief executive officer and controlling shareholder, was not authorized by the state to make an offering. Lucas has neither admitted to nor denied the charge. The company agreed to settle with the state and offer investors refunds, according to the document, which was obtained by The Virginian-Pilot.

Investors have been weighing the option of getting their money back. Neither Lucas nor her attorney, Tony Basch, returned phone calls for comment last week. Investors have until Nov. 15 to request refunds, according to the document.

The Virginian-Pilot attempted to contact more than 130 investors. About 20 declined to comment and more than 100 could not be reached or didn't return calls.

Among those who did, sentiments about the project and the way it has been managed range from full support to worries about the economy and the feeling that the Portsmouth Democrat has not been forthcoming about certain details.

Some, such as Ward, are committed to the idea as a way to bring new business to the city.

Others, such as Whitehurst, had other reasons for requesting a refund. Whitehurst, who accepted a $10,000 donation from Lucas during his council bid, said he asked for his money back because of legal action filed against Portsmouth and its council members. An attorney for Victory Conference Center LLC argued that the city had not fully complied with requests for information about the project under the Virginia Freedom of Information Act.

The matter has been resolved, aside from the company seeking legal fees.

But neither the legal action, the project's lack of capital nor the state's findings bothers some investors.

Eunice McMillan, a retired Portsmouth librarian, said she thinks Lucas has been "denigrated in the paper as doing something unethical." Some investors have asked for their money back because of the negative news coverage, she said.

McMillan also questioned why the Portsmouth City Council did not approve the use of bonds for the project, while other companies in the past have gotten development incentives.

In July, the council voted 3-2 against allowing Lucas to use up to $50 million in federal enterprise zone bonds, which would have helped her receive lower-cost financing. Whitehurst and Councilwoman Marlene Randall abstained from the vote.

"Why is it that when blacks come together and try to be part of the business community, that we've got to jump through a different set of hoops than others who do the same thing?" McMillan asked. "What's the difference?"

State Sen. Yvonne Miller, D-Norfolk, said it's important to remember that the resources of the commonwealth and the federal government are open to all citizens, without regard to race, position, creed, or color.

"People who have gotten 100 percent of all the public benefits to make money with investments from the state and the federal government have never undergone this kind of scrutiny we are placing an elected official under," Miller said.

Barbara Leach of Portsmouth said all investments carry some risk.

The investors are "just ordinary people trying to see something go up that's worthwhile," the retired dispatch clerk for Bell Atlantic, now Verizon, said. "When it comes to fruition, I will be so happy to say I had a part of it."

William Harding Sr. of Portsmouth said he continues to support the project because he would like to see the city's economic development expand beyond downtown.

Councilwoman Randall, whose husband, Vernon, invested $2,000 in the project, would not comment on whether he has requested his money back.

Vivian Boykins of Chesapeake said she has asked for a refund because she is not sure where the project is headed. She lives on a fixed income, and "years are running out on me" she said.

Michael Price of Suffolk said the documents state that there's a chance that investors could lose their money. That did it for him.

"You invest money to make money, not lose money," Price said.

He didn't know anything about the state's settlement order with Lucas' company or many other details about the project until recently, he said.

"The Virginian-Pilot knew what was going on before we did," he said. "That's terrible."

Earl Eley of Chesapeake said he decided a month ago, before he received information from Lucas about the project, that he wanted his money back.

"My gut told me to get out, so that's what I did," Eley said.

Pilot writer Janie Bryant contributed to this report.

Jen McCaffery, (757) 446-2627, jen.mccaffery@pilotonline.com