Biscuit burden: Cuccinelli demands cash from Craig
In his response to a speculator's controversial lawsuit seeking nearly $20 million from taxpayers in the form of conservation tax credits, Attorney General Ken Cuccinelli has fired back by accusing Biscuit Run investor Hunter Craig of unmitigated gall and demanding that Craig's investors put up as much as $165,000 to cover allegedly underpaid recordation taxes.
"You guys have chutzpah," is the way Hook legal analyst David Heilberg restates the AG's response. "You want all this money in tax credits, but you wouldn't even pay the recordation tax on what you claim it was worth."
In a document that goes beyond merely fighting the suit, the AG makes the counterclaim that not only did the Biscuit Run backers seal their own legal fate by underpaying the tax, but that they need to pay the higher amount before the case can be heard.
"It was quite a clever pleading," says Heilberg, calling the tactic an example of the legal concept of estoppel, that the plaintiff's own action– penny-pinching, in this case– bars it from victory.
It turns out that in transferring the property nearly two years ago, Craig's team paid just $9,800 in recordation tax; yet Virginia code indicates that such tax should be paid on the full amount of the property's worth. And that's something Team Craig now controversially asserts was nine times what the state paid in December of 2009 when it handed over $9.8 million for the nearly 1,200-acre tract.
Already, the state has granted Craig's team nearly $11.7 million in tax credits. Yet Craig– who had hoped to reap millions on a private flip but who now could end up spending millions to shore up his once-delinquent loan– sued for $19.5 million more from the public.
Numbers that large are what makes an alleged $78,000 underpayment sound like the proverbial drop in the bucket. Nevertheless, the state, via the response penned by Senior Assistant Attorney General John Patrick Griffin, demands that Craig ante up that amount (which might eventually reach as high as $164,526 including interest and penalties) before the Albemarle Circuit Court even sniffs at his case.
Craig's group, Forest Lodge LLC, whose four lawyers listed on its lawsuit were unavailable for comment by presstime, has 21 days to respond to the state's November 21 demurrer and counterclaim.Attached Documents:This story is a part of the The Biscuit Run cash grab special.