By Bill Turque
Washington Post Staff Writer
Wednesday, November 28, 2007
Ever since an estimated $2.2 million from hundreds of Northern Virginia condominium and homeowner associations was found to be missing this year, no one -- no lawyer, state regulator or auditor -- has been able to answer the most critical question: Where did it go?
The authorities might want to check out a stylish new steak and sushi place on Capitol Hill, the one with the hardwood floors, the five plasma screen TVs behind the 35-foot bar and an ahi tuna tartar that's gotten good reviews. That's the contention of a lawsuit filed in D.C. Superior Court last month by the restaurant's majority partner, Jordan Cappolla.
Cappolla opened Jordan's 8 this summer in the resurgent Barracks Row district along Eighth Street SE. His partner, who invested more than $800,000 in the venture, according to the suit, is Amber Lynn Koger, the wife of Jeffrey S. Koger, former chief financial officer of Koger Management Group. The Fairfax City company collected assessments on homeowners and handled other business for about 400 condominium and homeowner groups before it was placed under court supervision Feb. 26 by a Fairfax County Circuit Court judge.
The court's action was in response to a complaint filed by the Virginia Real Estate Board and the Department of Professional and Occupational Regulation alleging that large cash withdrawals had been made from association accounts without proper documentation.
The complaint named Koger, 38, the son of company President Robert A. Koger, as "the likely primary culprit for embezzling the funds." In July, a forensic accountant hired by the real estate board said that at least $2.2 million had been stolen from association accounts -- and that the losses were likely to grow as more associations audited their books.
No charges have been filed against Jeffrey or Amber Koger. No one answered yesterday at their home phone number in Herndon. Amber Koger's attorney, Bradley Chase of Fairfax City, did not return a phone message yesterday.
A man came to the door of the Koger home in the Fox Mill Acres subdivision yesterday afternoon and said, "You've got the wrong place." The four-bedroom split-level, which sits on a 2.2-acre lot that includes a horse stable, is for sale.
Fairfax City police announced a criminal investigation in January but have made no public statement since then. Cappolla said in an interview that he has been questioned by Internal Revenue Service agents about his dealings with Koger. Some homeowner associations that employed Koger Management have responded to IRS questionnaires.
Robert Koger said he has not spoken with his son since last November. "He could be in Oshkosh or Bangladesh for all I know," he said.
In October, the company filed for protection from creditors in federal Bankruptcy Court.
Cappolla's lawsuit was filed Oct. 4 in Superior Court under the restaurant's corporate name, JIC. It said JIC "has reason to believe that the allegedly stolen funds may have been used to fund Defendant Amber Lynn [Koger's] capital contributions used to purchase her interest in JIC and to develop Jordan's 8."
Cappolla said in an interview that he met Amber Koger about four years ago through Tony Harris, a mutual friend who was an owner of Tri-Fitness, an Annandale health club. According to the suit, Amber Koger was vice president of Tri-Fitnesss, and Jeffrey Koger was treasurer.
Jeffrey D. Barsky, the forensic accountant hired by the state real estate board, reported in July that $2.2 million in homeowner funds withdrawn from an account at BB&T bank between 2004 and 2006 were transferred to Jeffrey Koger or Tri-Fitness. Harris, the Tri-Fitness co-owner, has not been accused of wrongdoing.
Cappolla said that he saw the Kogers socially from time to time and that last year they began to talk about what Cappolla might do as a follow-up to Tapatinis, a cocktail bar he owns that is also on Eighth Street SE.
Cappolla said that Amber told him she wanted to invest in a restaurant because "she had a daughter and wanted to provide for her future." In December 2006, she acquired a 49 percent interest in JIC for "capital contributions in excess of $800,000," according to the suit. Under the terms of the agreement, she was guaranteed 80 percent of the profits until she made back her first $300,000; then her cut dropped to 49 percent.
Cappolla, 38, said he was aware of the allegations against Jeffrey Koger but was assured by the couple that they had no merit.
"When Jeff and Amber told me what was going on, they told me it was absolute garbage," he said. "They told me he was innocent of everything," Cappolla said. He said he was also assured that the money going into Jordan's 8 belonged to Amber Koger, not her husband. As if to underscore the difference, she did business with JIC as "Amber Lynn."
But the suit says Jeffrey Koger provided the money to JIC on Amber's behalf "through a series of cash and check payments."
After the restaurant opened, Cappolla said, his concerns began to grow. Jeffrey Koger, who had no experience in the restaurant business, wanted to "help out," Cappolla said, and started to spend large amounts of time on the premises.
In September, after Koger got into a dispute with a vendor, Cappolla asked him to leave. When he refused, Cappolla called the police.
In the ensuing argument, according to the suit, Koger told a D.C. police officer "that he personally paid for the development of Jordan's 8."
Cappolla consulted a lawyer, Wilbert Washington of Fairfax City. Washington said that as they began to discuss the situation, he realized that "Amber Lynn" was Jeffrey Koger's wife.
As it turned out, Washington also represents more than 70 condominium and homeowner associations that contracted with Koger Management and had lost money or were trying to figure out if they had. They include Oakton Woods Homeowners Association, the Ashburton Manor Homeowners Association, Rollingwood Condominium Unit Owners Association and Villages of Mount Vernon Homeowners Association.
Washington would not discuss clients' specific losses, but he said they ranged up to $90,000. Other homeowner and condominium groups that are not his clients, he said, have had losses in the six figures.
Washington filed an "interpleader" action against Amber Koger on behalf of JIC. In essence, JIC is asking the court to take control of her restaurant profits and let anyone with a potential claim prove they have a right to some of the money. Cappella would also be released from any liability in connection with the money.
On Nov. 14, Washington sent a memo to his homeowner and condominium association clients inviting them to join the suit as claimants. He warned that there was no guarantee that a firm link could be established between Amber Koger and the stolen funds, "although it appears fairly likely that she was involved in the scheme and that she used stolen money to invest in Jordan's 8."
It is also possible, he said, that the restaurant money will be claimed by parties to the Bankruptcy Court proceedings underway in Alexandria.
For the moment, at least, the $800,000 in question is gone, according to Washington. It's been sunk into the sleek new urban restaurant, which Cappolla hopes will become a "baby Palm," attracting power brokers and staff members from Capitol Hill.
He said he is confident that Jordan's 8 will become profitable. Who will be sharing the profits with him isn't clear. It could be a group of suburban condominium and homeowner associations.
Cappolla said that would be fine. It might even be a boon for business.
"They can bring their groups in here," he said.