Falls Church CEO accused of multimillion-dollar real estate fraud
Date: Oct 08, 2018 10:11 AM
Falls Church CEO accused of multimillion-dollar real estate fraud
The owner and CEO of a Northern Virginia asset management firm is accused of lying dramatically about the size and value of his company and defrauding investors in a $33 million office building near a future Silver Line Metro stop, according to charges unsealed Friday in Alexandria federal court.
Todd Elliott Hitt, a 53-year-old member of a family well known in the regional construction business, is charged with securities fraud. He surrendered to the FBI on Friday.
Prosecutors say Hitt raised close to $11 million through false claims to buy the building near a planned Herndon stop on Metro’s Silver Line but spent less than $9 million in the purchase, relying on bank loans for the rest.
According to the court documents, Hitt spent the remainder of the money he raised on unrelated projects and to pay for private planes, jewelry and sports tickets. Employees told the FBI that Hitt struggled to meet payroll while spending company money on restaurants and private drivers.
He put no money of his own into the Herndon project despite claiming he had invested $6 million, according to court documents.
Hitt promoted his firm, Kiddar Capital, as managing $1.4 billion in assets from offices in Houston; Palm Springs, Calif.; London; and the Washington area. In fact, according to an FBI agent’s affidavit, Kiddar Capital’s only office was in Falls Church, Va., and employees estimated assets of about $26 million.
He also told investors that his brother Brett Hitt, co-chairman of the construction business Hitt Contracting, was involved in the project. A spokeswoman for Hitt Contracting said that Todd Hitt has no connection with the company and that the rest of the family has no involvement in Kiddar Capital.
Two major investors told the FBI they were persuaded to put money in the project because they believed Todd Hitt had “skin in the game.” One who invested $6 million said his firm would have “dug way deeper” if they knew Hitt had not put in an equal amount.
On the contrary, Hitt ended up spending some of their money to see the Washington Wizards and Capitals, eat at Bourbon Steak and shop at Cartier, according to prosecutors.
The investors said they were also led to believe there would be only a handful of investors in the project; according to the court documents, there were 29.
Hitt Contracting was founded by the Hitt brothers’ grandparents in the 1930s and has grown into a major regional company that has worked on the Pentagon, the Hay Adams Hotel and NASA headquarters, among many other projects.
Todd Hitt struck out on his own at age 26, building contentious homes, dubbed “McMansions” by critics, in Arlington. He has positioned himself as a pundit and philanthropist, sharing his views on construction-worker shortages in The Washington Post and the Wall Street Journal and taking a private jet to Puerto Rico after Hurricane Maria. In June he testified before the House Small Business Committee, calling his company “one of the fastest-growing private-equity firms in the region.”
Hitt, who could not be reached for comment, faces up to 20 years in prison if convicted.
Eddy Palanzo contributed to this report.