Another West Virginia real estate deal goes awry

CHARLESTON — Gov. Jim Justice has found himself in the middle of another real estate controversy involving more than $1 million owed to the state.

The Justice administration announced Wednesday that an internal investigation found the landlord of an office building in Charleston missed 79 loan payments at a cost of more than $1.5 million to the state.

The internal review, conducted by the West Virginia Water Development Authority, found that Corotoman Inc., a land development company, had collected rent from a tenant, but failed to make payments on a $3 million loan from the agency granted in 1999.

According to the governor’s office, the WVWDA loaned the $3 million to the Charleston-Kanawha County Regional Development Authority in 1999 to finance purchase of an office building housing Tickemaster, an entertainment company, in the Northgate Business Park in Charleston. Corotoman, whose president is John Wellford, previously owned the building and agreed to act as landlord for Ticketmaster, forwarding rent payments to the state to pay off the loan.

However, while Ticketmaster made its rent payments to Corotoman since 1999, the company made only three payments to the WVWDA between 1999 and 2012, and three more payments in June, July and August of this year. Corotoman and Wellford owe the state $1.539 million in back payments.

“As soon as I became aware of this problem, I directed my staff to turn over the evidence to the State Police, and to begin working with the appropriate parties to recover the lost payments,” Justice said in a press release Wednesday. “I want to make sure the over 300 employees at Ticketmaster are unaffected. I really appreciate the work of WVWDA Executive Director Marie Prezioso for discovering this issue through her internal review.”

Wellman and his companies have run afoul of authorities before. The Charleston Gazette-Mail reported that Wellford’s three development companies — Corotoman, Wellford Management Services and Trafalgor Ltd. — owed more than $200,000 in taxes as of 2014.

This was while Yeager Airport had contracted with Corotoman for $500,000 to remove 1.5 million cubic yards of dirt from its own hillside adjacent to Yeager. The $500,000 was part of emergency spending approved to deal with the aftermath of a landslide that took out part of Yeager’s safety overrun. The airport’s director at the time, Rick Atkinson, resigned shortly after the spending was revealed.

This is not the first controversy involving real estate for the Justice administration.

The State Auditor’s Office discovered in March improper lease payments from the Department of Health and Human Resources to Pin Oak Properties for property at the Middletown Mall in Fairmont. DHHR had moved out of the property in 2015, but the state continued to pay for the lease for 32 months, costing more than $1 million.

Upon discovering these improper payments, the State Auditor’s Office refused to process further payments to Pin Oak Properties and initiated further investigations by the office’s fraud and public integrity units.

The audit dings DHHR for lack of financial controls and oversight. It also criticizes the state Real Estate Division for not requiring signed lease termination letters, as well as not seeing the red flags when Pin Oak Properties made payee change notices.

This new controversy has caused the governor to direct the WVWDA to review all outstanding loans.