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Feds indict Lux Living owners on charges of defrauding St. Louis minority hiring program

Chelsea Apartment on Friday, September 20, 2024.
Sophie Proe
/
St. Louis Public
Chelsea Apartment on Friday, September 20, 2024.

The owners of one of Kansas City's and St. Louis’ highest-profile development firms face federal fraud charges in an alleged scheme that officials say defrauded a St. Louis city minority and women’s owned business program.

Owners of one of the region’s highest-profile developing firms with ongoing projects in St. Louis and Kansas City were indicted Friday on fraud charges.

The federal indictment alleges Lux Living owners and brothers Vic Alston and Sid Chakravery and their chief accountant Shijing “Poppy” Cao conspired to defraud the City of St. Louis to gain millions worth of tax incentives from the city through its minority hiring program.

The Minority Business Enterprise and Women Owned Business Enterprise programs seek to address critical social and economic disadvantages experienced by women and minority groups.

The brothers are behind several properties and developments in both St. Louis and Kansas City, including the Chelsea and SoHo luxury apartment complexes in St. Louis and the Wonderland and Katz building renovations in Kansas City.

The brothers also own and operate Big Sur Construction LLC, a construction management and development company. Both Big Sur Construction and Lux Living are privately owned companies.

Indictment alleges trio defrauded city programs

Alston, Chakraverty and Cao are each charged with wire fraud and conspiracy to commit wire fraud in the indictment.

According to the unsealed indictment, the Chelsea and SoHo projects, located in St. Louis’ Debaliviere Place and Soulard neighborhoods respectively, are core to the charges.

Officials allege the trio submitted falsified documents to the St. Louis Development Corporation claiming businesses owned by minorities and women performed millions of dollars worth of work. The indictment alleges that work never took place.

Neal Richardson, President and CEO of St. Louis Development Corp., said the city’s development arm was subpoenaed in the investigation.

“We provided all the information that we could provide being as transparent as possible and then let the courts do their job,” Richardson said.

According to the indictment, officials at the development corporation became suspicious after Alston, Chakraverty and Cao repeatedly tried to falsely verify inflated payments from a cleaning company to the corporation.

When Lux Living failed to get verification, the indictment reads, they sought another woman-owned business enterprise to falsely verify it had done the work.

The brothers and Cao face up to 20 years in prison and a $250,000 fine if found guilty of conspiracy charges. Wire fraud charges carry the same penalty. Assistant U.S. Attorney Hal Goldsmith is prosecuting the case.

History of legal troubles, tenant complaints

Alston and Chakraverty are no strangers to public scrutiny.

A NPR Midwest Newsroom investigation in 2022 uncovered Lux Living failed to disclose a history of SEC violations and lawsuits while seeking to build affordable housing at the KC Port. 

Public records show Lux Living’s chief executive Victor Alston was sanctioned in 2017 by the Securities and Exchange Commission while he was in charge of Ixia, a network company based in California.

The SEC found Alston broke accounting rules while he was chief executive of the publicly traded company, resulting in Ixia restating past financial statements. Alston agreed to a settlement with the federal commission that banned him from serving as an officer or director for any publicly traded company for five years and fined him $100,000. As part of the SEC settlement, Alston did not admit or deny wrongdoing.

The Kansas City riverfront development deal fell apart when the KC Port’s board voted against approving tax incentives worth more than $25 million to Lux Living.

"The track record of the developer raises a lot of questions," said Bruce Eddy at the time, who leads the Jackson County Community Mental Health Fund.

A handful of investigations into the brother’s business have revealed longstanding issues at the brother’s rental properties across St. Louis, including tenants complaining of property neglect, lackluster management and short-term rentals leading to parties in their buildings.

In March, a 16-year-old was shot to death in a downtown St. Louis building where a party was being held at a short-term AirBnB rental.

In 2022, the St. Louis Post-Dispatch chronicled complaints by residents of The Hudson, a Lux Living development, who signed leases and found themselves occupying unfinished apartments.

The Berkley Riverfront, where a developer from St. Louis wants to build apartments but has encountered criticism from housing advocates.
Carlos Moreno
/
KCUR 89.3
The Berkley Riverfront, where a developer from St. Louis wants to build apartments but has encountered criticism from housing advocates.

Problems in Kansas City

Lux Living’s recent proposals for new developments in Kansas City have stalled.

Most recently, a proposal to build a high-rise hotel near Kansas City’s Power and Light building fell apart after the project received tax incentive approval and some public support.

Lux Living’s KC Port development and an apartment development in the city’s Crossroads also were abandoned, according to reporting by Flatland KC. And work at the 215-unit Wonderland project and 192-unit renovation of the Katz building have slowed after some initial construction.

St. Louis Public Radio reporter Eric Schmid contributed to this report.

Copyright 2024 St. Louis Public Radio

Kavahn Mansouri is the Midwest Newsroom's investigative reporter. Contact him at kmansouri@kcur.org
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