Top Lux Living executives charged with fraud as high-profile developments continue in KC
Three top executives with Lux Living — the developer in Kansas City of two new high-profile apartment complexes now under construction, Wonderland in the Crossroads and Katz on Main at Westport Road — have been indicted in federal court on multiple counts of fraud on other projects, the U.S. Attorney’s Office in St. Louis announced Friday.
Sidarth “Sid” Chakraverty and Victor Alston operate St. Louis-based Lux Living and Big Sur Construction LLC. The two defendants along with their chief accountant, Shijing “Poppy” Cao, were each indicted Wednesday in U.S. District Court in St. Louis on one count of conspiracy to commit wire fraud and 11 counts of wire fraud.
The conspiracy charge carries a penalty of up to 20 years in prison and/or a fine of $250,000. Each wire fraud charges carries the same.
Attempts by The Star on Friday to reach the defendants for comment were unsuccessful.
The indictments, unsealed Friday, do not center on the developers’ dealings in Kansas City. They instead center on two other luxury apartment complex projects in St. Louis, one known as the Chelsea Project. The other is the SoHo Project.
The U.S. Attorney for Eastern District of Missouri holds that Chakraverty, Alston and Cao conspired to defraud the the City of St. Louis’s minority-owned business enterprise (MBE) program and its women-owned business enterprise (WBE) program to gain millions of dollars worth of city sales tax and property tax incentives.
To receive the tax incentives, developers are legally obligated to provide a certain percentage of work on projects to minority-owned businesses and women-owned businesses as contractors or sub-contractors.
The indictments allege that on the Chelsea project, Chakraverty, Alston and Cao knowingly defrauded the program by writing sham checks to a women - owned business and falsely claiming to the city that they had paid the company $298,897 for cleaning services. The government holds that, in fact, the defendants paid the women-owned business only $21,504 and paid the rest to a non-WBE firm.
The SoHo Project included the same women-owned business. In that situation, the indictment alleges that Chakrverty, Alson and Cao paid the company $60,780 in labor and materials, but then fraudulently claimed to the city they paid the company $1.15 million.
Federal prosecutors also allege that Chakraverty met with the owner of an African-American minority-owned business and offered the owner $10,000 to falsely attest that they had done work that they had not.
The owner refused, but the owner of another African-American-owned company allegedly agreed to accept a 5% “mark-up” fee on $2.17 million in labor and materials supplied by a non-MBE. The government also alleges that Chakraverty did the same with a Native American MBE, agreeing to give the owner 6% on labor and materials that were, again, provided by non-minority company.
False reports were then allegedly submitted to the St. Louis Development Corporation, which grew suspicious.
The indictment also says that, due to the fraud, the Chelsea project resulted in $551,022 in sale tax exemptions and $1.75 million in property tax abatement. On the SoHo project is alleged to have resulted in $1 million in tax abatement, less than the $7 million that the defendants had expected.
Having grown suspicious, the St. Louis Development Corporation held back the amount anticipated.
Both Katz on Main and Wonderland remain under construction.
Five Lux Living projects in Kansas City have been approved for incentives since 2021, including a $200 million apartment/hotel at 14th and Wyandotte streets.
In October, Lux dropped two proposed projects — a 250-unit apartment development on Berkley Riverfront and and a 230-unit Freight House Village proposal in the Crossroads.
