Morris pleads guilty to 2 federal counts

WHEELING — Jeffrey Morris, head of Roxby Development, could face up to 6½ years in prison and pay more than $5 million in restitution and taxes, penalties and interest after pleading guilty Monday to two federal counts.

Morris pleaded guilty to one count of wire fraud and one count of willful failure to pay over taxes before U.S. Magistrate Judge James P. Mazzone on Monday afternoon. Morris, the former owner of the McLure Hotel and Scottish Rite Cathedral, among other properties, had faced 28 federal counts,18 of wire fraud and 10 of tax evasion, in his original indictment.

From December 2019 to June 2021, Morris obtained money and property by means of “materially false and fraudulent pretenses and promises,” according to the Feb. 7 plea agreement. The companies owned by Roxby — The Monastery, Roxby Development and Roxby McLure — were funded primarily through investment loans totaling approximately $6.9 million from at least 20 investors.

Due to the terms of the binding plea agreement approved by both the prosecution and defense, Morris can be sentenced to no more than 78 months in prison. William Ihlenfeld, U.S. Attorney for the Northern District of West Virginia, said the government would seek a “lengthy” prison sentence for Morris.

The “binding” designation means the district court will decide whether or not they accept the plea agreement at the sentencing hearing. If the district court does not accept, the defendant can withdraw his guilty pleas. Ihlenfeld noted the case falling under a binding plea agreement was not “unusual.”

At the time of sentencing, Morris will be ordered to pay approximately $5.129 million in restitution to investors and an additional $526,476.58 in taxes, penalties and interest to the Internal Revenue Service. A date for the sentencing hearing has not been set.

During Monday’s hearing, Jarod Douglass, Assistant U.S. Attorney for the Northern District of West Virginia, laid out the evidence for the wire count charge. In an email sent on Dec. 18, 2020, Morris misrepresented the revenue of the Scottish Rite Cathedral to out-of-town investors. Morris attached forged lease agreements for the Scottish Rite purportedly signed by the principals of Adventure in Elegance, LLC and Saira Hospitality Inc., for a total monthly rent of approximately $10,350.

Morris had not reached agreements with the companies for any amount of rent. He also knew the investor to whom he sent the forged agreements would provide this information and documentation to another prospective investor.

This second prospective investor subsequently invested in the building, having relied on “good faith on this information and documentation,” according to Douglass.

Ihlenfeld explained Morris forged the signatures of Scottish Rite tenants to make investors believe the building had good tax flow. Ihlenfeld added this was “actually the opposite” as there was “not income but out-go” at the Scottish Rite.

During the hearing, Morris admitted to misrepresenting the income of the building and attaching forged releases to emails.

In regard to the count of failure to pay over taxes, Douglass outlined that on July 31, 2022, Roxby Development willfully failed to pay the IRS payroll taxes withheld from employees’ paychecks totaling approximately $80,287. Roxby Development also failed to pay approximately $89,000 in payroll taxes to the IRS.

Morris admitted to withholding employee taxes during the hearing.

“That money was used to keep employees working,” explained Morris. “I intended to eventually pay it back to the IRS.”

Roxby also failed to pay more than $252,000 to the IRS including Medicare and Social Security taxes.

While the other counts against Morris have not yet been dismissed, Ihlenfeld explained that the defense and prosecution will “agree to dismiss” them at the sentencing hearing.

Though Morris only pleaded guilty to the two counts, Ihlenfeld noted the judge would consider “all of the conduct” included in the other charges against Morris during the sentencing hearing. Ihlendfeld explained this would “bring everything together for an appropriate sentence.”

“Morris pleading guilty to the two counts brings in all of his conduct in the case,” explained Ihlenfeld. “This was a small piece of a big case.”

The outcome of the sentence would be “all driven by the amount of fraud, not the number of counts,” added Ihlenfeld.

“Morris stole millions from innocent investors,” stated Ihlenfeld. “He fooled many people but not the U.S. Attorney’s office. We were skeptical of his plan from the beginning so we investigated and prosecuted. I hope no one is a victim of Morris again.”

Ihlenfeld explained the U.S. Attorney’s office had been in “regular conversations” with Kornbrath and heard last week that Morris was ready to enter a guilty plea.

“We put an agreement together and got into court as quickly as possible,” said Ihlenfeld. “We are pleased to have this part of the case behind us, and the ultimate penalty for Morris can occur.”

Morris will remain on bond until his sentencing hearing in front of the District Court for the Northern District of West Virginia Judge John Preston Bailey. Before his sentencing, the U.S. Probation Office will complete a presentence investigative report on the case for Bailey to review.

The start date of the federal trial was initially set for November but was continued until March due to the complexity of the case that required a “voluminous amount of discovery” and the need to bring in material witnesses from outside the area. The hearing was continued again until April due to potential scheduling conflicts of jurors surrounding the Easter holiday.


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