Bagby, now a candidate for Dem party chair, brushes off concerns about his close relationship with VARR

For years, state Sen. Lamont Bagby, D-Henrico, has been a political ally to leaders of the Virginia Association of Recovery Residences (VARR). 

After Bagby supported their efforts to secure funding through the state budget in 2020 and 2021, companies owned by both Bagby and his brother benefited.

Over the last couple of years, I’ve sprinkled these findings throughout various installments of The Parham Papers – a series focused on money and power in Metro Richmond’s sober home industry. The conflicts of interest between Bagby and VARR haven’t been the central focus of any article to date.

But now, with Bagby expected to slide effortlessly into the coveted chair position for the Democratic Party of Virginia – backed by a long list of high-profile public figures – I decided to make the information I’ve discovered more easily accessible for those who don’t follow recovery housing. 

This special installment highlights Bagby’s political allyship and financial relationship to VARR leaders, his support of VARR’s efforts to secure legislatively directed funding, and subsequent payments VARR made to his brother’s business.

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In 2019 and 2020, VARR was a small nonprofit with annual revenue under $165,000. The organization was funded by the Virginia Department of Behavioral Health and Developmental Services (DBHDS) to certify and oversee recovery house operators who chose to participate in the state’s new voluntary certification process. 

Starting in 2021, Virginia handed VARR control over millions of dollars allotted through the state budget for recovery housing. By 2022, the nonprofit’s annual revenue had skyrocketed to more than $5 million.

Bagby, then serving in the House of Delegates, played a role in helping VARR get that money. He disputes the significance of his support.

In November 2020, DBHDS started working to facilitate payment on VARR’s first round of legislatively directed funding – $500,000 over two years. 

In one of many emails seeking to expedite the process, VARR Executive Director Anthony Grimes wrote to DBHDS officials on Dec. 10, 2020:

We have spoken to Delegate Lamont Bagby, he pushed this budget amendment through the general assembly for VARR and we would like to see a portion of this funding come to VARR up front. … Delegate (Bagby) has requested us to ask for what criteria and policy would prohibit VARR from receiving funds upfront as this funding was created in the general assembly for VARR to provide funding that didn’t previously exist.. Delegate Bagby supported this funding for VARR because he understands the great need during these trying times to make funding available and equitable access for people seeking a recovery residence especial BIPOC. …

A couple weeks later, VARR’s then-vice president (and current president) Sarah Scarbrough wrote to the governor’s office: 

(We) are continuing to hit a brick wall to access the funds. Delegate Bagby is working very hard to remedy it, as he is clear of the original intent of the GA and the funds …

On Jan. 6, 2021, Grimes copied Bagby on another complaint to DBHDS reiterating Bagby’s support of VARR. 

When asked to comment on these emails in 2022, Bagby told me he supports funding for the recovery community but said, “It wasn’t my budget amendment. … You’re going to have to ask (Grimes) what he was trying to accomplish with that.”

(Related emails are available here.)

The pressure was effective. Deviating from its standard procurement process, DBHDS compromised and issued a portion of VARR’s funding up front.

The following month, Imagine the Freedom Properties, LLC (ITF Properties) was formed. It was a joint venture among Bagby, VARR leaders and their business partners and lobbyist David Hallock Jr.

In April of that year, the group purchased a commercial building at 2604 N. Parham Road in Henrico County for $950,000. 

VARR moved into that building along with a network of LLCs and nonprofits that served the business interests of VARR leaders. Later that year, VARR renovated and furnished the building with $75,715 in federal grant money and started paying monthly rent of $2,400 to ITF Properties for VARR’s office space. 

In late 2022, Bagby told me he didn’t know public funds were used for rent or improvements on the property he co-owned. He said he invested in the building to help the recovery community and had “not received one dollar” from it. When pressed for more information on ITF Properties’ business model, Bagby said, “I don’t understand why you care.” During a subsequent conversation, he told me there was no agreement in writing.

By August 2021, VARR had another $10 million committed by the Virginia General Assembly. 

And for the next three years, VARR awarded $350,312 out of that allotment to Lotus Recovery RVA – a newly formed for-profit company owned by Bagby’s brother Isiah that operated one recovery residence duplex in Richmond. The business was registered to a Henrico County residential property owned by Sen. Bagby. Isiah listed that address, Bagby told me, because he had been living in a recovery house and didn’t have a permanent address. 

Sen. Bagby admitted to me that he supported VARR’s efforts to secure the $10 million.

He said he met with two individuals who were representing VARR – Michael McDermott (now deceased) and John Shinholser, co-founder and then-president of The McShin Foundation (now retired from the organization). “They asked me if I would support it and I did,” Bagby told me.

He said the challenge for then-Sen. John Bell, D-Loudoun County, who introduced the $10 million budget amendment, was to make sure VARR got “their fair share” of the money. “I was happy to support that effort,” Bagby told me. 

At the same time, Bagby minimized the significance of his support, describing himself as more of a sideline advocate. “When you start asking me the detailed questions about how they accomplish what they do,” he said of VARR leaders, “I have no clue.”

A couple of months after VARR received its $10 million line item from the 2021 Special Session II of the Virginia General Assembly, Bagby and then-VARR President David Rook presented together at the October 2021 summit of the National Alliance for Recovery Residences (NARR) – VARR’s parent organization – in a session titled “Building Relationships between Recovery Home Operators & Legislators.” 

The following year, Bagby was scheduled to speak at the 2022 NARR summit in a session titled, “VARR: How We Did It (Part 2),” which highlighted VARR’s progression from having “very little state support” in 2019 to having more than $14.15 million committed by the legislature in 2022. The only other legislator on the panel was Delegate Carrie Coyner, R-Chesterfield – a more recently elected official with less political capital.

After speaking with me in September 2022, Bagby didn’t show up to that event. He also failed to appear as scheduled on a VARR-hosted virtual panel discussion on “Making Recovery Possible” with Rook, DBHDS Commissioner Nelson Smith and Jim Newton, then-chief administrative officer at Chippenham Hospital’s Tucker Psychiatric Pavilion.

But commenting on the event afterwards, Bagby told PW Perspective: 

I am committed to making recovery possible for all Virginians and ensuring those in need, particularly in Black and underrepresented communities, receive the resources and support they need and deserve. My hope is that we can continue the important collaboration between our local providers, community-based organizations, and at all levels of government to increase access and support for drug prevention, treatment, harm reduction, and recovery support services in Richmond and across the Commonwealth.

The $350,312 awarded to Bagby’s brother came from a portion of the $10 million that had been earmarked for expanding recovery housing throughout Virginia and helping minorities enter the industry. Isiah Bagby received the second highest amount out of 19 award recipients. 

When I spoke with Sen. Bagby in late 2022, he told me he was unaware that his brother received any money from VARR. 

Nonetheless, after I told Bagby about it, the money continued flowing to his brother. 

For the first two years, there was no public application process. VARR leaders quietly awarded the majority of the money to their own organizations and those of their affiliates, including Lotus Recovery.

Two months after I published a January 2023 installment covering VARR’s insider benefits, VARR implemented a public application process for capacity-expansion awards — just in time for the third and final year VARR had access to that pot of money.

For reasons that aren’t clear, Lotus Recovery was still selected for a third year of funding.

In February 2024, I asked Scarbrough to provide the portion of Isiah Bagby’s application that would show what he intended to do with his third-year award of $125,000.

She declined to release that record and instead provided the following statement.

Pertaining to Lotus Recovery, they submitted a funding application to expand its capacity, aimed at serving a younger and diverse population, highlighting the organization’s need for support. It’s crucial to mention that this application, along with others for capacity expansion, underwent a review process conducted by a panel. This panel included three external individuals not affiliated with VARR, in addition to myself, the VARR board president. The external members, who were mostly unfamiliar with the applying organizations, made their decisions to approve or deny the applications based solely on (the) merit of the application, the population they served, and ensuring it met the criteria of the capacity expansion funding.

One of the panelists was Michael Zohab — a long-time VARR ally.

When asked to explain the specific purpose of Lotus Recovery’s award — i.e.: What does “expand its capacity” mean? — Scarbrough did not respond.

A 2023 audit of VARR expenditures by DBHDS found that 15 out of 32 tested payments lacked supporting documentation. Three of those were for Lotus Recovery:

According to Scarbrough, the lack of proper documentation was due to VARR and the recipient organizations being “relatively new” and not having “well-established processes for documenting receipts.” She told me VARR “took proactive steps” to remedy the issues when discovered by DBHDS.

Regardless, I have found no record to suggest that the money VARR funneled to Lotus Recovery helped anyone other than Isiah Bagby. 

As I covered thoroughly in a previous installment, with Bagby’s expenses covered by VARR, he’s been reportedly living at the Lotus Recovery house, enjoying a work-free life, free housing and a constant stream of passive income generated from residents’ weekly rent payments and administrative fees. 

What’s more, former residents reported that he entered a romantic relationship with at least one female resident and evicted anyone who spoke about that relationship. Some were allegedly thrown into the street with no resources or even a refund of their prepaid rent.

>> READ MORE: ‘He’s in his own harem’: Inside the taxpayer-funded sober home of a Virginia senator’s brother

Before publishing the installment on Lotus Recovery in August, I asked Sen. Bagby to comment on VARR’s continuing financial support for his brother. This time, he didn’t respond.

In June 2022, I requested emails and text messages between then-Delegate Bagby’s office and three VARR representatives. Through his chief of staff, Bagby provided six emails, none of which were incriminating. He declined to release the requested text messages, citing state law that exempts legislators’ correspondence from mandatory disclosure under the Virginia Freedom of Information Act.

When I asked him to reconsider in September of that year, he told me, “I hope you’ll just accept my no.”

Roughly a week after I published this installment, Bagby told the Virginia Mercury, “All I have done was give money to the recovery community.” He declined to speak about the matter on record any further.

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*For less than 30 minutes after this article was initially published, former Senator John Bell’s district was incorrectly listed as Petersburg.