Buffalo Home Builder Pleads Guilty To Felony Fraud Charge
Attorney General Spitzer announced that an Erie County home contractor has pled guilty to a felony fraud charge stemming from his misuse of customer money.
Brian Ellsworth, 37, president of the defunct Churchill Builders, Inc. and an officer of Patel Development, Inc., has pled guilty to one count of Scheme to Defraud in the First Degree, a class E Felony which is punishable with imprisonment up to four years and a fine up to $5,000. The criminal plea resulted from an investigation by the Attorney General's office into complaints that consumers had made deposits for the construction of new homes that were never built.
"The home building industry depends, in large part, on the support and trust of the local community," Spitzer said. "This industry is an important part of our State economy that needs to be fostered and protected from individuals who would tarnish its good name. It is my hope that the resolution of the case will show contractors and consumers alike that regulators are watching closely."
During the course of its investigation, Spitzer's office determined that Ellsworth had diverted tens of thousands of dollars for his own personal purposes from consumer deposits, which are by law required to be kept in trust and used exclusively toward the individual project. When the Buffalo-based builder folded in 1999, it owed subcontractors approximately $300,000 for their services and at least eight consumers over $40,000 in deposits for new homes.
The Scheme to Defraud charge to which Ellsworth has pled guilty stems from records showing he had diverted customer funds for his own personal uses including: $38,000 to himself for which he has no receipts; $1,500 for a Christmas party; $9,500 to pay an American Express bill; $3,000 for country club fees; and over $180,000 for expenses of a previous business.
Between April 1997 and August 1999, Churchill Builders had an exclusive agreement with Hunt Real Estate to market and sell Churchill-built homes. In 1998, Churchill Builders entered into an agreement with Patel Development to which it assigned all of Patel's pending contracts for homes. In return, Churchill used large sums of consumer trust fund monies to pay Patel's bills resulting in its inability to begin construction on eight new homes and to complete another 15 projects already underway.In April of this year, Spitzer's office successfully got both Hunt Real Estate and Patel Development to pay $40,000 toward refunds to the eight consumers. In addition, Spitzer's office was instrumental in over $100,000 worth of liens being released or not renewed on the existing home construction projects.
Justice Michael L. D'Amico of the Erie County State Supreme Court approved Ellsworth's plea and scheduled sentencing for January 2, 2001.
This case was handled by Assistant Attorney General James M. Morrissey of the Buffalo Regional Office. The Attorney General expressed gratitude to the New York State Police for their assistance with the case.
Individuals with complaints about home builders are encouraged to contact the Attorney General's office by calling his consumer help line at (800) 771-7755.