Contractor ordered to pay $300,000 in restitution | SkyHiNews.com

Contractor ordered to pay $300,000 in restitution

Tonya Bina
tbina@skyhidailynews.com
Grand Lake, CO Colorado

Jim Barnett

A man accused of stealing construction-loan draws then not paying contractors for work done on homes in the Grand Lake area is serving 30 days in the Grand County Jail.

Jim Barnett, principal of the construction company ADS Construction of Bloomfield while he was overseeing a development project comprising about 20 homes within the larger subdivision called Rocky Mountain Estates (Colorado Anglers Club), must also pay $300,000 in restitution to contractors as part of his March 30 sentencing.

Barnett shares the burden of the restitution with his then-business partner Chris Foster.

In a plea deal, the 14th Judicial District Attorney’s Office dismissed 12 counts of Class 1 misdemeanor theft $500 to $1,000, and one count Class 4 felony theft of $1,000 to $20,000.

He pleaded guilty to one count of Class 3 felony theft of $20,000 or more, and 60 days of jail time was suspended. The sentencing also includes four years of probation, 100 hours public service, apology letters to all victims and about $1,900 in fees.

In a letter to the DA, dated March 23, Barnett blamed the company’s misuse of construction loans on the “failure to keep these funds completely separated from other ADS accounts.”

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“The effect of the accounting gap was that while some of the construction loan funds were used for their intended purpose, a portion was used to pay company expenses to maintain ADS,” Barnett wrote. “This was not planned; it happened because the funds were co-mingled.”

Later in the letter, Barnett said he hadn’t planned for cost overruns and weather delays during the project. “I learned the hard way that building in the mountains in a resort area is quite different than my prior projects.”

Barnett also wrote he relied on his employees “far too much” to oversee the project. “I should have stayed more involved in the day-to-day operation, as it was my responsibility.”

“So much for taking responsibility. He’s still pointing his finger at someone else,” said Grand Lake mortgage broker Sandy Doudna, who with her appraiser husband Doug has been a key witness and researcher on the case since 2006.

According to Doudna, the Federal Bureau of Investigation had been looking into the alleged construction-fraud case alongside Grand County Sheriff Investigator Leo Piechocki, but in 2009 the FBI agent was pulled off the case for needs elsewhere, and the investigation is still pending at the federal agency.

As many as 24 Grand County- and Denver-based contractors are listed in court documents as having been shortchanged by as much as $138,540 by Barnett’s part in the Colorado Anglers project.

During Barnett’s day in court last week, Granby-based contractor John Jennings’ wife Trista McAdow read aloud an emotional letter explaining how Barnett’s failure to pay them $50,879 for work done on the project has led to the failure of their business and the financial ruin of the family. The family was forced to give up health insurance to make ends meet, then when Trisha suffered a stroke, the family spiraled into further financial devastation.

“We did not and will never rebound from this,” Jennings, who was not present at the court hearing due to illness in the family, said via a letter read by Trisha in court.

“How do you sleep at night knowing that you have ruined so many lives?” Trisha asked Barnett.

They asked the court for a steeper punishment.

“The punishment that Mr. Barnett is about to receive is really not much of a deterrent for people like Barnett,” were Jennings’ words. “It is a mere ‘slap on the wrist’ in this case and unfortunately so many other cases just like this. I wish the court would send a message to others like Barnett. This is not a message, this is more like an invitation.”

John Jennings was hired on to the project to fix faulty ADS construction in ADS’ attempt to lead homeowners to believe their resort homes, sold to them through Upstreet Development, would be finished properly, according to Doudna.

ADS’ failure to pay contractors on work done after taking construction draws on loans, however, caused the project to be abandoned. This left homeowners who bought into the Upstreet promise, many times without ever seeing their properties in person, on the hook for repayment of loans without finished homes to show for them.

“It hurt (Jennings’) reputation,” Doudna said. “Then the recession hit at the same time, so there wasn’t a chance to recover.”

Rocky Mountain Estates today is a subdivision across Highway 34 from Lake Granby with about 79 homes and property owners and has a fully functioning board and homeowners association, according to the Rocky Mountain Estates Owners Association.

The ADS construction case involved only about 20 lots within the subdivision.

– Tonya Bina can be reached at 970-887-3334 ext. 19603

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