Builders suspected of bilking homebuyers |

Builders suspected of bilking homebuyers

Tonya Bina
Sky-Hi News

GRAND LAKE – Principals of ADS Builders, James Barnett of Westminster and Christopher Foster of Parker, were arrested April 12 and booked into Grand County Jail on suspicion of 14 counts of criminal theft – seven for Class 4 felony theft and seven for Class 3 felony theft – for nonpayment of bills and failure to complete home construction in Grand County after being paid to do so.

The Grand County investigation focused on The Colorado Anglers Club subdivision across Highway 34 from Lake Granby, although other smaller ADS projects in Grand County were also mentioned in court documents.

The charges are the result of a year-long investigation of possible fraudulent activity on the part of ADS Builders and companion companies Mile High Construction and Legacy Construction Services, all of which had been based in Broomfield.

Grand County Sheriff’s Office Investigator Leo Piechocki alleges that the suspects received about $2 million from closing costs and builder deposits drawn from homebuyers’ “construction to permanent” loans, but never finished building investors’ homes with that money.

They instead are suspected of having used the money to fund projects elsewhere, pay their office employees large salaries, buy expensive trucks, pay down credit card bills and buy airline tickets for vacations, according to the results of the investigation.

Barnett authorized a $300,000 expenditure to start a development branch of his company, the sole purpose of which would be to recruit more investors, all while subcontractors were not being paid and homes were not being built, according to statements in the affidavit from an ex-employee of ADS Builders.

A call Monday and email to Barnett’s attorney Robert McAllitster of Centennial for comment from him or Barnett about the story was not returned by press time. Calls to Barnett’s cell phone would not connect.

A message left on Monday for the only Chris Foster with a telephone listing in Parker was also not returned.

All-in-one loans

Once part of a quickly growing neighborhood, the homes near Grand Lake were in a 40-lot sub-community of the Anglers Club purchased by Upstreet Developments LLC of Fort Collins, the principals of which were Mike Hawthorne and Jon Thompson.

Each of the owners of the 39 lots bought from Upstreet applied for zero-down loans with construction/permanent riders, meaning the land purchase and the house construction were all wrapped up in one loan.

The loan included an interest reserve account that would satisfy loan payments for a set amount of time, such as 6 to 12 months, before home buyers would be responsible for monthly payments. It also included closing costs ranging from about $5,000 to $10,000.

Piechocki’s affidavit for the arrest warrant of Barnett and Foster lists the homebuyers of 31 homes in Anglers, buyers who acquired their loans through National City Bank. ADS is suspected of making construction draws from these loans in the total amount of $2.05 million.

Of that amount, $34,000 had been paid out to ADS Builders on lots that ultimately had zero construction done on them and $131,600 had been paid to ADS on 14 lots for which building permits had never even been pulled, according to Piechocki’s report.

Meanwhile, $457,527 was never paid to subcontractors and suppliers who worked on the project, many of them Grand County businesses, court documents say.

As of last October, Jennings Construction of Kremmling was owed $50,879 for work on the Colorado Anglers Club project, according to the affidavit, and Mountain Parks Electric of Granby was owed an estimated $10,500.

Sani King and Flintstone Gravel are also among Grand County businesses listed in the complaint, filed in District Court, for not having been paid by ADS for work done at Colorado Anglers. The largest amount owed among the 14 businesses listed is to Diamond Contracting Corp. of Arvada, for $80,000.

ADS is also accused of taking construction materials designated to homes at Anglers, paid for with buyers’ construction draws, and applying them to other projects elsewhere in Colorado.

Ongoing FBI investigation

Homes in Colorado Anglers were left empty and open to the elements and wildlife when the builders pulled out in the fall of 2007.

Several homeowners who had liens placed on their homes by subcontractors – in spite of the fact that ADS never completed them – have since paid bills owed to subcontractors on behalf of ADS to satisfy the liens, according to the report.

The affidavit also links ADS and Upstreet Development, both of which are part of an ongoing investigation by the FBI for “violations of federal law relating to mortgage fraud.”

Grand County’s investigation lists more than one dozen promissory notes obtained through a search of the ADS office that bound Barnett to paying Upstreet Developments a cut from each of the first construction draws from loans for Anglers projects, about $10,000 to $15,000 per home, totaling about $175,000, amounts deemed unrelated to construction costs.

Barnett was arrested in Arizona, bonded out, then came back to Colorado to face charges. He was placed in Grand County Jail on April 12, then released with the understanding that if he does not return for court proceedings, he could be placed in jail with a $50,000 bond.

The same terms apply to Foster who, prompted by Barnett’s arrest, “turned himself in,” according to 14th Judicial District Attorney Elizabeth Oldham.

Their upcoming disposition hearing is scheduled for May 10.

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

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