Missing contractor under investigation

'Everybody is very angry"

By CHERY SABOL

The Daily Inter Lake

Homeowners, subcontractors, employees, mortgage companies, lawyers and police are looking for solutions after a building contractor reportedly left town with projects unfinished and money owed.

"It certainly looks like a case of fraud," Flathead County Sheriff's Office detective commander Bruce Parish said. "We've received numerous complaints."

Richard and Amy Ockey of Keystone Contractors are under investigation for possible theft and bad-check charges, Parish said.

Meanwhile, homes stand half-built, and employees and subcontractors say they have been stiffed for wages and costs.

A message on the answering machine at the Kalispell office Wednesday said, "Unfortunately, Keystone Construction is no longer in business." A call to the Ockeys' home is answered with a recording that says the number is no longer in service.

Parish said detectives keep hearing that the couple "took all the money and ran" to Hawaii. "Other people are telling us the two of them are still in town. We don't know where they are."

People who paid Keystone to build their homes are coming to believe the worst.

"A lot of us have saved our whole lives" for homes that are now unfinished, with subcontractors demanding payment and a contractor who appears to have vaporized with money that was supposed to go to the subcontractors, according to one woman who asked to not be named. "It's a nightmare."

One subcontractor told his story at length, but then decided he didn't want his name used in this news story.

"We don't want to be affiliated with these guys at all," he decided.

His company has been hired by Keystone for 40-60 homes in the past 3 1/2 years, he said.

He started getting concerned a couple of months ago when a $9,000 check from Keystone bounced. Ockey made good on it, but since then, "They've been slow to pay, with repeated promises" of payment, he said.

He said he called the company on Jan. 4 to ask about a $24,000 payment he expected.

"They [the Ockeys] said they were in Portland. They were going on vacation. They were on their way to Hawaii.

"I thought, this doesn't look really good here," he said. They promised he could pick up a check at their office on Jan. 7.

He called and talked to a bookkeeper who told him, "There is no money," he said. He asked when there would be and she reiterated: "There is NO money."

When he went to the Keystone office last week, he found a sheriff's deputy there. He didn't take that as a good omen that he was going to be paid the $30,000-$35,000 he says Keystone owes him.

It's not just his business that's hurt, he said.

"All the trades, everybody got screwed."

The construction community is talking about a $180,000 debt Keystone allegedly owes a lumber company, he said.

Homeowners are calling him, wondering if he is going to finish work on projects for which he doesn't think he will ever be paid.

"A lady called crying yesterday … I said, ÔI don't know what to tell you.'"

"People are ruined. This valley is small" and the contractors, subcontractors, and suppliers rely intimately on one another and their honesty, he said.

He has put liens on 14 or 15 properties, which will prevent them from being sold until his debt is satisfied.

Other subcontractors are doing the same thing. The Flathead County Clerk and Recorder's Office said there are more than 100 liens involving Keystone. One clerk said she had never seen so many liens for one business.

Meanwhile, Keystone employees were still at work on Jan. 7, unaware that their labor was being performed for free. They were later notified the company no longer existed.

On Wednesday morning, the 50 or so employees of Keystone went to a meeting at the Montana Job Service office.

"Anytime there is a business closure or significant layoffs, we do these workshops," said Laura Gardner of the Job Service.

Displaced employees learn how to file unemployment claims and register for work, and get advice on resumes and training programs, she said.

One of those employees was Bob Crowell, shop supervisor for Keystone since last May.

"I think everybody is very angry," he said Wednesday.

Employees deposited paychecks after they were distributed in mid-December. Many bounced, including Crowell's, though he wasn't notified of that until last week.

At the end of December, when checks were distributed, employees were told to cash them and not deposit them. Those that were deposited bounced, Crowell said.

"I knew things were getting tight."

He heard that the Keystone owners were headed to Hawaii. And then he heard that "there is no money for their whole payroll for this Friday" when the next checks were due.

Considering the checks that bounced, "They cheated everybody out of a month's wages," Crowell said.

He had been working six days a week storing up extra days for a planned vacation. It turns out he got paid for no days per week.

He's hoping to find a new job soon; employees learned Wednesday morning that not all of them will qualify for unemployment. But the dead of winter is not the best time of year for most construction workers to be looking for jobs.

Richard Erickson expected to be in his new house last summer. Keystone promised the home on Houston Point on Whitefish Lake would be done by mid-July.

On Thursday, Erickson turned on the heat at his house for the first time. The work still isn't finished, and Erickson estimates it will cost $60,000 to $70,000 over the contracted amount to get it finished now.

A friend recommended Keystone to Erickson, who talked to several contractors and took bids before he hired the company in February.

"They build excellent, high-quality homes," he said. "I got a construction loan and said, ÔGo for it.'"

"We started out extremely well." But then March went by, and so did April. Richard Ockey talked about a delay in getting a framing package from Canada. He reassured Erickson that nothing was wrong.

"I trusted him and believed him."

In May, construction began. But Ockey pulled his crew to work on condominiums in Empire Heights. By mid-July, Erickson's house wasn't even framed, he said.

He was paying extra interest and an extension fee on his loan. The bank was inquiring. Progress was slow. Ockey wasn't returning calls.

By December, Ockey wanted another draw on the construction loan for a house that was 80 percent done.

"Nope. You're not getting another dime until I get my house completed," Erickson told him. "I would be absolutely stupid to give you 100 percent payment for an 80 percent job."

The house had to be completed and inspected before Erickson could close his loan with the bank.

Erickson and Ockey finally met in December. Erickson totaled up things that were included in the contract that Ockey hadn't delivered, things Erickson agreed to forego so he could just get into the house. He figured that Ockey owed him $10,000 to that point.

He put money into an escrow account and told Ockey he'd pay him the agreed-upon amount when the house was done.

"He put a lien on my house," Erickson said. And then Ockey closed shop and left.

Erickson had to put up $38,000 to bond around the lien, he said. Then he had to borrow more money to hire people for labor and materials for which he had already paid Ockey. He has been renting a house in Whitefish since June, waiting to move into his own house.

Erickson said that in some ways, he's lucky.

Some people paid for a house and wound up with only a foundation before Keystone closed, he said.

"I'm pleased with the house and the quality of the house," he said, even though it's still unfinished and Ockey is gone.

"His ethics are atrocious," Erickson said. "If Richard would have just come to any of us and said, ÔI'm having financial problems' … we would have said we'll back off and see what you can get done."

Erickson and others wound up going to Kalispell attorney Chad Wold.

Wold's law firm has been contacted by 15 people left hanging by Keystone and represents a half dozen, Wold said.

"Now there are dozens of people left in the middle of winter with their houses unfinished," Wold said.

He saw a similar situation, to a smaller degree, in Whitefish last summer, he said, and probably 50 total in his law career. This is the most egregious case he has seen, he said.

"It's absolutely horrible," Wold said.

Most of Keystone's customers were building high-end homes, he said.

"To add insult to injury," Ockey put liens on some of the properties before he left - some for work that was performed, but which the customers hadn't been called upon to pay for yet, and some for work that was never performed, Wold said.

That means that some customers paid Keystone, which took the money and didn't pay subcontractors, so the customers will essentially have to pay twice.

John and Judy Melin were building their dream home in Whitefish. Judy estimates that they lost approximately $50,000 in addition to what they will have to pay other contractors to finish the work at their house.

"At first it was supposed to be finished by Thanksgiving, then it was Christmas and now apparently it's never," Judy said. "The whole situation is terrible, but now we are just trying to pick up the pieces and move on with our lives."

Wold wants people to know of a few legal steps that could protect them from something like that.

Requiring a general contractor to get subcontractors to sign lien waivers protects homeowners from the liens and places the burden on the contractor to pay subcontractors.

The waiver is a simple, one-page form, Wold said.

"No money should ever be exchanged if there is no lien release," he said. "The problem is, nobody knows that."

Erickson continually requested lien releases from Keystone, but never got them, despite promises. Now, subcontractors are putting liens on his home.

Requesting a bond from a contractor on a building project is also simple insurance that the job will get done, Wold said.

He believes that as the communities in the valley turn into boom towns, it's time for some state regulation for builders. As it is, Keystone's customers didn't know the business had filed for bankruptcy a few years ago. That might have scared off some customers, Wold said.

For one subcontractor, the debt he says Keystone owes represents the land and new shop the business had planned to buy this year. Keystone contracts comprised 40 to 60 percent of his business, he said.

"We're a company that's honest to a fault. We expect people to conduct business the way we conduct business," he said.

His experience with Keystone was an expensive lesson, teaching him that the Flathead Valley is changing, he said.

It used to be that business was conducted with a handshake.

Those days are probably gone, he said.

Reporter Chery Sabol may be reached at 758-4441 or by e-mail at csabol@dailyinterlake.com