Yes, the topic is exciting...but as much as I want to ignore these sorts of cases...we are getting buried by folks coming in with tales of woo about being screwed by building contractors. Does anyone have any experience with these cases...I'm looking at Section 161 of the Property Code and it looks like I have to prove fraud to get it up onto the felony bracket... but that seems to be well nye impossible unless I have access to the records of the contractor...anyone got any ideas how to deal with this wave of crooked contractors...Blessings Fred Edwards...Waller County

I am starting to prepare for one of these trials in November. I obtained all the bank records from the defendant's accounts as well as the bank who tendered the construction loan. Lucky for me, my victim is a CPA who can do all the necessary audits for free.

As I read Property Code 162.005 (1), there are several different ways I can prove the contractor's "intent to defraud". The easiest way is by simply showing that the contractor failed to propery establish and maintain a construction account as required under 162.006 and 162.007. Under the Code, I believe that I am entiltled to a presumption of the contractor's "intent to defraud" if the contractor's bank account is not designated "construction account" on the bank statements. I also believe that any failure to meet any of the other numerous requirements of 162.007 renders the contractor's account non-compliant and gives us the "intent to defraud" presumption that we need to prosecute the misapplication of trust funds case.

With a little forensic accounting from my CPA victim, I think I can prove "intent to defraud" under 162.005 (1)(A) by simply showing that the contractor's account balance dipped below the level necessary to pay all of the invoices owed on the house. In my case, we can graphically show that the defendant used draws from my victim's construction loan to compensate himself and pay invoices on other projects without first fully satisfying debts owed to subcontractors of the victim's project. The jury should be allowed to infer defendant's "intent to deprive" if the defendant payed those other payees while at the same time stiffing subcontractors owed under the victim's contract.

I dread the thought of criminally prosecuting every homebuilder dispute. But, the law seems pretty clear that when construction loan proceeds are diverted as in my pending case, it's a crime! So, wish me luck. I'll let you know how the trial goes...

Thanks for your thoughts on these sorts of cases...we are getting a bunch of them and victim wrath is quick to build when they loose thousands of dollars...good luck on your case in November...Fred