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Contractor took deposit and then went out of business
Old 10-21-2014, 01:05 PM   #1
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Contractor took deposit and then went out of business

My retired dad ordered $20k of hurricane windows and gave this company (that has supposedly been in business since 1979) a $7k deposit. Last week, the company confirmed that they would install tomorrow. Today my dad tried to call the company to confirm they were still coming tomorrow and got nothing but voicemail. So he drove over to their shop and finds everything locked and a note that says they are no longer in business.

The deposit check was cashed in August. What does he need to do to try to recover whatever cash he can?

Here's a story about the assholes:

Shutter company shuttered - wptv.com
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Old 10-21-2014, 01:21 PM   #2
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If they can prove that this was a scheme to rip people off then the owners can be sued to make restitution. They can only make restitution if the money is available to the courts either voluntarily or not. Usually, this isn't the case where any money is available.

The more likely case is that your father is now an unsecured creditor of the company as it goes into bankruptcy. The money is probably lost.

A similar situation once happened to me when we ordered indoor shutters. The company went under and I was out a few hundred dollars for the shutters. I had only paid the deposit for them to order the shutters. I happened to see the shop open and I went in. It turned out that it was someone from the lawyers doing an inventory. I told them I had ordered shutters that were supposedly delivered. They actually were there and clearly marked for me. I was told to take them which I did. Installing them was a pain in the butt but I got my shutters. It's possible your father's windows are in and he may be able to claim them. If the windows aren't there it's obvious they were making sales, taking money and not intending to install anything.

It's possible they meant well and just mismanaged their business. Honest people do screw other people somethimes without intending to.

If your father paid by credit card, he may be able to get a refund from the credit card company but there is a time limit. Check right away if he did.
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Old 10-21-2014, 01:49 PM   #3
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Assuming the contractor was/is licensed check with your states Registrar of Contractors (RoC), they will try and mediate a solution and should have an insurance fund setup to cover loses if you're unable to collect from the contractor. I had a similar problem when I was looking to build an addition to my house. The contractor (licensed) took my deposit and decided to skip out. I filed a claim with the Registrar of Contractors, the process took a long time (almost 1 year) but I did get my money back from the RoC, plus the difference in the amount between what the new contractor and old quoted for the job.
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Old 10-21-2014, 01:59 PM   #4
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He paid by check so credit card dispute is not an option.

He called the window manufacturer to see if they had already produced the windows and just not delivered them to the installer. They confirmed they had an order but had not produced anything because they had not received any cash from the installer. So...looks like fraud.

I'll have him see if there is a Registrar of Contractors, thanks.
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Old 10-21-2014, 03:09 PM   #5
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Chances of recovery are slim. The down payment likely exceeded the state laws , but at this point with a failed business , that issue will go nowhere. They likely owe everyone money.

File a small claims suit against the business. You will win , likely by default , then see if a debt collector will buy the judgement.

Ask your tax adviser if this could be claimed as a tax loss ( loss by theft/fraud)

Sorry.
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Old 10-21-2014, 03:17 PM   #6
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The deposit check was cashed in August. What does he need to do to try to recover whatever cash he can?
It's long shot but also call the police or sheriff's department there. To make it a criminal case they'd have to be able to prove the company owner knew, at the time the check was cashed, that the company was going to go bankrupt. A lot depends on state law too.

When I was doing fraud investigations I had a couple of those and was happy to work them. When the guy is looking at jail time that's a powerful incentive come up with restitution funds so at sentencing he can say he made everyone whole. But that was in MD and our agency did have the resources to put the time into it. Not every agency does.
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Old 10-21-2014, 03:24 PM   #7
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Wow. This is scary ! Makes me never want to give a large deposit again. And I just did - for hurricane windows and shutters no less !

Fingers crossed for your dad. What a terrible situation.
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Old 10-21-2014, 03:31 PM   #8
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Wow. This is scary ! Makes me never want to give a large deposit again.
When you do, use a credit card so at least you have that 60-day window to get refunded even if you pay the cc bill in full every month.
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Old 10-21-2014, 05:49 PM   #9
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Wisdom comes from bad judgment. Thanks for sharing.
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Old 10-21-2014, 10:18 PM   #10
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It's long shot but also call the police or sheriff's department there. To make it a criminal case they'd have to be able to prove the company owner knew, at the time the check was cashed, that the company was going to go bankrupt. A lot depends on state law too.

When I was doing fraud investigations I had a couple of those and was happy to work them. When the guy is looking at jail time that's a powerful incentive come up with restitution funds so at sentencing he can say he made everyone whole. But that was in MD and our agency did have the resources to put the time into it. Not every agency does.

I know that when that happened to my sister and some of her neighbors the police said it was a civil matter... I think enough people pushed and there were a few who paid deposits and got nothing (my sis did get a lot of work done).... so they finally did file a case against him...

He skipped out to Florida, never to be heard from again.... nobody got any money either....
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Old 10-21-2014, 11:34 PM   #11
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The company website is still up , proudly showing an award from Angie's list and The BBB logo. BBB currently says they are "re-evaluating the business" so no rating is currently available.
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Old 10-22-2014, 12:13 AM   #12
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I was caught in a mess with a contractor. I did my research and found a guy who had been in business 15 years in my town with a good reputation. What I didn't know was he had sold the business to some fly by night (deliberate fraudsters - in my opinion) outfit and the deal was he would keep selling and not mention the change in ownership. They did a terrible job that I had to hire another company to fix, but all the money paid was long gone.

Despite good research and vendor's good reputation, all was not as it seemed. I only put deposits by credit card now. I want some better protection in case a deal isn't what I'm told or the company isn't what they represent.
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Old 10-22-2014, 06:41 AM   #13
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Wisdom comes from bad judgment.
I don't see the bad judgment here. This was a supposedly reputable contractor who had done other work for my dad in the past and had been in business for a long time. No contractor I've dealt with will order expensive custom items without a deposit.

Also, the owner of the closed company was president of the local chamber of commerce last year!

http://www.wptv.com/news/region-mart...mpany-shutdown
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Old 10-22-2014, 07:22 AM   #14
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I don't see the bad judgment here. This was a supposedly reputable contractor who had done other work for my dad in the past and had been in business for a long time. No contractor I've dealt with will order expensive custom items without a deposit.

Also, the owner of the closed company was president of the local chamber of commerce last year!

More fallout from shutter company shutdown - wptv.com
This looks more like bad luck than anything else. It's a real shame, hopefully your father will withstand the financial impact.
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Old 10-22-2014, 07:23 AM   #15
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I have two thoughts assuming your Dad is really pissed off and wants to spend the time to try and recoup his money:

1. The amount is too small to hire a lawyer. Go to your county courthouse and have your Dad fill out a complaint suing BOTH the company and the salesman he gave his money to. He must locate the salesman and his home address before filing the complain because it must be served. The basis of the personal suit is that the salesman defrauded him in July and had no intention of ever installing the windows. The important aspect of the complaint is that the salesman intended to deceive your Dad and that your Dad relied on his statements losing $7,000.00. If the salesman committed fraud he is personally liable for his actions and the corporate veil can be pierced. Your Dad may also be able to collect triple damages under the laws of some states. Normally the court attendants are very helpful to people representing themselves.

2. Again if these people never intended to install the windows their actions are criminal. Also file a complaint with the police department. You may also be able to file a private criminal complaint in local municipal court. I suspect your Dad was not the only one hoodwinked. The police may have received other complaints and together with your father's may decide to spend time on the case.

The laws and procedure of every state vary. Particularly the laws in Texas but the general concepts normally apply everywhere. Good Luck.
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Old 10-22-2014, 08:32 AM   #16
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I agree that if your dad wants to spend time and aggravation on this he should
- report to whatever contractors licensing board.
- pursue the lawsuit as described by philben1.

We had a horrible experience with a contractor when we built our casita. Unfortunately there was an arbitration clause in the contract - and when the contractor refused to pay his portion of the arbitration fees - they expected US to pay them. We were pursuing his licence through the CSLB. That was a painful process - but we had overwhelming proof of damages so it was finally referred to the state attorney general 2 years after the fact. A negotiation was settled and we received a few payments before he decided that losing his license was ok. That's the only threat the contractors boards have over unscrupulous contractors... their licenses.

Sounds like these people are already willing to forfeit any license - so that might not work. But file a complaint anyway out of principal.
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Old 10-22-2014, 08:45 AM   #17
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Sometimes the local TV station will help out here. The threat of a story may make the owner do something. It's worth a shot if one of them does any kind of consumer advocacy help work.
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Old 10-22-2014, 09:24 AM   #18
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We were pursuing his licence through the CSLB. That was a painful process - but we had overwhelming proof of damages so it was finally referred to the state attorney general 2 years after the fact. A negotiation was settled and we received a few payments before he decided that losing his license was ok. That's the only threat the contractors boards have over unscrupulous contractors... their licenses.

Sounds like these people are already willing to forfeit any license - so that might not work. But file a complaint anyway out of principal.
I'm sure the group that regulates contractors differs from state to state but in Arizona if you file a claim with the contractors board and win you get paid directly from the contractors board fund, it's then up to the agency to pursue the contractor to collect the money they paid out. The fund is setup from the fees contractors pay to be licensed, it's suppose to be an added incentive for people to use licensed contractors.
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Old 10-22-2014, 12:15 PM   #19
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The company website is still up , proudly showing an award from Angie's list and The BBB logo. BBB currently says they are "re-evaluating the business" so no rating is currently available.
I've come to view AL and BBB ratings are almost worthless. Certainly not an excuse for doing your own homework on any potential contractor.
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Old 10-22-2014, 01:18 PM   #20
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No contractor I've dealt with will order expensive custom items without a deposit.
Several ways to handle this in future, some options:
  • Order and pay the item with manufacturer yourself, directly. Have it delivered to contractor.
  • Put the money in escrow with a bank.
  • Require proof of invoice and confirm with manufacturer before .transferring deposit. Establish written claim of ownership of item.
Its a frequent mishap in business unfortunately. Remember that the inverse also happens: contractor pays for his materials, customer goes bankrupt. Guy I know lost 5 years of profit in one such case just this week.

Once it happens cash is likely gone, especially if the manufacturer didn't get the order and payment yet. The suggestions by other posters on how to handle this are good: get yourself established as creditor, try to invoke fraud.
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