Nanticoke closure may mean criminal charges

By Lynn R. Parks

On the day that Nanticoke Homes began bankruptcy proceedings, Attorney General Jane Brady told a group of employees, contractors, homeowners and suppliers that the people who operated the Greenwood construction company may face criminal charges. Penalties for some of those charges include jail time. The 31-year-old company shut its doors last month, laying off about 85 employees and leaving tens of millions of dollars in unpaid bills, including about $10 million to Mercantile-Safe Deposit and Trust Co., Owings Mills, Md., and dozens of houses unfinished. The attorney general’s office is investigating whether company leaders paid health insurance and pension plan premiums, and whether they inappropriately spent money that was intended for contractors. “It is a provision of the law that money received in trust” for a contractor must be paid to the contractor, Brady said. When that is not done, “it creates all sorts of nightmares for the homeowners. And there are penalties, including fees and incarceration.” Brady said that her office is not certain of what happened to money that was paid to Nanticoke Homes. “We are trying to follow it, to find out where it went,” she said. In addition, Brady said that her office “will be talking with the banking commission” regarding the actions Mercantile has taken. Nanticoke Homes is filing for bankruptcy under chapter 11, typically the path for companies that intend to restructure and reopen. “There is no reason why this business cannot succeed in today’s economic climate,” Brady said. “This is not an industry that is doing poorly. This is a company that is doing poorly in an industry that is doing well. I think that it is realistic that, with the right people in there, this company will be able to make good through restructuring.” Brady spoke to about 200 people in the Greenwood fire hall Friday. Many complained that homes for which they had paid were not complete. Others were there because they were owed money by the company. Elaine Fannin, Greenwood, sold Nanticoke’s homes through Robert Collins Enterprises, Greenwood and Seaford. Nine of the homes she sold are not complete and she is owed “10s of 1,000s of dollars” in commissions, she said. “This came as a total shock,” she said. “We knew that they had slowed down and that they were having problems, but we were told that everything was clear.”

Fannin said that contractors who did work for Nanticoke are suffering the most. “It is really sad when you drive by their business and see that they have their second vehicle out there for sale,” she said. “They are small businesses, and they have lost jobs.” Fannin intended to file a complaint with the attorney general’s office. Brady, who brought with her a stack of complaint forms, said that under the bankruptcy proceedings, secured creditors, or those who hold collateral against their loans, will get paid first. “They get in line ahead of everybody else without secured credit,” she said. She added that her office will work for restitution for homeowners outside of the bankruptcy proceedings. Even so, many homeowners will have to pursue their own cases. “We urge you to sit down with us,” Brady said. “Many of you may need to have private lawyers to litigate payment issues.” Many homeowners complained that they had received threatening letters from Mercantile regarding unpaid balances on homes that are still not complete. John Loftus, Waldorf, Md., has a partially-finished Nanticoke home in Clarksville. He recently received a letter from Mercantile, saying that his unpaid balance of $72,000 was due immediately. “I had to pay $3,400 to an electrician to complete wiring that was supposed to be done by a [Nanticoke] factory worker,” Loftus said. “That money has got to come from somewhere. I wrote Mercantile back, saying, ‘I don’t owe you anything now, and it remains to be seen whether I will ever owe you any money.’ ” Melanie Pappas, Annapolis, Md., has an unfinished house in Bethany Beach. To applause, she demanded why the state had not done anything about Nanticoke Homes before so many people were hurt. “How could a company like this still be in business?” she asked. “Contractors tell us that this has been going on for months.” Brady said that her office received very few complaints about Nanticoke Homes before it closed. “There were not any calls coming in to alert us,” she said. “Since its doors closed, I’ve heard complaints everywhere I went.”

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