A former high-flying homebuilder whose affiliated commercial business stumbled severely during the financial crisis and the recession is facing likely probation after pleading guilty to four felony charges for improperly diverting more than $300,000 in trust funds for new home construction to prop up the failing commercial side.
Kevin Michael Patrick Curry, founder and former head of Patrick Homes and Patrick Development, admitted that he violated the state’s Lien Law between March 2010 through December 2012, when he improperly transferred money that had been paid to him for building homes in order to sustain his commercial construction business.
As a result, 17 subcontractors on the homebuilding side were not paid within 31 days of their claims being submitted, and two homeowners suffered losses of more than $56,000.
Under the lien law, a general contractor who accepts money from someone to build a house is a “trustee” for that money, which should only be used for work and materials related to the purpose of the money. Using it for other purposes, whether personal expenses or another business, is illegal and constitutes theft.
Curry pleaded guilty to one count of scheme to defraud in the first degree for all 19 victims, plus one count of third-degree grand larceny related to $89,965 owed to Switala’s Construction and two counts of fourth-degree grand larceny related to $17,655,50 owed to Kroll’s Construction and $15,626 owed to Vastola Heating and Cooling LLC.
In all, he owes $304,280, according to the plea filing in Erie County Court.
He is scheduled to be sentenced at 9:30 a.m. March 7 by Judge Kenneth Case. That’s delayed from the original date of Jan. 17 to give Curry more time to make restitution.
There is no minimum mandatory jail sentence, but under sentencing guidelines, he could face up to 15 years in jail. However, his attorney, Rodney O. Personius, said he expects Case to order probation, not incarceration.
“Given all the circumstances, including how the offense was committed, Kevin’s cooperation with the district attorney from the get-go and his efforts at restitution, our expectation is that he will not be required to serve any time in jail,” Personius said, noting Curry had liquidated his retirement funds, among other things, to repay what he owed.
The charges and guilty pleas provide more insight into the demise of Patrick Companies, which was founded over 22 years ago by Curry and his partner, Paul Michael Bliss. Curry ran the homebuilding side, while Bliss handled the commercial side. Bliss sold his interest in the business back to Curry in 2007 but remained as an employee running the commercial contracting division until he broke off and started his own firm, Bliss Construction.
By then, though, Patrick was running into trouble, particularly on the commercial side of the ledger, as the economic downturn cut into the demand for commercial construction work much more than on the homebuilding side. Rather than give up, Curry shifted over $500,000 from Patrick Custom Homes LLC to Patrick Management Services LLC, resulting in significant bills going unpaid.
Personius stressed that the money was used for business purposes, not for personal gain or lifestyle expenses. He said Curry also took out a second mortgage on his own home and spent his children’s college savings funds to keep the business going.
“This influx of money did not save the failing part of the business, and as a result, a number of contractors and suppliers for the residential construction were financially harmed,” Personius said. “Kevin shoulders full responsibility for what happened here. He doesn’t have any excuses and doesn’t make any.”
Some contractors have complained to The Buffalo News that Bliss also has a track record of not paying his bills, but he denied that any of his vendors have not been paid. He was not implicated in the wrongdoing, according to the Erie County District Attorney’s Office.
“I’m doing everything I can to distance myself and straighten my image out,” Bliss said. “I’m clean. There have never been any issues, and there won’t be.”