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Bankrupt builder must pay 16 clients

The president of Lighthouse Building Co. agrees to make payments to a handful of victims to avoid trial.

By TERESA BURNEY, Times Staff Writer
© St. Petersburg Times
published June 23, 2002

Lisa Simmonds can barely stand the sight of a lighthouse picture. Even her three small children boo at the image.

And that's only one of many scars left on the Simmonds family by the demise of Lighthouse Building Co., more than 21/2 years ago.

In late 1999, the Spring Hill company filed for protection in bankruptcy court, leaving 81 homes unfinished in Hernando, Pasco and Citrus counties and owing customers somewhere between $750,000 and $1-million, say investigators.

The Simmondses had given Lighthouse more than $100,000 toward their home north of Weeki Wachee when the company closed. Essentially, they got nothing for their money.

Even though their lakefront lot had been cleared, the plumbing roughed in and the concrete slab poured, Lighthouse had not paid the subcontractors for the work, so the Simmondses were stuck with those bills as well.

Now, the Simmonds family, as well as 15 other former customers, may get some of their money back from the company's president, Steven Bultema. In order to avoid a trial on criminal fraud charges, Bultema has agreed to pay back $200,000 to 16 of the 81 former customers, making 50 payments of $4,000 to be divided among the 16.

"If he makes those payments, charges will be dismissed," said assistant state attorney Philip Hanson. "If any one of those 16 victims doesn't get those checks, there will be a trial."

Of the 16 listed as victims in the criminal case, 13 told Hanson to allow Bultema to try to make restitution before going to trial.

"I was for it," Simmonds said. "It's something rather than nothing. But if justice was served, I would feel better about it."

"If he goes to prison, chances of getting restitution go down," said Hanson. "It gives the victims a chance to get some money back."

Though 81 homes were left incomplete, the State Attorney's Office found only 16 cases where they thought they could make criminal fraud charges stick.

"The difficult thing about building cases is you have to prove that the person who took the money had criminal intent," Hanson said. "For two-thirds of those homes, he did at least part or a substantial part of the work." In those cases, it is difficult to prove that Bultema planned to defraud the clients, Hanson said.

But in 16 cases, Bultema's customers got nothing or almost nothing for their money. Those were the ones listed in the criminal charges.

In addition to the criminal charges, Lighthouse and Bultema also were sued in civil court by 37 former customers. Last September, the court awarded a $1.2-million judgment against Lighthouse to the customers. But, since the company still is in bankruptcy, the customers will have to get in line behind the company's many other creditors to collect the meager remainders. The portion of the lawsuit against Bultema personally is pending.

Buddy Ford, a Tampa attorney who is representing the customers in the civil case, also is trying to get his clients some restitution from the state's Construction Industry Recovery Fund, which is designed to help pay back customers of builders who go bankrupt.

However, the keepers of that fund have told Ford that all the civil cases and bankruptcy cases have to be settled first because the fund is a last resort.

"I think that is absurd," Ford said. "(The customers) are not going to be made whole from the restitution, and they are not going to be made whole from the bankruptcy, and they are not going to be made whole from the fund."

Bultema's attorney, James Brown of Brooksville, said his client never intended to hurt anybody. If he is guilty of anything, he said, it is of being a bad businessman. The company quadrupled its business in three years. At the same time, it kept using antiquated accounting systems and bidding formulas. It also failed to develop the pool of capital it needed to finance the larger number of homes under construction.

"They were doing all the bookkeeping with scraps of paper and do-it-yourself Quicken (computer software)," Brown said. "When they started realizing that they were in trouble, they hired an expert to come in. He said they needed investors to infuse the company with capital to get it over the hump."

The investors never came, and then Bultema and his in-laws started putting personal money into the company, mortgaging houses and cashing in certificates of deposit. By then, it was too late, and the company asked the bankruptcy court for protection from creditors while it reorganized. About six weeks later, company officials decided to ask the court to liquidate its assets rather than reorganize.

Bultema has since moved to Tennessee, where he is working in the building industry but not as a contractor.

"(Bultema) has said from the beginning he would like to make everything right," Brown said. "I think by paying that amount of restitution he is trying to do that. He is not going to be drinking wine and eating steak for the next 50 months."

Brown knows many of Bultema's former customers will not believe he is sincere.

"Mr. Bultema really does feel badly," he said. "But there are some people out there who would not accept his apology."

Count Simmonds as one.

The costs of Lighthouse's bankruptcy to her family have been enormous and go far beyond the $118,000 or so they paid out of pocket to the company, she said.

She scoffs at the idea that Bultema had no criminal intent. The day before Lighthouse filed for bankruptcy protection, she said, he pressured her to pay 50 percent of the home's total bill, with the promise that concrete blocks for the walls and trusses for the roof were on the way to the homesite.

Simmonds, who was pregnant at the time and dealing with the impending death of her grandfather, complied.

It turned out Lighthouse had paid for none of the materials or labor that had already gone into the house, so the family had to pay those bills and find someone else to finish the house.

The Simmondses also had a difficult time borrowing money to complete the construction because banks considered the project a bad risk. Since Simmonds, a real estate agent, had just moved to town, she had no proven income, and her husband is a stay-at-home dad.

They borrowed money from friends, maxed out the family credit cards, and sold their five paid-off cars and furniture for the cash to get the home finished. It was finally completed nearly a year after Lighthouse was scheduled to finish it.

"I had this gorgeous, beautiful house but no furniture," she said. "I'm only 36, and you'd swear I was 50. This thing just kept going and going."

Even completed, her home in Woodland Waters fails to give Simmonds satisfaction. It reminds her too much of the struggle it took to get it. She has put it up for sale.

"I love the house. It's just that I'm frustrated with this state and the politics," she said.

She isn't the only one who questions Florida laws, which allow builders to co-mingle funds given to them to build homes in one bank account. Though they are not supposed to use money paid to build one person's house on another's construction, it happens all the time.

The state's lien law, which allows subcontractors who are not paid by builders to seek payment from the home's owners, including putting a lien on the house, also is a problem, many say.

"In my opinion, the laws regulating building don't really have much protection for consumers in the state of Florida," said Hanson of the State Attorney's Office. "The builders have strong lobbyists.

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