Opinion ID: 2912069
Heading Depth: 3
Heading Rank: 2

Heading: Questions Arise About the Projects.

Text: At some point, Campsey grew suspicious about the progress of the projects. For the Clarksville Pike property, although some demolition had been done, Campsey learned that the tasks listed on the December 5, 2006, invoice were not actually completed, including “pulling” No. 14-5720 United States v. Churn Page 4 the construction permit. Nor was the modular house set on February 8 as Churn said it would be. Similarly, she visited the Green Street property, but found no completed work. An inspector dispatched by BSB made similar observations. On his first visit to the Clarksville Pike property in October 2006, he noted that the existing structure had been torn down and cleared. But a few months later, on March 23, 2007, the inspector estimated that only 1.2 percent of the construction project had been completed. He later found that no additional work was performed from then through July 17. The inspector also assessed the Green Street property on March 16 and determined that only 1.2 percent of the construction project had been completed; when he returned on July 17, he found that no work had been done since his March 16 visit. Questions about Churn’s invoices arose as well. The invoices he submitted to BSB to support draw requests purportedly reflected purchases for two “Hot Tamale”-style modular houses. But AAH never received any orders or payments from Churn. AAH also did not prepare the invoices Churn submitted to BSB. While the submitted invoices reflected a one-third deposit on the total purchases, as well as costs associated with installing electrical and plumbing “tie-ins,” AAH never required more than a 10-percent deposit—the industry standard. Indeed, AAH was not even able or licensed to provide electrical or plumbing services. On March 3, 2007, Campsey emailed Churn, stating that an AAH representative told her that it had not received funds from Churn and would not start construction on modular homes until it received the money. She stated that Churn’s representations to BSB that he had paid deposits on the houses using the loans “greatly conflicts” with information given by AAH. Since Churn had previously said that he would pay for the purchases through checks, Campsey requested copies of cancelled checks and further information about what charges Churn had paid, but she never received any. She also pointed out to Churn that there was no pad (a part of the foundation) laid on the Green Street property even though Churn told her that it was already installed. Two days later, Churn told Campsey that she would “have the information that’s needed by the end of the business day.” Churn also said that BSB’s inspector should “go by [the] site at [the] end of this week” and that Churn “will also have in writing this week [a] guarantee from No. 14-5720 United States v. Churn Page 5 [the] manuf[acturer] that we will have product this month on the sites.” (Id.) Campsey replied by confirming an inspection date, requesting proof of payment, and asking for a written guarantee from the manufacturer. She never received any of the items. When Campsey later went to the Green Street property, she observed that “nothing had been done since the first time. It was the same every single time . . . .” (Trial Tr., R. 80, PageID 296.) Campsey later called Churn. He said that the houses were coming, but from IBC instead, a different manufacturer. Churn promised to perform additional work on the properties, but Campsey said that she no longer trusted him. On March 8, 2007, Churn told Campsey that he “will be moving forward with the work on the projects” and that she was “very wrong about [her] comments.” Churn said that he would provide “[a]ll info” to Rief and Thomas, who would “deal with [her] directly.” (Id.) Campsey, who had been in contact with Rief and Thomas throughout the projects, still never received any documentation. In early May 2007, BSB sent formal demand letters to Rief and Thomas, requesting written confirmation that modular houses were being completed and verification of the delivery dates. The letters warned that failure to provide the requested documentation or to complete the site and foundation work by May 18, 2007, would result in the loans being payable immediately. On May 18, Churn sent an email with two attachments to BSB. The first attachment was an invoice from “C&M Construction Managment” [sic] to Rief, stating that the “deposite [sic] has been paid for unit ordered for 2408 [Clarksville Pike] job site,” and confirming a $33,463 payment. The second attachment was a photo of modular houses sitting on trailers. Churn told Campsey that the structures depicted would be delivered to the Clarksville Pike property. Campsey quickly responded that “this information is not sufficient.” She again demanded written confirmation from AAH verifying production of the units and the dates of delivery, site preparation, and foundation work. Churn responded five days later, on May 23, stating that the units were not from AAH, but that BSB would be getting paperwork from C&M Construction Management directly. BSB never received any paperwork. During its investigation, BSB located the modular houses shown No. 14-5720 United States v. Churn Page 6 in the photographs. After examining the houses’ serial numbers, the bank learned that they were owned by other people, not Churn. Churn stopped making monthly payments on the loans sometime in April 2007. While Rief attempted to make some payments himself, he was ultimately unable to continue paying, leading to the foreclosure of the Clarksville Pike property and Rief’s filing for personal bankruptcy. Thomas also attempted to make some payments himself, but was unable to do so after he lost his job; BSB foreclosed the Green Street property and Thomas also filed for personal bankruptcy.