Home construction turning into a money pit?

Brian Sher thought he was doing everything right when he hired a contractor to build his new home. He made sure he had a license— and even got references.

Brian Sher, homeowner: Everyone was very complimentary

Victoria Corderi, Dateline: There were no complaints on his record?

Sher: No complaints whatsoever.

So, then, why did things go so wrong?

Sher: I’ve been taken so badly and there’s nothing that I can do about it

First, Sher says, his contractor, Richard Martinez, fell way behind schedule. And worse, he botched the job.

Sher: How a guy can put a beam that should have been there and it says on the plan is absolutely unbelievable. 

Now the house has to be torn down. The contractor, he says, took the lumber and windows from the construction site and refused to give them back.

He says he’s been receiving bills the contractor never paid for things that had nothing to do with his project. 

Sher: Personal tools, candy bars, stuff which are just for himself, cell phones, cell phone holders.  He charges to my job site I have to pay it. I can’t do a thing about it.

Sher says in the end he’s out $200,000 dollars and may even lose his property. 

We went to his contractor’s house and he wouldn’t come out. But he did call us and leave a voicemail, on which he said he was the victim. We called him back, and Martinez agreed to an interview then didn’t show up.

Fooled by a good reference
If you think that’s an ugly situation, talk to Ed Shimmon and his wife.  They did what most homeowners do— very little homework. They got a good recommendation and went with that.

Ed Shimmon: I had the architect tell me he was a great guy, a great builder.  I’d be lucky to get him to build my house.

That great guy was contractor Covey Cowan.  And they hired him to build their multi-million dollar Silicon Valley mansion.

Annalise Shimmon: He seemed very sincere.  So it’s still hard for us to believe what’s happened.

What happened was a financial debacle. Shimmon says he was paying Cowan hundreds of thousands of dollars. But that as weeks passed, Shimmon says the contractor told him needed more.

Corderi: He would tell you he’s running out of cash?

Ed Shimmon: Yes, he actually came to me and wanted to borrow a quarter million dollars.

Corderi: Now, that doesn’t inspire confidence.

Ed Shimmon: That didn’t inspire confidence at all.  I mean, here’s a multi-million dollar project and I know you’re signing up other multi-million dollar projects...—and now you want to borrow a quarter million dollars from me?

Shimmon’s wife, Annalise, says the stress was unbearable. One particular phone call between contractor Cowan and her husband, she says, left her shaken.

Annalise Shimmon: They screamed at each other for 45 minutes, I would say,  to an hour. I thought he was going to have a heart attack. The contractor had control of him and it was killing him.  It was killing him.

Corderi: Why didn’t you fire him?

Ed Shimmon:  I was afraid and I got to tell you I felt like I was a hostage.  If I didn’t give him money, he was gonna be angry with me and sabotage my project.  It’s like you’re just trying to be nice to him.

Corderi: It’s almost as if he’s doing you a favor.

Ed Shimmon: Exactly. That’s the best way I can describe it—he’s doing us a favor.

Corderi: Which is crazy but—

Ed Shimmon: That’s the way it is. As soon as that contractor starts your project and you give him money, you’re invested with him for the next until he’s done.

It turns out contractor Covey Cowan had a history of financial problems. In 1994, his business went bankrupt, leaving a trail of angry creditors. That was something Shimmon didn’t know. Neither did another homeowner until it was too late.

Corderi: When you hear the name Covey Cowan, what pops into your mind?

Mimi Chang: He’s a thief, basically.

Mimi Chang hired the contractor to build her family’s home in the Tony Hills of San Francisco.

Chang: It was a disaster.

About six months into Chang’s project, Cowan delivered some very bad news.

Chang: He was very nervous. And he said that he was going out of business. Work had stopped on our job the day before.  And that was it, he was walking away from the job.

Ed Shimmon says he got a similar call.

Ed Shimmon: I was shocked.  It was a 30-second phone call. I mean, it was like, “I’m shutting my doors.  I can’t make payroll.” And he hung up the phone.  It wasn’t no—

Corderi: "I’ll try to help you.  I’ll take care of it.  I’ll finish the project.  I’ll find somebody else."?

Ed Shimmon: Zero.

Corderi: What did you say? 

Ed Shimmon: I was speechless.

Shimmon was speechless— until he began receiving bills for thousands of dollars from subcontractors: money he says he’d already paid Cowan to cover the supplies.

Ed Shimmon: So how does that make any sense that I had to pay the contractor a year ago and now the cabinet guy wants money from me?

Because it turns out, even though Shimmon paid Cowan, Cowan never paid the cabinet maker—or some of the other subcontractors.  Mimi Chang also began receiving bills she thought shed’ already paid.

They learned a potentially costly little secret of the contracting business: In most states, when you hire a contractor, it’s your responsibility to make sure all of the subcontractors get paid. If not, they can put a lien on your house, and in effect force you to hand over money or risk losing your property.

Now, Ed Shimmon says he’s facing lawsuits over unpaid bills. Yet, he is still forging ahead with the construction— this time he’s the contractor— managing the project by himself.

Cowan’s other former client, Mimi Chang, says she still can’t believe the contractor’s attitude toward her predicament.

Chang: I said, “Are you ever going to make this right for us?  Are you ever going to try to pay this back?” He looked at me and said “no,” basically. 

After much searching, Mimi Chang found another contractor willing to finish her home, but thanks to Cowan, she says her family has taken a devastating financial hit.

Chang: This was our money.  This was our retirement. It’s shaken us a lot. And it’s been a tough road.

We wanted to find contractor Covey Cowan to as why he abandoned the Chang and Shimmon projects, and you may be surprise to find out where we caught up with him.

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