The Money Pit

Angry customers say a Valley log home builder has stolen their dreams and pocketed their cash

They filed for bankruptcy in 1986, 1993, 1995 and 1996. In 1996, Richard and Barbara Piper filed a claim in bankruptcy court in California, accusing the Lees of "despicable conduct." They said the Lees fraudulently took $32,000 of their money in 1993, used it for something other than purchasing logs and never built them a cabin in Colorado.

Barbara Piper, whose husband died two years after they moved into their retirement home, says John Lee cost them much more than that initial $32,000. The couple were forced to sell their car and an investment townhome, borrow money from their son and spend $150,000 in savings to fight Lee and finish their house.

"He took every damn dime we had," she says.

Attractive ads in local publications give no hint of the company's legal and financial wores.
Attractive ads in local publications give no hint of the company's legal and financial wores.
Robert Zenor holds a flier he says contains a false endorsement from him.
Kevin Scanlon
Robert Zenor holds a flier he says contains a false endorsement from him.

By 1996, when the Pipers were just beginning their battles with the Lees, Great Bear was soliciting business in Arizona via advertising and trade shows, court records show. It was at a 1996 show that Gary Martinson first came in contact with Lee and Great Bear. Owner of the company now known as Mirage Homes, Martinson visited the Lees' operations in California and convinced them to move to the Valley. Mirage, which is developing the Bison Ranch Western-themed community on the Mogollon Rim, had hoped to build a business relationship with Great Bear. It was an alliance Martinson would come to regret, according to his attorney, Chester Yon.

Martinson helped Great Bear find its first office space on Frank Lloyd Wright Boulevard in Scottsdale, lent the Lees money and found them a place to live, court records show. He and his firm even leased a truck for the Lees. But Martinson soon learned the Lees' credit was so bad they couldn't even open a checking account, records say. And despite signing promissory notes pledging to repay Mirage with interest, the Lees never paid a cent, files show.

"He [Martinson] was the reason they got here and then they stiffed him," Yon says.

The Lees moved their operation to a spot at the Loop 101 and McDowell Road. Some customers believe Great Bear's relocation to this corner of the Salt River Pima-Maricopa Indian Community was no accident. They allege the Lees are trying to insulate themselves from regulation and law enforcement by conducting their business on Indian land, where legal jurisdiction is complicated.

Since coming to Arizona in January 1997, Great Bear Log Homes has had high visibility and nothing but positive media coverage. Its small-scale log home has been a favorite exhibit at trade shows. Many customers who are now angry at Great Bear say they were attracted to the company after visiting its exhibit. The Arizona Republic called the cabin "the centerpiece" of a home show one year and said a tour of it "is not to be missed."

This weekend, November 9, 10 and 11, the company is scheduled to be part of a log home show at the Arizona State Fairgrounds.

Great Bear has advertised frequently in newspapers and magazines. It has hosted regular open houses at its construction site. And the company was even profiled in the Phoenix Business Journal under the section "Success Strategies for Small Businesses."

The company's slogan: "You've worked hard, you deserve the best."

Gerald Rasmussen, a Great Bear log home owner from Scottsdale who spent years fighting with Lee and his business partners in and out of court, says the continued use of that slogan galls him.

"What he thinks you deserve is sheer hell," he says. "He's stealing people's dreams. Building your retirement log home is a dream."

Records show Great Bear has sold dozens of log homes from its Valley headquarters. A company price sheet shows the houses range from about $58,000 for a 1,200-square-foot cabin to the Zenors' choice, a 2,300-square-foot model now priced at about $110,000. Garages, extra decking, customized plans, transportation of the material to the construction site and completion of the home all cost extra.

As to tangible credentials for building the homes, Lee testified in a deposition that he has no post-high school degree, although he did study at an engineering school. California state records show Lee was a licensed contractor from 1988 to 1994. The license was revoked after Lee failed to renew it, a state Web site says.

But a call to the regulatory agency reveals Lee's license was revoked in 1998 after an investigation substantiated the Pipers' complaint. Lee was found to have broken nine laws, including abandonment of a project and diversion of funds.

Lee never held such a license in Arizona, yet some homebuyers allege he told them he did. In a deposition this year, Lee admits he and Great Bear did act as a contractor, actually constructing the homes in Arizona on customers' property for a few years after moving here.

After Robert Zenor brought Lee's work to the attention of Payson town officials, Lee was prosecuted by the town attorney and was convicted of contracting without a license. He was fined $550 and ordered to pay Zenor $17,000 in restitution. But the misdemeanor case was appealed and the restitution order -- but not the conviction -- was overturned early this year by a Superior Court judge.

While Zenor was arguing with Lee, people started calling the homebuyer and stopping by the cabin. Lee had been touting it as an example of his work, Zenor says. Indeed, Zenor has a copy of a Great Bear flier in which he is quoted as saying the company "has set a new standard of excellence in log home building."

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