The Money Pit

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

"He said, 'I'll see you in court,'" she says.


Lee likely would have fulfilled that promise.

Robert Zenor holds a "trust no one" sign he posted at his Payson cabin to commemorate his experiences with Great Bear Log Homes.Great Bear has a highly visible headquarters just off the Loop 101.Visitors to a May open house walk inside unfinished homes.Attractive ads in local publications give no hint of the company's legal and financial woes.Robert Zenor holds a flier he says contains a false endorsement from him.
Bruce Reade
Robert Zenor holds a "trust no one" sign he posted at his Payson cabin to commemorate his experiences with Great Bear Log Homes.Great Bear has a highly visible headquarters just off the Loop 101.Visitors to a May open house walk inside unfinished homes.Attractive ads in local publications give no hint of the company's legal and financial woes.Robert Zenor holds a flier he says contains a false endorsement from him.
Robert Zenor holds a "trust no one" sign he posted at his Payson cabin to commemorate his experiences with Great Bear Log Homes.
Kevin Scanlon
Robert Zenor holds a "trust no one" sign he posted at his Payson cabin to commemorate his experiences with Great Bear Log Homes.

When Gerald Rasmussen filed complaints with regulatory authorities regarding shoddy work on his Lakeside log home, Great Bear and the Lees sued him for breach of contract and slander. They alleged he was refusing to give them the money needed to complete construction of the house and that he was ruining the company's reputation in conversations with the state, his bank and others.

He says the bank, which was to release money in increments for construction of the $220,000 home, did its own inspection and refused to pay anything further because prior phases had not been completed.

Rasmussen contacted the local office of the state Registrar of Contractors with a lengthy list of problems, ranging from improperly installed windows and incomplete features to a cracked foundation through which daylight was visible.

The state ordered Great Bear's affiliate contracting company, Log Creations, to correct the work, but it never did. State records note that the company abandoned the job, leaving unused building materials and the unfinished home to deteriorate. Officials eventually revoked Log Creations' contracting license, saying the contractor had "repeatedly invoiced" Rasmussen for a greater percentage of work than had been completed, walked off the job and "made no effort to correct its deficient workmanship."

Rasmussen says he is disappointed in local and state authorities because they have never brought charges or regulatory action against Lee. A state Registrar of Contractors criminal investigation into Lee is still pending, officials say.

Rasmussen believes investigators view his dispute as an isolated case, a small problem not worthy of their time. In reality, he and others say (and court records show), there are unhappy customers and clients all over Arizona and beyond. And they share similar complaints against Lee and Great Bear.

Barbara Piper says she can sympathize with Arizonans who believe complaints have fallen on deaf ears. She says her lawsuit against Lee was abandoned after she and her husband ran out of money to pay lawyers. And she says despite problems Lee had with other homeowners and suppliers, prosecutors in California never acted.

"If you're parked at a red light and a gangbanger steals your $30,000 car . . . he'll go to prison," she says. "But John Lee can walk into your life, lie to you and take all your money and nothing happens to him."

Local attorneys who have battled with Great Bear and the Lees say they now communicate with each other. And court documents show they are beginning to get wise to the Lees, their past history and their methods of operation.

A May motion in a lawsuit filed by a Nevada company includes some chronological history of the Lees, noting some of their bankruptcies and legal maneuverings the lawyer alleges were designed to avoid paying debts. A settlement in that case includes a provision for allowing the lawsuit to proceed in the event of a subsequent bankruptcy.

And the most recent lawsuit filed against Great Bear, this one by a Valley company called SES, alleges that Great Bear is in a sorry financial state and has a poor reputation among clients. SES fronted $50,000 for a distributorship that never materialized.

The complaint, filed in June, said the Lees acted in a "willful, wanton, evil, knowing, intentional and outrageous" manner when negotiating the distributorship. The lawsuit, which sought more than $1 million in compensatory damages in addition to punitive damages, alleged the Lees told SES they were moving to Mexico to expand their operations. SES was to take over most of Great Bear's Arizona territory, records show.

But SES alleged the Lees painted a fake, rosy picture of the business, withholding key facts, such as its "significant" cash flow problems and "financial distress," its practice of making customers pay large sums up front "then using the funds for unrelated matters," that a majority of its clients were dissatisfied with Great Bear and that some had filed or were considering filing lawsuits against the company.

The case was recently dismissed after a judge determined that according to terms of the distributorship contract, disputes needed to be handled through arbitration. That step in the process hasn't yet begun.

Those who are willing to stand up to Lee in court should prepare for a long, frustrating, expensive fight. "He plays the legal system like a fiddle," Rasmussen says.

Court documents and interviews show Great Bear and the Lees don't give up, continuing to fight lawsuits and file appeals despite rulings against them. In a couple of cases, Great Bear and the Lees have turned the tables, suing someone they claim has hurt them financially, when the facts of the case show the defendants were the ones hurt by Great Bear.

Rasmussen's case was one example of this. Another involved a local drafting firm called the Tektone Company, which had drawn plans for the log home models. Great Bear Homes Inc. sued the firm and its owners in 1999, claiming they refused to turn over electronic plans that Great Bear had ordered. Tektone, in its answer to the lawsuit, explained the plans were not turned over because Great Bear refused to pay about $7,000 it owed the firm. An arbitrator later ruled that Great Bear owed Tektone the $7,000 plus more than $5,000 in legal fees that Tektone had incurred defending itself against Great Bear's suit. Great Bear, of course, appealed. But the case was settled before trial.

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