More than nine months after news surfaced that a major luxury homebuilder in the Twin Cities was being investigated for allegations of fraud, official criminal charges have been filed against two men that ran the firm.
Criminal complaints were recently filed in Hennepin County Court against Keith Waters and alleged co-conspirator Carter Siverson. Court documents claim that the men, through their now-defunct company, Excelsior-based Keith Waters & Associates, defrauded numerous homeowners, as well as a faith-based organization that had hired the company to build a worship center in Victoria.
Waters was the principal owner of Keith Waters & Associates; Siverson was a minority owner, according to court documents. Waters handled sales and the design of homes, many of which were multimillion-dollar properties, while Siverson prepared bids, managed individual projects, and obtained money from clients and banks to cover project expenses.
The charges allege that, between 2010 and 2012, Keith Waters & Associates received more than $1.2 million from The Blessing House Ministries and five homeowners in Wayzata, Eden Prairie, and Minnetonka, but didn't give the money to subcontractors like it was supposed to.
Several customers who were allegedly defrauded by the company told the same story: After subcontractors walked off the job sites, they asked them why—only to learn that Keith Waters & Associates had not properly paid them for materials or services rendered, according to the complaint.
The firm also allegedly kept collecting funds without telling the customers that it was “in serious financial trouble and had been for a number of years.” In fact, it had operating losses in recent years, had reached a limit on its line of credit, and Waters had taken out loans on speculative real estate projects while making a $741 per month payment on a BMW, according to the complaint. In fact, the company allegedly owed more than $1 million to subcontractors on past projects prior to even signing the contracts highlighted in the criminal charges.
Waters faces six felony counts of “nonpayment for improvement.” Siverson, meanwhile, faces those same six counts, plus one count of theft by swindle. That charge alleges that Siverson illegally forged lien wavers that indicated that subcontractors had been paid. An attorney for one of the men was out of town Thursday when Twin Cities Business reached out for comment on the allegations.
In November 2012, the Minnesota Department of Labor fined Keith Waters & Associates $80,000 and fined the men $20,000. The state also revoked the company’s license, and the firm shut down.
At the time Waters and Siverson filed for bankruptcy and closed the firm, they had also had 73 claims against them for $12.8 million, according to the Star Tribune, which reported that, as of Wednesday night, neither man had been arrested.
Waters focused on luxury homes and commercial space and designed such high-profile projects as musician Lorie Line’s Lake Minnetonka home, the Minneapolis newspaper reported.