Attorney General Martha Coakley’s office has filed a lawsuit against an Acton-based developer for falsifying cost statements and profits on an affordable housing development.
The attorney general’s office alleges Crossroads Development LLC, its owners James Fenton and Michael Jeanson, and contractor James Fenton & Son Contracting, Inc., submitted a false cost certification to the town of Acton in connection with the development of the 12-unit affordable housing complex on Main Street in Acton known as "Crossroads." As a result, the developers fraudulently concealed a large sum of money owed to Acton’s Affordable Housing Fund.
Crossroads had an agreement with the town of Acton that capped its profits at 20 percent of the development costs and any profit above the allowable profit was to be paid to the town’s affordable housing fund, according to Coakley.
According to the complaint, Crossroads and its principals included costs in its report for services not actually incurred and inflated costs on the project in order to pocket profits and circumvent the 20 percent profit cap allowed under the state’s affordable housing law.
The complaint alleges costs for the project were estimated at approximately $2.7 million with the developers’ profit capped at $540,413. However, Jeanson and Fenton exceeded that threshold by adding an additional 10 percent global surcharge to the site work through JF&S, the site work contractor owned by Fenton, charging impermissible amounts for development fees, charging for labor, equipment and fees that were never provided, and charging rates that far exceed costs that were actually paid. None of these excess charges were disclosed.
The defendants also sold one of the condominiums to an entity they owned at a price lower than market value and then promptly resold the unit at market rate, making $50,000 on the resale. In addition to concealing the profit, Jeanson and Fenton also charged excessive overhead costs by adding on a baseless 10 percent surcharge to JF&S billing rates, which already included overhead and profit, Coakley said.
The attorney general’s office began investigating this case last fall after a referral from the inspector general’s office. The False Claims Act gives the attorney general the authority to recover, on behalf of the state and its political subdivisions, such as cities and towns, triple damages and civil penalties from those who defraud the state or its political subdivisions. The attorney general’s office seeks to recover these sums for the state and the town of Acton, as well as seeking multiple damages and fines.
