Dive Brief:
- Orange County, CA, contractor Storm King Building Co., Inc., has accused Continental Organics, an aquaponic fish and greens farm, of fraudulently diverting $1 million of construction funds and owing Storm King more than $500,000 for various construction projects at the business, the Times Herald-Record reported.
- In the lawsuit, Storm King also alleged that the lender on the project, Orange County Trust, failed to verify that contractors and suppliers were being paid and stood by while Continental withdrew and diverted $1 million from its construction loan account.
- Continental Organics received a big welcome in Orange County in 2010, as well as tax incentives and below-market rent, on the promise of 100 well-paying jobs for veterans in the community. But today, the company is close to bankruptcy and employs only 18, according to the Record.
Dive Insight:
Storm King President Raymond Yannone told the Record that Continental not only diverted the construction funds in question, but that the company habitually misrepresented construction costs in order to get extra money from lenders.
Yannone said Continental owners Michael Finnegan and Thomas Endres exaggerated his contract price to lenders by $1.6 million and may have created fake bills to a construction management company called ECS, run by Endres' brother, the Record reported.
Yannone said the Orange County Trust ignored his warnings about Continental’s deceptive practices, which have left him unpaid.
"The problem is that Storm King Building paid everybody in full because that’s my obligation. If I don’t pay suppliers, there’s no next job," Yannone told the Record. "My workers must get paid. I think it’s very unfair of Orange County Trust to look the other way."