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Judge dismisses theft-by-contractor charge

By: Dan Shaw, [email protected]//February 5, 2016//

Judge dismisses theft-by-contractor charge

By: Dan Shaw, [email protected]//February 5, 2016//

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An Ozaukee County judge has dismissed a theft-by-contractor charge against a custom homebuilder, leaving standing only the allegations made in a related civil case.

Judge Joseph Voiland decided late last month to dismiss the Class G felony theft-by-contractor charge that had been filed in November against Timothy Rigsby, of Delafield. Rigsby is the owner of Rigsby Group, which specializes in custom-built houses. The dismissal came at the request of Ozaukee County District Attorney Adam Gerol.

In a petition submitted to the court on Jan. 29, Gerol wrote, “While the case has been pending, the state received additional information that it wishes to investigate as well as pursue other issues presented to the state by the defense.” Because the charge was dismissed without prejudice, Gerol could file it again at a later date.

The allegations against Rigsby were brought by Michelle Friedman and her husband, James Friedman, a lawyer at Milwaukee-based Quarles & Brady. Michelle Friedman said she and her husband have retained a forensic accountant for their related civil case and are hopeful that evidence will be uncovered that will lead to the filing of further criminal charges.

But Rigsby’s lawyer in the case, Brent Nistler, cautioned against reading too much into the district attorney’s request for dismissal of the theft-by-contractor charge without prejudice. Nistler said there’s nothing unusual in a prosecutor’s wanting to keep his options open and added that he remains convinced that his client is innocent.

Meanwhile, Rigsby filed a lien for $47,832.73 against James Friedman in August last year.

The now-dropped criminal charge stems from suspected trust-account violations that occurred while Rigsby was building a house in Mequon for the Friedmans. To make sure Rigsby had the money needed to pay subcontractors while the work was proceeding, the Friedmans took out a roughly $1 million bank loan, as well as contributed about $129,000 from their own pockets. The money was held in a trust account managed by Chicago Title Insurance Co., of Jacksonville, Fla.

The Friedmans started to suspect something was amiss when the architect they had hired to design their house began noticing abnormalities in the paperwork Rigsby was submitting. After dealing with a long series of alleged project mishaps, the couple started an investigation on Feb. 5, Michelle Friedman said.

Rigsby’s contract was terminated six days later. The couple alleged Rigsby was ostensibly pulling money from the trust account to pay subcontractors and suppliers but was in fact using it for his own purposes.

The dispute also partly hinges on the type of contract the Friedmans had entered into with Rigsby. The Friedmans contend it was a cost-plus agreement, which would have Rigsby essentially passing through to the Friedmans any of the material and labor costs incurred while the house was being built.

Rigsby instead argued that it was a lump-sum contract. If that were case, he would be responsible merely for completing the project for a previously agreed-upon price.

The documents the Friedmans used were the standard ones drawn up by the American Institute of Architects for lump-sum agreements and specifies a project cost of $1.26 million, plus $56,000 held to the side as a contingency. Still, the Friedmans contend that their particular contract was modified to incorporate features more commonly associated with cost-plus contracts.

For instance, their contract with Rigsby explicitly stated that the homebuilder was allowed to charge an additional fee equal 10 percent of the project’s total cost. In cost-plus agreements, similar fees are often used to cover overhead and provide a profit, among other things.

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