Homebuilder investigated for questionable business practices
In February, we first told you about an Austin home builder who was under state investigation for questionable business practices. Since then, the builder has sold all 3 of his austin subdivisions, Maravilla, Maravilla Hills, and La Ventana in Marble Falls. But, as you're about to see, Mike Kelly's history continues to follow him and it's caught the attention of authorities...In February we tracked down Mike Kelly, Maravilla’s developer. When we first approached him, he just laughed.

Homebuilder investigated for questionable business practices
November 15, 2007
By CHRISTINE HAAS
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See KVUE News: Defenders Investigative Report

In February, we first told you about an Austin homebuilder who was under state investigation for questionable business practices.  Mike Kelly’s history continues to follow him, and it’s caught the attention of authorities.

It’s been nearly five years since the first foundation was poured in the Maravilla sub-division in /northwest Austin.  Among the stucco and wrought iron, there is anger.

“It's sad and disgusting,  ever since we moved in it has been been 1 nightmare after another,” said Louisa Barlow, a homeowner in the Maravilla sub-division.

In February we tracked down Mike Kelly, Maravilla’s developer. When we first approached him, he just laughed.

That laughter is difficult for Barlow to stomach.  She and her husband allowed the bank to foreclose on their home.

“Essentially, this property is pretty much worthless to us,” she said.

Barlow says problems caused by Kelly’s company, Primera Homes, have left her house unfit to live in, possibly endangering her family’s safety.  Travis County even sent a letter to Maravilla Homes last December stating the entire community of about 70 homes had problems with drainage and potential septic system failures, which could cause health and safety issues.

Concerns like Barlow’s and questions KVUE began asking back in February prompted a state investigation into the business practices of Kelly and Primera Homes.  The Texas Residential Construction Commission (TRCC) acknowledged then that the problems were serious.  

Now, nine months later, the Travis County District Attorney’s Office confirms its White Collar Crime Unit is investigating Kelly’s action. 

The state investigation is almost complete and it’s working to revoke Kelly’s builders license.

TRCC Executive Director Duane Waddill says he can’t speak specifically to Kelly’s case, but will say his chief concern is Kelly’s alleged abuse of customer money.

“We have allegations related to advertising practices and issues to the misuse of funds,” he said.  “Where someone would take money from homeowner a and use it to build homeowner b's home or use it for personal expenses."

It’s almost impossible to gauge just how much damage homeowners have suffered.  Some tell KVUE they have settled lawsuits with Kelly and Primera Homes and can’t discuss the details.  Others are still trying to sell their homes, but most disclose the drainage problems and lack of builder warranty because Kelly and Primera have now filed bankruptcy.

KVUE has also learned the state has spent dozens of hours listening to testimony from concerned homeowners.  In  February, KVUE revealed Maravilla homeowners were impacted by $67,000 in outstanding liens on their subdivision.  According to the TRCC, Kelly sold homes without paying the construction loans he accumulated during the building phase.

When KVUE asked about the liens nine months ago, Kelly said in a written statement  he had not been dishonest at closing and once the development was finished, the liens would be paid. 

The state says those liens could have impacted every Maravilla homeowner’s ability to sell or refinance their homes. 

When KVUE showed up at Kelly’s bankruptcy hearing to find out why he never paid the liens, we got no reply.

For homeowners like Louisa Barlow, the reaction is disbelief.

“The sheer shattering of one's dream and sanctuary this should not happen to any consumer,” said Barlow.

Homeowners in the Maravilla sub-division are now hoping the county can fix the drainage and sewer problems left behind.  Travis County Commissioner Gerald Daugherty says he is leading the fight for $700,000 in bond money Kelly put in place when construction began.  He is working with the new owner of Primera Homes and is hopeful the county will be able to use that money to fix the potential health and safety issues. 
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