Maryland Attorney General Anthony G. Brown announced Monday that a Harford County home-building company and its former owners have been ordered to pay more than $1 million after a state investigation found they took consumers’ money for homes that were never completed or were delivered with serious defects.
A Final Order issued by the Attorney General’s Consumer Protection Division determined that by misappropriating customer payments, including through what state officials described as a “Ponzi-like scheme.”
According to the Division, home builders are required to safeguard deposits and advance payments by placing them into an escrow account or protecting them with a surety bond or irrevocable letter of credit. They must also pay subcontractors and suppliers on time and provide proof of those payments to custom-home buyers. Investigators found that Korey Homes failed to meet these obligations, leaving consumers with unfinished houses, defective construction, and substantial financial losses.
The order requires the company and the Smiths to repay all funds improperly taken from customers, in addition to more than $300,000 in civil penalties and over $115,000 in costs. They are also barred from engaging in unfair or deceptive trade practices and must post a $500,000 bond before operating as home builders in Maryland in the future.
“Home builders have a responsibility to protect the money Marylanders trust them with – not run a Ponzi scheme that leaves people without homes or their life savings,” Brown said in a statement. “This costly outcome sends a clear message: if you cheat Maryland homebuyers out of what is likely the biggest purchase of their lives, my Office will hold you accountable and fight to get their money back.”
The Attorney General’s Office urged consumers experiencing issues with Korey Homes or other builders to contact the Division’s Mediation Unit at 410-528-8662 or 888-743-0023. Prospective home buyers can verify a builder’s registration through the state’s Home Builder Registration Unit.
