5 On Your Side

AG wants to ban kitchen remodeler from NC

Posted July 14, 2014

— The state Attorney General's Office filed suit Monday against a Burlington company that authorities accuse of taking upfront payments from customers for kitchen remodeling jobs and then not finishing the work.

The lawsuit seeks to ban American Kitchen Corp. and owners Robert Selfors and Tyler Justin Sheets from offering home repair or home improvement services to North Carolina homeowners and to force them to pay refunds to consumers who paid for work that was never completed.

“Businesses that take your money up front have an obligation to get the job done,” Attorney General Roy Cooper said in a statement. “Using payments from new customers to finance existing jobs is bad business and not sustainable.”

5 on Your Side reported two weeks ago on problems customers were having with American Kitchen.

American Kitchen is now closed, according to Cooper, but up until last month, it required customers to pay deposits of as much as $19,000 on kitchen makeovers before hiring subcontractors to do the work. The lawsuit states that the firm couldn't pay the subcontractors to complete existing jobs without recruiting new customers to pay more advance deposits.

"The business was not unlike a Ponzi scheme and was destined to fail, leaving its newest customers high and dry," the suit states.

The unpaid subcontractors and suppliers have filed liens against several customers’ homes, many of whose kitchen remodeling jobs remain unfinished, he said.

Sheets couldn't be reached for comment Monday. Selfors, who is also the pastor of The Kirk Church in Raleigh, said he wasn't aware of the lawsuit.

"It's not a crime to go out of business and not a crime to try twice in the same business and fail," Selfors said, adding that it's "unfair that people feel they were scammed."

The state Consumer Protection Division has received complaints from 38 homeowners who have lost about $300,000 total to American Kitchen, he said, adding that the company's owners previously ran a company called Kitchen Carolina that operated using the same business model and shut down in a similar manner in 2009.

To avoid problems with home improvement projects, the Consumer Protection Division offers the following tips:

  • Avoid paying more than 10 percent of the total cost in advance.
  • If you must pay fees in advance, use your credit card if possible in case you need to dispute the charge later.
  • Ask to pay as the work is done, or once the work is completed to your satisfaction.
  • A contractor who claims to need a lot of money upfront for supplies and materials may have poor credit or be in bad financial shape. If you wish to do business with such a contractor, buy the supplies and materials yourself and pay for the labor once the project is finished.

To report problems with a home improvement company or contractor or to ask questions before hiring one, call the Consumer Protection Division at 1-877-5-NO-SCAM.


This story is closed for comments.

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  • Tony Snark Jul 16, 2014

    View quoted thread

    The government should protect us from fraud and it is their duty to prosecute or take other action.

  • Kyle Clarkson Jul 15, 2014
    user avatar

    Once again, the government officials trying to control everything we do. Let free market forces work themselves out.

  • flyfish42 Jul 15, 2014

    The correct course of action seems pretty apparent here. Charge them with fraud, and require them to liquidate whatever assets they have to reimburse the customers that they ripped off.

  • JustOneGodLessThanU Jul 15, 2014

    View quoted thread

    So, paying upfront entitles a company to rip-off the consumer? Blame the victim, eh?

  • elkerster Jul 15, 2014

    View quoted thread

    Though they didn't directly higher them they hired the company that did and their work and labor was put into the house (product) so they have the right to file a lien for not being paid and that information was probably in their contract as well.

  • Lightfoot3 Jul 15, 2014

    "The unpaid subcontractors and suppliers have filed liens against several customers’ homes" - article

    Given the customers didn't hire them, how is that possible? American Kitchen Corp owes them money, not the customers.

    "Dishonest contractors really add to the stress of remodeling" - mohnkae

    I recently had a house built. I had to deal with a dishonest contractor AND dishonest subs. Talk about stress!

  • mohnkae Jul 14, 2014

    Dishonest contractors really add to the stress of remodeling, as well running an honest business, the fear of such complicates things. I do (among other things) kitchen remodeling, it is a field of work that puts you in the center of people's homes, requiring trust from the client, making Honesty and Courtesy crucial to the success of your business. It baffles me that they thought this "business model" might work, it self-destructs when you abuse the trust of the people who hire you... and rightly so. Having said that, I would like to say that I think 10% down on a complete remodel is probably not sufficient, in a business that doesn't have a large staff and several jobs open at once. A large kitchen's cabinets could cost upward of $20,000, that's a lot of cost to cover in the front end of a job, especially in a relatively small company. Our standard is 50% down, in the nine years I've been doing this I've never had a client balk at that.

  • Wheelman Jul 14, 2014

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    Either that or do like I did the last time I had a bathroom remodeled. We picked out the tile etc. and then I told the contractor I would pay the tile company for the supplies and told the contractor that I would pay them the balance in full once the job was satisfactory completed. The first one said no, so I told him to forget it. The second one had no problem with it and even got me their discounted contractor price. He also did wonderful work and I was happy to pay him. You don't have to do business the way they want to just because that is what they want.

  • areyououtofyourmind Jul 14, 2014

    View quoted thread

    Yep, they actually had the business for sale back then. I went through enough due diligence to learn that they were nothing but liars.

  • Made In USA Jul 14, 2014

    The owners previously had to shut down their last business adventure called Kitchen Carolina back in 2009, a time when the recession was in full bloom... in a "similar setting". Now, 5 years later, their newest money-collecting business "American Kitchen" is failing.

    It's seems that maybe there are a couple of fellows fighting excessive personal debt with other people's money instead of their own.