Stephen Lee Ates, 60, pleaded not guilty recently in Mason County Superior Court in Shelton to nine counts of first-degree theft. The Everett man is scheduled to be tried Feb. 13, 2024, on the felony charges.

Ates is accused of swindling nine customers in Kitsap, Mason, and Pierce counties into paying him $30,000 to $149,000 toward construction of their new houses, then doing little-to-no work in most cases to complete the homes.

His business, Family Classic Homes, Inc., in Mason County, specialized in building dream homes for people desiring to live in rural areas of the three counties, especially on lakefront property.

“This contractor flat-out stole hard-earned money from people who trusted him,” said Steve Reinmuth, assistant director for Field Services and Public Safety at the Department of Labor & Industries (L&I).

“He also undermined Washington’s reputable contractors by choosing to ignore the requirements others follow, like purchasing insurance and providing other protections for their customers.”

The state Attorney General’s Office is prosecuting the case based on investigations by its office and L&I.  

Owes L&I over $23,000 for infractions, workers’ compensation premiums

The criminal charges cover incidents from September 2019 to July 2021. Ates registered as a contractor with L&I part of that time, but the department suspended his registration in April 2021, when his bond was cancelled and insurance expired.

In 2020 and 2021, L&I’s Contractor Compliance program cited Family Classic Homes for a dozen civil, contractor-related infractions. Ates paid five of the tickets, but owes over $17,000 for the remaining infractions.

In addition, he owes L&I over $6,200 in unpaid workers’ compensation insurance premiums. Employers and workers are required to pay into the state workers’ compensation insurance system, which helps injured workers heal and return to work.

Failing to follow through

Customers made down payments of up to $50,000 for site preparation, and then paid more when Ates said it was needed for the next phase of construction. But customers soon discovered Ates wasn’t following through with their agreements, including filing building permits on time, if at all. 

In several cases, charging papers said, Ates subcontracted construction tasks, such as digging a well. He told customers it was covered by what they had already paid, but victims later learned Ates was pocketing most of that money for himself. That left customers owing the subcontractor for work they had already paid Ates to do.

Paying twice for labor and materials

A couple in Gig Harbor, for instance, in early 2021 paid Ates $114,000, which he said would include the cost of their new home’s foundation, lumber, trusses and labor for framing, charging papers said.

The foundation was poured and paid for as expected. But it turned out Ates hadn’t paid the framer who installed the first floor and trusses, nor had he paid for those materials.

The couple had to come up with more money and pay $76,000 to the supply company, and $10,000 to the framer, whose checks from Ates bounced, charging papers said.  

Files for bankruptcy

According to charging papers, by May 2021, the company’s project manager told two customers he was resigning because he and other workers weren’t getting paid. He warned one of the customers not to pay Ates because the owner had lost his contractor registration.

In June of that year, Ates filed Chapter 7 bankruptcy both personally and for his company. His business, which had formed in 2012, listed 56 creditors, charging papers said.

It was Ates’ second time filing for bankruptcy. In 2009, his construction company with the same name, Family Classic Homes, but a different contractor registration number, filed for Chapter 7 bankruptcy, according to L&I records.

Federal bankruptcy and state contractor registration laws do not automatically prevent contractors who have gone through bankruptcy from opening a new construction business.

Get tips for hiring contractors

Smooth-talkers can sometimes take advantage of the most careful consumers. Check whether a contractor is registered with L&I and get tips on how to hire contractors at ProtectMyHome.net.