Colorado Construction Trust Fund Charges Can Destroy Your Business
Have you heard of the Colorado Construction Trust Fund Statute?
It was implemented with the supposed goal of protecting contractors and subcontractors by making sure that they get paid. That sounds great. After all, no one wants to put in a lot of hard work and get stiffed by someone over them in the hierarchy.
Unfortunately, the way the law works in practice is that it creates a lot of extra work for businesses. It forces them to create trusts for any monies they receive and pay contractors and suppliers out of those trusts. If you neglect to create these trusts or make a mistake in their creation – even if you pay the necessary parties in another way – you can potentially face a criminal charge.
To make matters worse, many smaller contractors have no idea this law even exists. This means that you can find yourself suddenly facing charges for something you did not even know you needed to do.
As a Denver criminal attorney who has been fighting to protect people’s rights for years, Kimberly Diego has seen this over and over since the law was created. She knows how much of a negative impact being charged can have on a small business owner – both personally and professionally. She always strives to handle these matters quickly and efficiently, with an eye toward protecting your time, your pocketbook, and your reputation.
It starts with understanding the law itself.
Fighting Construction Trust Fund Charges Requires a Denver Criminal Attorney Who Knows the Law
The actual statute that covers this act is 38-22-127. Moneys for lien claims made trust funds – disbursements. It says:
“(1) All funds disbursed to any contractor or subcontractor under any building, construction, or remodeling contract or on any construction project shall be held in trust for the payment of the subcontractors, laborer or material suppliers, or laborers who have furnished laborers, materials, services, or labor, who have a lien, or may have a lien, against the property, or who claim, or may claim, against a principal and surety under the provisions of this article and for which such disbursement was made.
(2) This section shall not be construed so as to require any such contractor or subcontractor to hold in trust any funds which have been disbursed to him or her for any subcontractor, laborer or Uncertified Printout material supplier, or laborer who claims a lien against the property or claims against a principal and surety who has furnished a bond under the provisions of this article if such contractor or subcontractor has a good faith belief that such lien or claim is not valid or if such contractor or subcontractor, in good faith, claims a setoff, to the extent of such setoff.”
What exactly does that mean? Say you are a contractor working to build a house for someone. To do the job, you have to use subcontractors and suppliers. Anytime the client pays you for part of the job, the law requires that money be placed in a special trust and that all subcontractors and suppliers involved in that specific part of the job be paid before you do anything else with it.
If you first pay off a utility bill and then pay your subcontractors and suppliers, that is a violation. If you do not place the money in a trust but instead pay it directly to your subcontractors and suppliers, that can be a violation if you are unable to prove that you paid them. If you take money from one trust to pay a contractor involved in a different part of the job, that can be a violation. And, of course, if you simply take the money and do not pay, that is a violation.
How do “violations” work? They fall under § 18-4-401 – Colorado’s theft statute… with one big difference. Regular theft in our state clearly requires that the person committing it does so with intent. In other words, you have to be intentionally trying to deprive someone of their property in order to be convicted. It is not enough that your child shoved a toy into your purse and you walked out of the store with it. You had to know it was there and decide to leave anyway.
Not so with construction trust fund theft. Even if you are merely ignorant of the law and had no intention of not paying your subcontractors and suppliers, you can be charged and convicted.
What will you be up against if you end up facing a charge?
Construction Trust Fund Theft Penalties Mirror Regular Theft Penalties in Colorado
Since construction trust fund theft falls under our state’s theft statute, so do the potential penalties that you can face if you are charged with this act.
Here’s how the penalties break down:
Value under $50 – Class 1 petty offense. Up to 6 months in jail and $500 in fines.
Value between $50 and $300 – Class 3 misdemeanor. Up to 6 months in jail and $750 in fines.
Value between $300 and $750 – Class 2 misdemeanor. Up to 12 months in jail and $1,000 in fines.
Value between $750 and $2,000 – Class 1 misdemeanor. Up to 18 months in jail and $5,000 in fines.
Value between $2,000 and $5,000 – Class 6 felony. Up to 18 months in prison and $100,000 in fines.
Value between $5,000 and $20,000 – Class 5 felony. Up to 3 years in prison and $100,000 in fines.
Value between $20,000 and $100,000 – Class 4 felony. Up to 6 years in prison and $500,000 in fines.
Value between $100,000 and $1,00,000 – Class 3 felony. Up to 12 years in prison and $750,000 in fines.
Value over $1,000,000 – Class 2 felony. Up to 24 years in prison and $1,000,000 in fines.
Beyond these very serious consequences, you also have to worry about what charges like these will do to your business and your reputation. That is why it is so important to aggressively battle all accusations – and to get started as soon as possible.
Start Battling Your Charges Today with a Skilled Denver Construction Trust Fund Lawyer
Ready to fight back and protect your good reputation? Work with Kimberly Diego and she will use every legal tactic possible to get your charges reduced, dropped, or dismissed and make sure that your rights are protected. She is relentless in her defense, and she gets results.
However, she cannot begin unless you reach out first. All it takes to get started is a quick phone call or email. Or you can fill out our online contact form and we will get back to you.
Phone: (720) 257-5346