Harford County Home Builder Ordered to Pay Over $1 Million for Consumer Protection Violations

The Maryland Attorney General’s Consumer Protection Division has secured a Final Order against Korey Homes Building Group, LLC, and its former co-owners, father and son Kenneth W. Smith and Korey Wayne Smith. This order mandates that the company and its owners pay over $1,000,000 in restitution, civil penalties, and costs. The judgment stems from violations of the Maryland Consumer Protection Act, including improperly taking funds from consumers for home building services that were never provided, and a misappropriation of consumer money through a scheme described as Ponzi-like.

The established order requires Korey Homes Building Group, LLC, Korey Wayne Smith, and Kenneth W. Smith to repay consumers for money that was improperly taken. In addition to restitution, the Final Order includes over $300,000 in civil penalties and more than $115,000 in costs. Furthermore, the company and its former owners are now prohibited from engaging in unfair and deceptive trade practices. To be permitted to act as a home builder in Maryland in the future, they must also post a substantial bond of $500,000.

Home builders in Maryland are legally obligated to safeguard consumer deposits and other advance payments. These funds must be held in trust for the benefit of the purchasers and kept in a separate escrow account, distinct from the builder’s operating funds. Alternatively, builders can secure these funds through a surety bond or an irrevocable letter of credit. They are also required to make timely payments to subcontractors and suppliers and furnish proof of these payments to consumers who are commissioning custom homes. The Final Order found that these obligations were not met by Korey Homes Building Group.

Consumers were reportedly harmed when Korey Homes Building Group accepted payments for home construction but failed to complete the projects or delivered homes with significant defects. The misappropriation of consumer funds for personal use by the company and its owners further compounded the financial damage experienced by these individuals. The Attorney General’s office emphasized that this substantial financial penalty serves as a strong message to those who might engage in similar fraudulent practices within the state’s housing market.

Maryland residents who have experienced issues with homes built by Korey Homes Building Group or other builders are encouraged to contact the Consumer Protection Division’s Mediation Unit. Assistance can be sought by calling (410) 528-8662 in Baltimore or by dialing the toll-free number (888) 743-0023. The Attorney General’s Office also advises prospective new home buyers to verify builder registration. This can be done by contacting the office directly or by visiting the dedicated section on their website.

Article by Mel Anara, based upon information from the Maryland Attorney General.

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