A Houston builder billed the bank for work that didn't exist.

On most projects, money moves through a "draw" process: as work is completed, the builder requests a payment — a draw — from you or from the construction lender. It's an everyday, trust-based mechanism. This Houston case shows what happens when no one verifies that the work being billed was ever actually built.

What happened

A Houston-area builder, Detamore Development, submitted false invoices to the banks holding his clients' construction loans, causing the lenders to release more than $1.5 million in draw funds into accounts he controlled — money intended to build homes. He was ordered to pay $2.3 million in restitution to more than 10 victims and sentenced to 51 months in federal prison.

Where it went wrong

The draw process trusted the builder's own paperwork. Nobody independently confirmed that the work being billed actually existed on the jobsite — so inflated and fraudulent invoices sailed straight through to payment. Banks fund against documentation; most homeowners have neither the construction expertise nor the time on site to check a pay application against what's actually been framed, wired, and plumbed.

How an owner's representative changes the outcome

Independent draw verification is one of the highest-value things we do. Before any pay application is approved, we compare what's billed to what's actually built — we walk the site, measure progress against the schedule of values, and review lien waivers line by line to confirm subcontractors are actually being paid. A draw should be paid for what's constructed, not for what's invoiced — and an owner's set of trained, on-site eyes is what enforces that difference.

Sources: KHOU 11; FOX 26 Houston.

This article summarizes facts reported by the cited public sources and is provided for general educational purposes only. It is not legal advice, and Cross Timbers Development is not affiliated with any party mentioned. Talk with us about your project →