Ken Paxton

Tuesday, February 25, 2014

Attorney General Abbott Charges Austin-based Castro Property Restoration with Deceiving Texas Homeowners

AUSTIN – Texas Attorney General Greg Abbott today charged an Austin-based residential construction contractor with deceiving Texas homeowners and misrepresenting funding sources available to pay for home repairs and restoration.

Castro Property Restoration, its owner Victor James Castro and his business associate Allen Lloyd Kinman are named in the State’s enforcement action as defendants. According to court documents, the defendants solicit business door-to-door, offering to assist homeowners with home improvement services. The defendants misrepresent to homeowners that “free money” from the government is available to pay for the home repair work – and then require homeowners to sign a contract and pay a $99 “administrative fee” to the defendants in advance to complete the repairs.

Attorney General's lawsuit against Castro Property Restoration and others

The State’s investigation revealed, however, that the defendants failed to disclose to homeowners that the contract contained a “power of attorney” clause that gave the defendants control over financial decisions regarding the homeowner’s home. Because the “free government money” claim was false, the only funding source the defendants could obtain was from the homeowners’ insurance policy – and the defendants could file a claim against the homeowner’s insurance policy by relying on the contract’s broad “power of attorney” clause.

State investigators also found that the defendants failed to clearly communicate homeowners’ right to cancel the transaction within three days of signing the contract. Court documents state that when one homeowner expressed interest in canceling her contract, the defendants sent two representatives to the homeowner’s home who told her that canceling the contract might constitute insurance fraud and that she might be arrested for it.

The Office of the Attorney General charged the defendants with violating multiple provisions of the Texas Deceptive Trade Practices Act and Texas Business Code. The State is seeking a temporary and permanent injunction, civil penalties and restitution for affected customers.