Bankrupt Lamar Construction Co. Accused of Fraud by a Client

by San Antonio Attorney

Lamar Construction Co. was hired by Royal Technologies to build a factory in Texas. The cost of the project was $19.7 million for a plastics manufacturing plant. Royal Technologies claims that Lamar fraudulently obtained $2.3 million to repay debts that were not related to the project in Texas.

Lamar Construction said it would use the funds from Royal Technologies to pay suppliers and subcontractors working on the factory. But the contractor allegedly diverted $2.3 million from the project’s fund that had been reserved for subcontractors.

The complaint filed by Royal Technologies contained a petition for personal bankruptcy filed by George D. Holmes, co-founder of Lamar Construction.

Royal Technologies wants to recover the $2.3 million that should have been paid by Lamar to the suppliers and subcontractors. The factory is situated in a 12-acre site in the Mission Expressway Business Park.  It is expected to provide 100 new jobs. Royal Technologies accuses Lamar of obtaining the payments from them based on fraudulent misrepresentations that the contractor provided.

Lamar was shut down on July 10 following a cancellation of its credit line by Fifth Third Bank. It filed for bankruptcy the day after. The company employed 280 people in three states, Kentuchy, Michigan and Colorado.

A few days after the company closed, Holmes and his business partner Carl Blauwkamp sought for Chapter 7 bankruptcy protection. The two purchased the firm in May 2007. They will liquidate and close the company through the Chapter 7 bankruptcy proceedings.

Based on court papers filed, Lamar stated $37.7 million in debt and $24.8 million in assets. Debts include unpaid rent on its corporate offices in the Jamestown Commerce Center.

On Monday, Blauwkamp appeared at a U.S. Bankruptcy Court hearing. He has 50 of the over 300 creditors seeking to collect some of the money he owes.

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