BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley is suing Acton-based Crossroads Development LLC, its owners James Fenton and Michael Jeanson, as well as a related contractor, James Fenton & Son Contracting, Inc. (JF&S) for violating the False Claims Act.
State law gives affordable housing contractors a break from certain ordinance and zoning laws but limits the profit-making from these developments.
The lawsuit alleges the defendants submitted a false certification to the town of Acton in connection with a 12-unit housing contract resulting in the developers fraudulently concealing a large sum of money owed to Acton's Affordable Housing Fund.
According to the complaint, Crossroads and its principals included costs in its report for services not actually incurred and inflated costs on the project in order to pocket profits and circumvent the 20 percent profit cap allowed under the state's affordable housing law, even though the town of Acton set the profit cap.
The complaint also alleges the defendants sold one of the condominiums to an entity they owned at a price lower than market value and then promptly resold the unit at market rate, making $50,000 on the resale.
As a result, the developers fraudulently concealed their profits, according to Coakley.
The False Claims Act gives the Attorney General the authority to recover, on behalf of the Commonwealth and its political subdivisions, such as cities and towns, triple damages and civil penalties from those who defraud the state or its political subdivisions.
The state is seeking to recover these funds, as well as impose fines and penalties.