LITTLE ROCK, Ark. (Legal Newsline) - Arkansas Attorney General Dustin McDaniel announced on Monday that he has filed a lawsuit against a roofing company that allegedly defrauded state consumers out of $250,000 through a Ponzi scheme.
Conway Roofing LLC allegedly violated the Arkansas Deceptive Trade Practices Act and the state's Home Solicitation Sales Act by collecting large up-front insurance proceeds from consumers and using the money to fund roofing work it was already performing for other clients.
McDaniel also alleges that the company's owner, Michael J. Wickherst, used tens of thousands of dollars for his own personal use. Wickherst allegedly took money from his company to pay for his rent, home movie rentals and Justin Bieber concert tickets.
"Schemes like these are doomed from the outset, and are clearly illegal," McDaniel said. "Unfortunately, Arkansas consumers are paying the price for this disastrous business model. The company's owner appears to be using insurance proceeds to fund his lifestyle, while needed roofing repairs are left undone."
The suit alleges that Conway solicited customers by having employees go door-to-door in storm-damaged areas. The company allegedly offered a roof inspection and the promise to work with the homeowner's insurance company in exchange for all insurance proceeds. The money is then transferred to a roofing job elsewhere for someone who made a similar deal earlier, McDaniel says.
The defendant allegedly puts off work on the home from which it has collected money until it can expand the Ponzi scheme to the next victim.
McDaniel is seeking an injunction to prevent Conway Roofing from signing any new customers and wants the company to honor all existing contracts or refund the money to anyone who decided to cancel. He is also requesting restitution and civil penalties.