The construction fraud statute, Virginia Code § 18.2-200.1, was not meant simply to criminalize a contractor’s breach of contract. The statute instead criminalizes a species of fraud analogous to the crime of obtaining money under false pretenses. Cf. Riegert v. Commonwealth, 218 Va. 511, 518, 237 S.E.2d 803, 807-08 (1977) (setting forth the elements of larceny by false pretenses). The only analogue in civil law to construction fraud would be promissory fraud, which recognizes tort liability when a contracting party “makes a promise that, when made, he has no intention of performing.” Station # 2, LLC v. Lynch, 280 Va. 166, 172, 695 S.E.2d 537, 540 (2010).
Code § 18.2-200.1 uses highly specific language to protect against the risk of being interpreted as a means of criminalizing mere contractual defaults:
If any person obtain from another an advance of money, merchandise or other thing, of value, with fraudulent intent, upon a promise to perform construction…, and fail or refuse to perform such promise, and also fail to substantially make good such advance, he shall be deemed guilty of the larceny of such money, merchandise or other thing if he fails to return such advance within fifteen days of a request to do so sent by certified mail, return receipt requested, to his last known address or to the address listed in the contract.
The Commonwealth Must Prove
Under the construction fraud statute, the Commonwealth has to prove that the defendant:
- (1) obtained an advance of money from another person,
- (2) with fraudulent intent at the time the advance was obtained,
- (3) made a promise to perform construction or improvement involving real property,
- (4) failed to perform the promise, and
- the contractor failed or refused to “perform” the promised work and to “substantially make good such advance.”
- (5) failed to return the advance within fifteen days of a request to do so by certified mail to defendant’s last known address or his address listed in the contract.
- this “notice requirement,” Supreme Court of Virginia has emphasized, is a “material element” of the statutory offense. Jimenez v. Commonwealth, 241 Va. 244, 251, 402 S.E.2d 678, 681 (1991).
§ 18.2-200.1. Failure to perform promise for construction, etc., in return for advances.
If any person obtain from another an advance of money, merchandise or other thing, of value, with fraudulent intent, upon a promise to perform construction, removal, repair or improvement of any building or structure permanently annexed to real property, or any other improvements to such real property, including horticulture, nursery or forest products, and fail or refuse to perform such promise, and also fail to substantially make good such advance, he shall be deemed guilty of the larceny of such money, merchandise or other thing if he fails to return such advance within fifteen days of a request to do so sent by certified mail, return receipt requested, to his last known address or to the address listed in the contract.
mn1980, c. 459; 1987, c. 358.
- Bowman v. Commonwealth, 777 S.E.2d 851 (Va. 2015) – construction fraud statute required proof of unqualified demand to return all or part of original advance
- McCary v. Com., 42 Va.App. 119 (2003) – Intent
- Rader v. Com., 15 Va.App. 325 (1992) – partial performance did not preclude finding that he did not substantially make good on the advance.
- Holsapple v. Com., 39 Va.App. 522 (2003) – statute defining construction fraud does not require that defendant actually receive notice of request to return an advance payment
- Dennos v. Com., 63 Va.App. 139 (2014) – multiple counts
- Wood v. Commonwealth, Not Reported in S.E.2d (2016) – prior bad acts. “Evidence of other crimes or convictions may be admitted for the purpose of, among other things, … proving a relevant issue or element of the offense charged, such as motive, intent, common scheme or plan, knowledge or identity.”
- Phillips v. Com., Not Reported in S.E.2d (2008) – Not guilty. Partial performance. Poor project management. No fraudulent intent where appellant obtained an advance from the homeowners, then simply failed to perform the contract.