Your Stories: 4 years later scam victims still owed $375K
Updated: Wednesday, July 10 2013, 05:24 PM EDT
Rochester, N.Y. --- Four years later more than 40 victims of Eagle Construction owner John Costello’s scams are still waiting to be paid back.
In 2008 Costello’s Gates business was shutdown by then New York State Attorney General Andrew Cuomo. Through civil courts the Attorney General’s Office won a $377,000 settlement that included restitution for 44 victims and $30,000 in penalties. The Monroe County District Attorney’s Office later prosecuted Costello who pled guilty to Grand Larceny and Scheme to Defraud. Costello served a year in New York State Prison followed by a year of parole supervision that ended in 2010.
In most cases his victims were left with tens of thousands of dollars in damage for shoddy contracting work or lost money paid upfront in deposits. As a general contractor Costello needed no license but did employ some licensed contractors that did all sorts of home improvement work including windows, roofing, and siding.
While Costello has paid one debt to society in the form of his prison sentence and parole, years later he has paid but a fraction of the restitution and legal loopholes and obstacles appear to offer no relief for his victims.
Victim: “I Feel Betrayed By My Government.”
Two of Costello’s victims shared their stories with 13WHAM News. Mark Phillips, who now lives in North Carolina, lost his Webster home to foreclosure proceedings in part because of the financial hardship he suffered following unfinished and shoddy repair work by Eagle Construction.
Phillips, who cares for three sons with autism, said his bank is still coming after him for money owed in a home equity loan that grew in size because of duplicate repairs needed after Eagle Construction crews left the site. While Phillips calculates his total loss at more than $50,000 he was awarded just a little more than $17,000 in restitution.
To date Phillips has been paid $198.
“I am dying of Stage4b colon cancer and my son and I could use the money,” Phillips explained to 13WHAM News in an email. “I don't want them to have to worry about things after I am gone because I shouldn't be leaving them so soon in life.”
Amy Rosier of Holley, Orleans County was instrumental in bringing Costello and Eagle Construction to the attention of authorities. She paid the firm $20,000 for a roofing job to repair a home that’s been in her family for generations.
"They had too much pressure in their nail guns and they drove the nails right through the shingles, I had shingles blowing off in the Spring,” Rosier recalled. “The following January I collected more than twelve gallons of water in the downstairs kitchen.”
Rosier took her fight public launching a comprehensive website that details her battles with Eagle Construction as well as the legal system that to date has left her with just $700 in restitution.
"I need to be helped immediately I'm facing foreclosure right now,” Rosier said through tears. “I can't keep up my bills…When you sue through the Attorney General they should do some collections on their own.”
Rosier, who has battled depression since this ordeal began eight years ago, answered quickly when asked if she would trade Costello’s prison sentence for restitution that makes the victims whole again.
“Oh definitely, definitely 44 people (and) some lost their homes,” Rosier said. “I feel betrayed by my government.”
Both Phillips and Rosier have tried repeatedly to seek out answers from the Attorney General’s Office (now under the direction of Eric Schneiderman) and from Governor Andrew Cuomo’s Office. Letters and replies shared with 13WHAM News offer very few answers or guidance.
A spokeswoman for current Attorney General Eric Schneiderman declined to comment for this report.
Carlos Rodriguez was the Assistant Attorney General who prosecuted the case against Costello and Eagle Construction.
"Yes in fact I got an award on this case," Rodriguez, who has since left the Attorney General’s Office, recalled.
The penalties and restitution awarded in this case are generally seen as big wins in civil courts; an additional $10,000 penalty was assessed because Costello defrauded elderly customers. Following the civil case Rodriguez remembers successfully seizing one of Costello’s trucks that was sold for a few thousand dollars. The proceeds were distributed among the victims and account for the small settlements both Rosier and Phillips have received.
"You as a plaintiff (when you’re) wronged by somebody and the court awards you damages the problem then is that you have to go out and collect your damages,” Rodriguez explained. “But if the person just went to jail, is in jail, has no assets, no property, no money coming in there is really not much that the civil law will allow you; there is no debtors prison.”
Rodriguez notes that the civil judgments for the victims are often good for twenty years but collecting still depends on those assets.
"If he wins the lottery I'm sure the Attorney General's Office will go after the proceeds,” Rodriguez said.
On Thursday 13WHAM News was able to contact John Costello, now 67, by phone. He said he is back living in the Rochester area and that he has no assets remaining.
“I would like to pay the customers back, I feel very bad…there’s no way I can pay that money back,” Costello said.
Costello said he never expected to go to prison and that while the investigation was still underway he was able to incorporate another contracting company. He said he planned to open that business and focus on fixing the work that wasn’t completed at victim’s homes while also working to earn money to pay restitution.
The Attorney General’s Office then moved quickly to shutdown his businesses. A court order was also obtained prohibiting him from operating any other contracting firms in the state. The Monroe County District Attorney’s Office pursued criminal charges and accepted Costello’s guilty plea to two felony charges.
“They would have been paid back sooner,” Costello explained. “I wasn’t supposed to go to jail.”
In his phone conversation with 13WHAM News on Thursday Costello said he thought he owed about $8,000 and then amended that to about $80,000 later in the conversation. He also clarified that he believed that to be the amount of money and damages specifically owed to customers while also acknowledging the $377,000 judgment against him.
A transcript of Costello’s hearing before the New York State Board of Parole in 2009 (attached to this report) details a similar exchange about how much is actually owed.
“I’d love to pay them back and I can’t,” Costello said while explaining that his felony convictions and age prevent him from finding a job that pays much more than $10 an hour. “I lay awake at night thinking about this.”
Rosier and Phillips do too. Rosier said she hopes to advocate for a change in state or federal laws that will empower the victims of scams and crimes like this. At present Rosier and Phillips and the 42 other victims in this case do not appear to have any legal recourse available to them to collect what they’re owed. Each suspect Costello of moving certain assets into the names of various family members before civil and criminal proceedings began.
Costello tells 13WHAM News he has no assets and that he invested hundreds of thousands of dollars in an attempt to save his business at a time when things were going bad. Costello also pointed to the economic downturn in 2007 and 2008 as an additional obstacle in his ability to keep his business afloat and make amends to affected customers.