When a construction deal goes sideways, most people assume it’s strictly a civil issue. Maybe resulting in a lawsuit or maybe a lien filed against the property. What many contractors don’t realize is that Colorado law can transform a funding dispute into a criminal prosecution, and builders working in Weld County are frequently blindsided by how quickly this can happen.
Greeley Construction Trust Fund Statute: Breaking Down C.R.S. § 38-22-127
Colorado’s Construction Trust Fund Statute, found at C.R.S. § 38-22-127, sets out a straightforward rule: money a contractor or subcontractor collects under a construction, remodeling, or building contract must be treated as trust funds earmarked for the people who supplied labor and materials on that job. Put another way, payment received for a particular project is reserved for the sub-contractors, suppliers, and workers tied to that project. It isn’t available to cover overhead, fund a separate job, or pay for personal purchases.
Why Contractors Must Keep Separate Financial Records: A Windsor Defense Attorney Explains
Beyond dictating how funds can be used, the law also demands careful bookkeeping. Each project or contract needs its own distinct accounting records, and this obligation has been interpreted by courts as giving rise to a fiduciary responsibility, meaning contractors owe a heightened duty of care in how they manage client money.
From Civil Violation to Felony Theft Charge for Contractors in Erie and Evans
What makes this statute particularly dangerous is its fifth subsection, which converts a trust fund violation into criminal Theft under C.R.S. § 18-4-401. Redirecting a client’s payment to plug a hole on another job, spending project funds on unrelated company debts, or simply pocketing money without paying the people owed can all form the basis of a felony Theft charge, with the severity of penalties tied to how much money was involved.
Investigated for Construction Theft? What This Means for Contractors in Greeley and Weld County
Builders, developers, and subcontractors operating throughout Greeley and greater Weld County, including surrounding communities like Windsor, Evans, Johnstown, and Eaton, face real risk under this statute, and it’s a risk that’s often poorly understood until it’s too late. Something as ordinary as a temporary cash crunch, a judgment call about which expenses qualify as project costs, or juggling funds between jobs can spiral from a routine business headache into a full-blown criminal matter.
If you’ve been contacted by investigators, the district attorney’s office, or opposing counsel regarding how you managed funds on a construction project, it’s critical to fully understand what this law requires, and how these investigations typically unfold before making any statements. Call O’Malley Law Office at 970-616-6009. Together, we can protect your future.
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