EPPING — The owner of Southers Construction, Inc., has been arrested and charged with violating the Consumer Protection Act by allegedly deceiving customers who paid for work that was never finished.
Ricky Southers, 36, of Epping, turned himself in Monday to Brentwood police on a warrant, according to court documents. He was charged with three Class A misdemeanors that alleged he took deposits from three customers after being prohibited by a court injunction from doing so.
Southers had previously been taken to court in a civil action by the state attorney general’s office on April 18 and ordered by a judge not to take any more deposits. The AG, in the complaint, alleged Southers had run his business “something akin to a Ponzi scheme.”
Southers was prohibited from “soliciting, accepting, receiving, or keeping any customer deposits or prepayments” under a temporary restraining order in effect from April 19 to April 28, then again from May 7 to May 29, according to the attorney general. Since May 29, a preliminary injunction has also been in place, prohibiting him from accepting deposits.
The attorney general’s office alleges he violated the terms of the temporary restraining order twice — on May 10 and May 16 — then violated the preliminary injunction on June 28. An affidavit by investigator Thomas J. Rees details how three customers say they each paid thousands of dollars to Southers without the work being completed. Customers were unaware of the court order, according to the affidavit.
The affidavit states the payment from May 16 was for a $3,250 deposit to pay for snow breaks to go on a customer’s roof. The May 10 payment was allegedly for a $45,900 addition to a customer’s garage. A third customer, according to the affidavit, paid a total of $42,000 over a series of deposits for their house to be resided and windows replaced.
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The civil complaint filed by the attorney general’s office in April details 17 different occasions in which Southers allegedly entered into contracts with homeowners, collected deposits, and performed little or no work. It alleged the company collectively deprived customers in New Hampshire, Maine and Massachusetts of more than $500,000.
The civil complaint alleged Southers relied on new customer deposits to finance other projects “to stave off financial collapse.”
It said Southers was doing so under a new business model he started in 2020, similar to Roofing & Reconstruction Contractors of America, which operates in the Gulf Coast. Southers, the complaint stated, wanted to transform his company from a small, independent contracting outfit into a multi-tier corporation styled after RRCA.
As part of the new business model, Southers spent hundreds of thousands of dollars on marketing and advertising and hired salespersons with “limited training” to go door-to-door soliciting homeowners to see if they wanted any home improvements, the complaint states.
The complaint alleges the sales team would underbid prospective jobs for customers, including one instance where a salesperson sold an addition to a customer but failed to include the cost of plumbing, electrical work, installing a foundation, and permitting.
Adding to the company's financial woes, according to the complaint, was Southers spending and lack of anyone "tracking and managing its finances." The company, according to the complaint, was cut off from multiple materials suppliers for non-payment.
Meanwhile, the complaint states Southers and two executives were taking annual salaries equivalent to approximately one-third of the company's payroll.
It claims Southers spent tens of thousands of company funds on purchases like custom engraved knives, a $7,000 golf simulator, down payments on employees' personal vehicles and a company trip to Florida. The complaint also alleges that rather than hire a financial manager, he brought in coaches like motivational speaker Eric Spofford to help reveal the secret knowledge to "generate insane cash flow."
In attempts to dig the company out of the hole, the complaint alleges that he took out "millions of dollars in cash advances tied to the company's receivables," for which he is now in default.
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Southers was released following his arrest Monday by posting $500 bail, according to court documents. Tuesday’s press release noted “the allegations against Mr. Southers are merely accusations, and he is presumed innocent unless and until proven guilty.”
Monday, the state motioned to have the court retain jurisdiction over the case because of “underlying conduct that relates to violations of injunctions issued by the court.” Southers’ attorney Christopher H.M. Carter wrote in a court filing the state failed to identify any basis for “civil contempt.”
“Simply put, the state cannot demonstrate any ongoing violations of the court’s TROs (temporary restraining orders,” Carter wrote. “To the contrary, when notified of alleged omissions or violations by the state, Defendants have proven a willingness to take prompt corrective action.”
The affidavit by Rees states that customers who complained have not been reimbursed, however. In one instance, Rees writes that Southers emailed a customer from Newburyport, Massachusetts, falsely indicating she owed him an overdue balance of $22,695 and threatened to sue her, place a lien on her property and report her to the Internal Revenue Service.
“No work has been done on her roof,” Rees wrote.
The attorney general’s office is continuing to investigate whether more violations exist, however. In their press release, the attorney general’s office stated it is asking anyone else who paid a deposit to Southers since the order went into effect to contact their office.
“The court order prohibiting Mr. Southers and Southers Construction from taking deposits remains in full force and effect,” the office’s press release states.
Southers or a representative from his company did not immediately respond to a call seeking comment. A call to Southers Construction brings up a recording that indicates they are still taking on new projects.
In a recent YouTube interview titled “$18 Million To Zero... Ricky Southers Comeback Story,” Southers discussed what host Lee Haight described as “one of his toughest years.” Southers described how his success with generating “video leads” led to more jobs than his business could properly track.
“That created a problem in that we were selling too fast,” Southers said. “We were selling not to control and we did not intake every one of our jobs to the point where we knew that they were profitable.”
This article originally appeared on Portsmouth Herald: Southers Construction owner accused of running ‘Ponzi Scheme’ charged criminally
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