Regarding the problem between Lennar and one of their framing contractors in Arizona:
One of the biggest problems faced by home builders is fraud in the contracting process. Just before I went to work for Pardee, the head of purchasing was fired and prosecuted for kick-backs from vendors. Every employee reporting to him was also fired. He was replaced by an unpleasant, suspicious and hard-nosed but honest man I called "Mr Spider";
I can guarantee you that Lennar believes they were defrauded by the Veemac subcontractor and they believe the Veemac supervisors and office workers participated in the fraud, which is why Lennar is not willing to pay them - while Lennar is willing to pay the actual construction workers;
The fact that Lennar is willing to pay the workers with 1099s tells me that Lennar has no intention of ever paying Veemac, the subcontractor. Lennar will have no problem verifying the hours and the workers with their superintendent. If some phantom workers get paid too, Lennar can afford that so that their reputation stays good with potential employees;
You have your story from the subcontractor, but not Lennar. He is apparently an ex-Felon who is not entitled to be the officer of a publicly held corporation, even if he might be one of the largest shareholders;
As I have said many times, the expensive part for major home builders is the land and finished lots with the cost of putting in the utilities. Putting up homes brings you closer to dumping your excess land inventory without adding substantially to your existing debt load to carry the finished lots. I can tell you with nearly 100% certainty that this is wholly unrelated to the problem Lennar is having with Veemac;
Lennar will sell these homes, if they can, and put up a bond to guarantee later payment to Veemac should they prevail in court. No big deal;
If the ex-con who runs Veemac is smart, he will file for bankruptcy and not file a lawsuit against Lennar. Lennar may very well seek to prosecute him regardless;
In business you can't gain a reputation as an easy mark and stay in business. Chevron, like Pardee, would and did spend $6 million prosecuting a fraud or mistreatment which cost them less than $1 million. It looks like Lennar might be the same - I applaud them;
Conversely both Chevron and Pardee could be quite generous with those who had helped them. Some businesses see everything in dollars and I believe they pay a price for this. Being cheap with everyone you deal with doesn't save you money and not prosecuting fraud or standing firm against those who abuse you, even at great cost, does not save you money.
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