Virginia Code §18.2-200.1 makes it a crime to commit construction fraud, that is, to take an advance of funds in return for a promise to perform a job with no real intention of performing and indeed, failing to substantially perform. It is a felony if the job was for more than $200. To prove fraudulent intent, the statute says the contractor “shall be deemed guilty of the larceny of such money” if “he fails to return such advance within fifteen days of a request to do so sent by certified mail.” The question arises whether this letter must unequivocally demand the money back or instead give the contractor options, such as returning the money or performing the job as promised.
The Virginia Supreme Court recently answered the question in a case in which it held that to convict a contractor of construction fraud, “Code §18.2-200.1 requires proof that the certified letter to the contractor made an unqualified demand for the demand of the advance.” The court reversed the conviction of a contractor who had pocketed a $2,000 advance and performed no work because the evidence at trial showed that the owner, in his certified letter, demanded either his money back or performance of the job (installing a pool liner).
This may sound like a technicality, but the court had good reason to let this particular contractor off the hook criminally even if it probably had little sympathy for him. The court noted that §18.2-200.1 “was not meant simply to criminalize a contractor’s breach of contract.” Construction disputes arise all the time, and owners often send letters of the do-it-right-or-return-my-money variety. To limit criminal prosecutions to cases where there is strong evidence of fraudulent intent, the court decided that the certified letter must be an unequivocal demand for return of the money, so that a contractor is “not misled into believing that anything other than the return of the advance would relieve him of the very real risk of criminal prosecution.”
In short, if you have a dispute and receive a demand letter, take a close look at its language. An unqualified demand for money back might be setting you up for a prosecution if matters are not resolved in other ways.