This report regards Michael Kelly (a.k.a. Mike Kelly), the President and owner of Maravilla and Primera Homes (Maravilla Homes) in Austin, Texas. Primera homes filed for bankruptcy protection on 6/21/2007.
Mike Kelly developed 3 residential subdivisions in the Austin, Texas area under the Maravilla Homes names (Maravilla, Maravilla Hills and La Ventana). A number of the homes were constructed under a joint venture (JV) program, where Mike used an investor's credit to build a home with the contracted promise to pay all taxes and expenses on the home while under construction, as well as to pay the investor either a monthly payment while the home was being finished (a leaseback home) or a percentage of the home's sale price once sold. In 2006, Mike Kelly actively marketed his JV program to both instate Texas investors and out of state investors. Mike Kelly claimed that the Maravilla subdivision was near completion and this was a thank-you opportunity to investors for Maravilla's success.
Mike Kelly assured all investors, as well as those persons that actually bought a Maravilla home as their primary residence, that Maravilla was financially sound and the project was successful. Although Mike Kelly claimed that only a few of the JV deals were offered and only to a select group of friends and family, in reality, there were approximately 60 investors with whom he contracted in such an arrangement. Mike Kelly continued to market the JV program until February 2007, while he was engaged in discussions with his bankruptcy attorney, Ray Fisher about declaring bankruptcy.
In February 2007, investors and some homeowners with unfinished homes received a letter from Mike Kelly's bankruptcy attorney Ray Fisher stating that Maravilla had financial problems but that it was being resolved and not to worry. In March 2007, the investors were called to a meeting and Ray Fisher stated that Maravilla/Primera planned to file bankruptcy.
Mike Kelly left the Maravilla homeowners in a major dilemma. Mike Kelly took exorbitant initial lot cost draws, excessive soft cost draws, and over-inflated budgets on construction loans such that in many cases there are not enough remaining funds to finish the homes. In addition, mechanics liens were placed on the entire Maravilla subdivisions by unpaid vendors, interest reserves were depleted, property taxes were unpaid and no construction or marketing was being done on the homes.
Details have surfaced as to how the Maravilla project collapsed and it is evident that there was fraud and misrepresentation by Mike Kelly. Mike Kelly essentially took all potential profit in the front end of the homes. Vendors and subcontractors were not paid even though Mike Kelly paid himself and family excessive salaries (he paid himself $644,000 last year despite claiming the company was 'failing' and his wife Allison Kelly was paid $71,000 for decorating a model home). In addition, Mike Kelly owned shell companies that he paid funds to and paid himself excessive dining and entertainment expenses from the Maravilla budgets while leaving the homeowners with an unfinished subdivision with numerous problems.
Mike Kelly and his wife Allison are now attempting to sail off into the sunset under the guise of bankruptcy for his old company. Do not do business with Michael (Mike) Kelly or his wife Allison in the future, as they have ruined many people's financial lives (leading to personal foreclosures and bankruptcy) and have sold homes with liens to many unsuspecting and innocent parties. Do not allow this thief and his wife to continue their fraudulent ways!