Keith Waters and Carter Siverson worked together for two decades building and remodeling some of the nicest homes in the Twin Cities.
They specialized in the ritzy style featured in the Parade of Homes, including designing Lorie Line's Mediterranean-style mansion on Lake Minnetonka, and remodeling ex-Congressman Jim Ramstad's wife's home on Lake Harriet. See also: Colin Chisholm Sentenced in Sad Final Chapter For Welfare Fraudster
Waters hired Siverson in 1992. Back then the company was called Waters and Bonner, but after Waters's partner William Bonner left the firm Siverson became a minority owner in the business, which was renamed Keith Waters and Associates.
The company was losing money even before the housing crisis began in 2007-2008. According to the charges filed by the Hennepin County Attorney, Keith Waters and Associates had operating losses in 2004, 2005, 2006, 2008 and 2009. By October 2009 the firm owed $1.3 million to various subcontractors.
Faced with the mounting financial crisis, the duo began taking money that was supposed to be used for projects they were currently working on and paying contractors it owed for past projects.
Waters's former partner William Bonner told police Waters was effectively "robbing Peter to pay Paul."
To make the scam possible, Siverson admitted he forged at least 100 lien waivers, which are documents a contractor signs to certify it was paid for work done on a project.
"This was a case where we really didn't see the money being used for elaborate living or lavish lifestyles on the part of Keith and Carter; the money appeared to be used to keep the company afloat and keep from laying off employees," said Minnetonka Police Department Detective Mark Stock, who worked the case for about a year.
Stock may have not seen them flash much wealth, but according to the criminal complaint Waters was still making monthly $741 car payments on his BMW while his business was going down in flames.
The scam first appeared on Stock's radar when a victim walked in with a complaint in October 2012. Shortly after, a Minneapolis police lieutenant told him about a lawyer in Minneapolis who was representing several clients with pending civil suits against Keith Waters and Associates.
When Stock and Wayzata Police Lieutenant Michael Murphy, who also investigated the case, reached out to Rivers he immediately came in with his lawyer and confessed over a series of sit-downs.
"He was, for the most part, pretty honest about what had happened, although I think he was less than honest about when he first had knowledge about when the business was in trouble," says Stock.
Siverson contacted law enforcement through his lawyer a little while later and also confessed.
"Cater was quite honest," says Stock. "I think he wanted to get this off of his chest and felt bad about what he had done."
Altogether Waters and Siverson had 73 claims against them for $12.8 million when they filed for bankruptcy in 2012
Waters, 71, pleaded guilty in November to one count of nonpayment for improvement to real estate and was sentenced to six months in a Hennepin County workhouse. He's serving the sentence from home because he has an undisclosed serious illness.
Siverson pleaded guilty on Monday to three counts of nonpayment for improvement to real estate and will be sentenced April 20. He's expected to serve one year in Hennepin County workhouse, with 39 months in prison hanging over him if he violates his five-year probation period.
Two of the victims contacted by City Pages yesterday declined to comment.
"He carried such a good name, and you always took his word," one victim, Ryan Berger, told the Star Tribune in 2013. "But we had issues from the start."
Berger hired the firm to build a home and ministry center in Victoria. More from the Star Tribune:
"[Siverson] would say things like, 'they got busy, but they'll be here Wednesday,' but then they wouldn't show up," Berger said. "We went through one stretch last summer without a single thing getting done, but we were still making payments."
"I consider them thieves and crooks," Berger said. "They should get punished for what they did."
According to Stock, it's unlikely the victims, who were still obligated to pay the contractors after Waters and Siverson stole their money, will recover much in restitution.
"I'm honest with the victims. I tell them with a situation like this, when the company is in financial arrears, that the likelihood of them recouping their losses is pretty slim," he says. "And that's the sad part. In some of these cases people are out hundreds of thousands of dollars."
Click to page two to read the criminal complaint filed against Siverson.
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