A former Baltimore-area builder, whose controversial practices inspired a state law regulating custom home construction, has been indicted by a Baltimore federal grand jury on three counts of bank fraud.
Jerome J. Kendall, formerly Jerome Knoedler, 47, was arrested Wednesday by FBI agents in Dover, Del., where he has been building houses. Mr. Kendall was arraigned before U.S. District Judge Joseph Farnum and released on $50,000 secured bond, according to an announcement from the FBI.
Mr. Kendall became well known in the Baltimore area in 1983 and 1984 for starting to build expensive, custom homes on private lots, getting infusions of cash after completing various stages of the job, then walking off after finishing about half the work.
Customers subsequently discovered that subcontractors and suppliers had not been paid, and they were faced with liens on their unfinished homes. When they hired lawyers and filed suits, they found out that Mr. Kendall, whose name then was Knoedler, had filed for personal bankruptcy in 1983 and had no assets.
Meanwhile, he would sue them for breach of contract and go on to the next job.
Mr. Kendall built a 22-home development in Secretary, near Cambridge, in 1988 and 1989. Despite his earlier controversial record and his bankruptcy, he managed to get loans from local banks. Town officials halted work on the homes and adopted a building code, after a private building inspector reported that the houses had major construction faults and showed shoddy workmanship.
The man was able to continue working as a builder, however, because Maryland does not license builders of new homes. But in 1986, the General Assembly, pressed by some of the builder's angry former customers, passed the Custom Home Protection Act, which imposes criminal penalties for builders who misuse customers' money and requires builders to disclose former bankruptcies.
The federal indictment charges Mr. Kendall with defrauding the Peninsula Bank of Salisbury with a 1990 scheme to get a $112,500 loan.
The indictment charges that Mr. Kendall misrepresented his real income by submitting false tax returns and that he withheld information about a $10,000 judgment outstanding against him and about a second mortgage on a home he owns at 6814 Eldorado Road in Federalsburg.
In addition, he withheld from the bank the fact that he had declared bankruptcy in 1983, according to the indictment.
Each count of federal bank fraud carries a maximum penalty of a $1 million and/or 30 years in prison.