‘Something was terribly wrong’: North Carolina homeowners claim builder took hundreds of thousands of dollars in bank draws and never completed construction

Unfinished work

Labelle isn’t the only homeowner to have reported something amiss with Cotto’s construction group.

Lisa Flores and her family have been staying with a relative as they waited for their home to finish construction — work that went through constant delays before abruptly halting in 2021.

Flores continued to pay out the $189,000 construction loan for the past three years, even though she couldn’t actually live in the home. She finally fired the builder group, Distinctive Homes and Development Group (of which Mario Cotto and Parathazathel Mohanan are named managers and chief financial officers), in January of this year.

Flores purchased the lot from The Lion Real Estate Group — the same company Labelle bought her home from. State corporation filings list Cotto as the chief executive officer.

When Queen City News spoke to Cotto, he told the news organization that the stories homeowners had shared were untrue, but refused to discuss the construction projects in detail.

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Lawsuits and complaints

In September of last year, the Flores’ and three other families faced an unexpected lawsuit from Robinson Builders Mart, a builder supply company in Newton, N.C.

The lawsuit named the families and their properties as defendants, and claimed the contractor, identified as Parathazathel Mohanan, bought $132,463.65 in building materials from the supply company but never paid the bill.

The supply company later removed the families as defendants and in October, a $155,189.45 judgment was issued against Mohanan — which he reportedly paid out.

Labelle finally contacted a disbursement agent at Truliant Federal Credit Union and told them she believed a fraud was being committed against her.

“I knew that if I did that, when you yell fraud at a bank, they have to investigate it,” Labelle told Queen City News. “And that did work. And I think that raised some flags at the bank.”

The very next day, framers showed up at her lot and installed the floor system and partially framed two garage walls. But then the crew disappeared again.

Labelle fired Cotto in January and filed multiple complaints against him with state and federal agencies. She also filed complaints against his wife with the N.C. Real Estate Commission and Canpoly Realtor Association in Charlotte, accusing Joy of being aware about the delays with her husband’s builds and concealing them from Labelle at closing.

Queen City News reports the Cottos are involved in 22 properties across two subdivisions in Lincoln County — and records show just one certificate of completion.

How to vet a builder for your custom home

It’s incredibly important to do your research and pick a reputable builder when you’re setting up a construction project — and the National Association of Home Builders (NAHB) lists some tips on its website.

For one, you can start with researching what builders are currently active in your area. While the Cottos were certainly involved in various projects in Lincoln County, Mario Cotto had a history of delays with his construction work.

Asking a builder for their experience and references can help you vet them as a high-quality contractor — especially if former clients can tell you how satisfied they were with the projects and whether the builder followed through and met their expectations.

If the builder can’t or won’t provide you with references, the NAHB says to consider that a red flag and walk away.