On March 6, 2017, Fort Smith City Director Keith Lau filed an offense report against Arkansas State Sen. Jake Files, R-Fort Smith, alleging Files defrauded Lau’s KCP Property Management of $33,200.
According to a report received from the Fort Smith Police Department on Wednesday (April 12), Lau provided copies of two checks written to Files’ FFH Construction in the amounts of $9,500 and $23,706 along with the contract between the two companies and copies of text messages Lau and Files had personally exchanged.
Lau said on Nov. 10, KCP took over property management of Huntington Chase Apartments located at 6400 Massard Road. In the course of doing so, Lau inherited a hail damage roof claim. He bid out the roof repair work to five different bidders and FFH was the lowest bidder at $64,838.
“He (Lau) said that FFH was awarded the job and Mr. Files told him that he was going to order shingles by the truckload from Home Depot to get a better price,” the report stated.
On Dec. 15, Lau said, KCP Property Management cut the two checks to FFH for purchase of the shingles, adding that after cutting the checks “shingles weren’t being delivered and no work was starting.” Lau said he spoke to Files “several times around Christmas, and Mr. Files told him that they were going to start the work in January.”
January came and went with no work completed. The whole time Files was claiming it would begin “any day,” and they were trying to finish another job, Lau said. By Feb. 1, concerns were growing, prompting Lau to request from Files proof the “money that had been given to him by KCP had been spent on their job.” Lau also requested any money that had not been spent be placed into a trust account. Lau told the officer on the date of the report as well as Talk Business & Politics on Wednesday that, to date, Files “has not produced invoices from Home Depot regarding the shingles.”
On Feb. 8, Lau said, work started on building one of the 56-unit complex. The next day Files texted to say 60 squares of shingles had been delivered to the job site and the others were ready to be picked up. Lau reemphasized needing invoices showing the shingles had been paid for and acknowledged the shingles delivered were “the correct shingles which were a W-gray GAF Prestige 3 tab shingle,” the report stated, adding, “building one was completed using the correct shingles and Mr. Files told him that there was a delay on getting the rest of the shingles because the shingle supply company could not get anymore.”
Lau attempted to arrange a meeting with Files on Feb. 10 at Home Depot to check on the shingle order. He said that Files told him they had ordered the shingles “using one of Mr. Files’ employee’s accounts under the account name of Top Notch Roofing.” Lau claimed Files did not show up for the meeting and that “at some point Mr. Files had subcontracted the job to Mike Ray with Top Notch Roofing to complete the job.”
Lau then spoke with Ray, who told him that since he could not get the original shingle he would get one to match perfectly with what he wanted. Lau said the second building was completed and the shingles didn’t match, prompting him to inform Files and Ray the shingles “were not going to work.”
On Feb. 13, the report stated, Ray delivered and unloaded 170 squares of the wrong shingles to the job site and was told Files purchased the shingles from Jack’s Building Supplies on Highway 271. Lau had one of his workers “re-palletize” the shingles for return and contacted Jack’s to discuss the purchase. Lau said the owner then told him Files had purchased the shingles using a “hot check.” Lau then claimed he informed Files KCP wanted its money back, but “Files simply told him that he did not have it.”
Lau told Talk Business & Politics on Wednesday he did not tip anyone in the media off about the offense report, but figured it was only a matter of time before it became public knowledge.
“I would have rather it not gone public, to be honest, because it sort of makes me look bad. I did business with him, and I got burned,” Lau said.
When accessing Lau’s offense report, Talk Business & Politics also asked for any other filings that might involve Sen. Files and was given a copy of a second from Fort Smith area resident Ed Ralston. On Sept. 22, 2015, Ralston contacted the police department stating he had hired FFH Construction to build a primary residence for him. The report continued: “He (Ralston) said that they signed a contract for the work to be done but after that he found out that he was being charged for fake vendors. He said that the company said that they were needing the money for vendors that did not exist and then was pocketing the money. He said that this was fraud and would like to talk with the Prosecutor’s Office about the matter. He said that he does have a current Civil Case Pending with them but believes that there may be criminal elements. He has documentation of what has been going on with him to show the prosecutor. I explained to him how to get a copy of the report before ending the call.”
Files could not comment on the current pending civil case or on ongoing issues between him and Webb and the city of Fort Smith concerning the River Valley Sports Complex, but said of Ralston, “I do have a defamation suit against him.”
To the Lau allegations, Files told Talk Business & Politics he did not know about the offense report until his father texted him about it Wednesday morning.
The Southwest Times Record, which initially ran a story on the offense report, “didn’t even reach out,” Files said. “We had a contract to do the roofing, and in that contract there was a material deposit upfront,” Files explained, referring to the two checks totaling $33,200. “We got those and proceeded along and at some point in the process, the client (Lau) wanted all the shingles on-site. We were just going to bring them building by building, but we got all of them delivered, and the shingles did not match from building one to building two. It was a slight difference, and I told Keith we would re-roof all of building one at my expense. So we’re working through those processes with the understanding that when the two buildings were roofed, we would be paid. But we were never paid anything for our labor. We delivered all the shingles for the job out there to the seven buildings. He then canceled the contract and said if we came to get the shingles, he would call the police and say it was theft.”
Files continued: “I haven’t talked to my attorney yet, but those are the facts. He made a material deposit. All the materials are there, and I’ve got receipts for the materials, so I’m struggling to see how there is any theft by deception here.”
Files was particularly perturbed by the Times Record story, stating he had not talked to anyone from other media outlets, and “it’s disturbing to me when media outlets run a story that does not present both sides of it, and yet people see the headlines and immediately jump to the conclusion there must be a problem.” Files also insisted the police had not been in touch with him that Lau had filed a report.
“I called a friend who used to be a policeman about protocol, and you would think that with something of this magnitude, you would try to get both sides of the story.”
Concerning Files’ future as an Arkansas State Senator, he said, “I have not done anything to necessitate me needing to resign my position.” Running for another term, however, may be another story. “I’d have to declare, and I haven’t decided.” Should he choose to run, Files will be up for reelection in 2018.