How Does It Work?
Chad Golem's con is relatively simple, but he executes it very well. It was perfectly described by one of the victims as a "rob Peter, maybe pay Paul, and then keep a lot for himself" fraud scheme.
The con usually starts with Mr. Golem obtaining a large amount (25%) up front, as a deposit, to start a project. He does actually start the project but does not pay, or pay in full, Golem Construction's employees and/or subcontractors. He also does not obtain and pay for any permits for ANY project, so the cost normally associated with permits is not incurred. He then takes some of the money and pays for his and his wife's lifestyle & expenses. Almost immediately the client is behind on work performed versus money paid.
In order to keep future payments coming in, Mr. Golem will lie to the client, and tell the client anything he thinks the client needs to hear. He tells his employees / subcontractors similar lies to keep them working for him as long as he can. Since he is constantly taking money from the project, he eventually does not have enough to continue or finish the project. He then has to start another project so he can steal money from that project to pay for the previous project. This process repeats itself, over and over, and projects begin to overlap and pile up.
Similar to any "Ponzi" type scheme, Mr. Golem's fraud is not sustainable. He needs an ever increasing amount of projects to keep the whole thing afloat, and as these projects begin to pile up they get further and further behind. Eventually he is not able to find enough future projects to steal from in order to complete past projects. This is when the whole fraud starts to fall apart. Unfortuantely, the victims that come in near the end will bear the brunt of the losses. Not all of the losses, but most of them.
Mr. Golem's fraud scheme is not large by Wall Street metrics but, as the scheme progresses, he may be working on upwards of 10+ projects at any given time that are not finished. He is not concerned wtih completing projects in a timely manner, or at all. Additionally, it doesn't even really matter to him if the monetary amount of the contract makes financial sense (i.e. if he can make a profit). It is irrelevant to him because he just needs to keep money rolling in to continue the fraud. He will bid jobs at whatever price is needed to get the job. Profitability is not important. A constant stream of money IS important. Eventually, as the money dries up and the fraud falls apart, the uncompleted projects will not get finished. He will cease all communication and simply walk away... with your money.
One of the most effective things that Mr. Golem does is to get his victims ahead on payments versus the work actually performed. Once they are in that position, he is an expert at manipulating them. One would think that it is difficult to get them in that position, but it is actually fairly easy. Mr. Golem is very believable and has his pitch down to perfection. He is very good at misleading his victims about the amount of work that has been performed. He will lie about anything, including deposits that have been made, materials that have been purchased, products that have been stored offsite, subcontractors that have been scheduled, etc... anything he needs to tell his victims to keep money flowing to him. He knows that most victims will not check carefully. Why would they check? At this point, they still have a level of confidence and trust in him. He seems very believable and there is no reason to doubt him. Once he gets his victims in a position where he owes them money (either a client who is ahead on payments, or an employee / subcontractor who is owed money) he knows that the victims are vulnerable to his continued lies. They now have a vested interest in believing him because he has their money. The alternative is to realize and acknowledge that their time and/or money has been stolen, and that turns out to be a difficult thing for victims to do.
If and/or when victims realize that they are ahead on payments, Mr. Golem pivots and changes course. He starts a new narrative that could best be described as his "poor me" victimization story. This story has a few variations but the narrative generally revolves around other client's stealing from him and not paying his full fee or other client's having financial difficulties and owing him money. He will justify not spending time on a project by telling the victim that he needs to finish another project, or complete a certain amount of work on another project (for a client who owes him money), to receive payment that he can then put towards the victims project. For good measure, he will even throw in personal difficulties that he is "temporarily" experiencing to make himself seem more sympathetic. At the same time, he will also tell the victim that he may be a little slow, but that he has never walked away from a project and intends on finishing the project. In a testament to how good Mr. Golem is at this con, he will then ask the victim for (and receive) additional money - just to "keep the wheels greased" - until he can get paid from the other projects. Of course he is telling this same story to many of his victims simultaneously. Victim A is being told that victim B owes Mr. Golem money while victim B is being told that victim A owes Mr. Golem money. Naturally, no one owes Mr. Golem money. In fact all of the victims are ahead on payments to Mr. Golem. This is just all part of the con and it is remarkably effective. Mr. Golem has used a variation of this narrative with his employees and subcontractors to great effect. There are several that have lost well over $10,000 each to Mr. Golem.
As an example of how quickly Mr. Golem creates his lies, listen to this excerpt from Mr. Golem’s Federal Bankruptcy Examination:
Chad lying to the Bankruptcy Trustee
The investor being discussed was the owner of the Leaview property. The project manager being discussed is Seth Task. Mr. Task is a REALTOR. He was the 2014 President of the Akron Cleveland Association of REALTORS and is a 2016 Director of both the Ohio & National Associations of REALTORS. He was also the project manager for both the Leaview and Marwell properties. In the audio clip, Mr. Golem makes the mistake of actually suggesting that he may still be owed money from the Leaview project. Instead of letting this go, the trustee presses him on this claim. On the fly, Mr. Golem concocts the story about Mr. Task lying to his clients about cost overages and costs to cure Point of Sale violation issues. The problem is that there was no city point of sale money being held for the Leaview, or Marwell, properties. Additionally, there were no cost overages because Mr. Golem had barely started Leaview, and simply never did ANY substantial work on Marwell. How could there be overages when these projects never really got started? So what exactly could Mr. Task have been lying to his clients about?
The reality is that Mr. Golem knew that the trustee didn’t know the truth, so he quickly created his own version of it for the trustee. In Mr. Golem’s version, Mr. Task became the villain, lying and stealing from his clients. The trustee didn’t know that it was a lie because there was no one there to refute Mr. Golem’s version, and he was under oath to tell the truth. This is actually very similar to how Mr. Golem is able to lie to his victims so successfully. He knows that as long as he has a level of trust the victims are unlikely to have any reason to question him. Even if the victims trust in him is waning, he knows that, as long as multiple victims don’t cross paths and talk to one another, he is relatively safe in continuing his lies. As long as there is nobody to refute his lies, he can continue his fraud. He will simply tell the victims anything he thinks they need to hear.
It is tempting to think that Mr. Golem's victims should have realized that they were being conned. Looking at it from the outside and knowing all of the facts, it seems obvious. When the victims are in the middle of it though, it is incredibly emotional and disorienting. Mr. Golem is a skilled con man who has been doing this a long time. At least two iterations of this fraud have run their cycles, and he has started another now. He is able to inject enough truth with the voluminous lies to keep his victims off balance. Additionally, most victims are in a vacuum. They don't know the other victims or even that there are other victims. In fact, they don't even know that they are a victim yet. Victims who are aquainted with Mr. Golem or his family are in an even more vulnerable position. They don't want to believe that Mr. Golem is a con man. Mr. Golem counts on his victims never crossing paths or knowing one another. He can control the lies and the narrative to each individual victim. Once the victims do come in contact and start comparing notes, the truth becomes very apparent. This is what happened to Mr. Golem's last iteration of his fraud scheme. One of the victims started talking to other victims, and that became a big problem for Mr. Golem because he could no longer control the narrative, and the whole fraud fell apart.
Why Not Report the Crime?
Several victims have tried to file criminanl complaints against Mr. Golem. When a victim goes to a county in Ohio to file a criminal complaint against a contractor, most law enforcement will tell them that it is a civil matter regardless of the details. They just aren't going to take your complaint, period. Even in a case like Marwell in Twinsburg where almost nothing was done, Summit County still would not even consider taking a complaint. Part of the problem is that these counties do not have the resources and are not equipped to investigate this type of fraud. It is easier for them just to tell victims to file a civil case. Another problem is that this type of fraud spans multiple counties. Each individual county is only interested in the details of the crime committed in their county. This makes it difficult to convey the necessary details and scope of the fraud because they only want to hear a small part of it.
Geauga County is the only county that allowed one of the victims to file a criminal complaint but even they indicated that they were unlikely to do anything with it. The victim filed the complaint anyway. Geauga's response was almost amusing, if it wasn't so sad. According to the victim, they indicated that they didn't think a crime was committed because the victim didn't recognize it as a crime from the beginning. Essentially, they told the victim that he should have realized he was being defrauded. That complaint will be made available on this site, once permission from the victim is obtained. It is very detailed.
On the state level it is a little more interesting. You can file a complaint with the State of Ohio Attorney General's Office through the Consumer Protection Section. This may not initially seem like the correct place to file this type of complaint but it has been verified through Mike DeWine's office to be correct. However, you should not have high expectation that they will do anything. According to Michelle Nixten, a Consumer Protection Specialist with the Ohio Attorney General's Office, the official position on contractor fraud is that if a contractor takes your money and does anything, no matter how little, with regard to the work that was supposed to be performed, the State of Ohio considers it to be a civil case. She did say that they would look at complaints, but was honest in saying this type of fraud is not high on their agenda. The reality is that they get a lot of complaints and the chances of having your complaint investigated is very low.