Contractor drops out of Schenectady foreclosure program
SCHENECTADY The only contractor to win permission to renovate a foreclosed Schenectady house has dropped out of the program after his criminal history was revealed by his ex-wife.
Gary Pappas was convicted of embezzling from his failing auto parts business in 1999. While some city officials said the conviction had no bearing on his ability to do construction work now, some city council members said they wouldn’t have approved him if they’d known about it.
“My heart’s really broken about it,” Pappas said Wednesday.
In an email to city officials, he withdrew from the project.
“I am truly sorry for the exposure and the embarrassment I have caused,” he wrote. “My deepest apologies, to you all and the council members, for my past and the lack of my disclosure.”
Pappas said he had planned to continue working on the project until he learned council members were upset they approved his bid without knowing about his criminal past. Given that, he said, it would not be appropriate for him to continue.
“My family and I desire only greatness for Schenectady and believe you have the staff to do it. We are not leaving the community but rather will continue on in the great commission our Lord has placed before us,” he wrote.
Two weeks ago, Gary Pappas’ ex-wife contacted Schenectady officials to complain because Pappas had won a bid to renovate 14 Myers Alley. Pappas had intended to put $75,000 of work into the building and turn it into his home over the next few months.
The city could have taken the house from Pappas at any time if he did not complete the work or his work did not pass code inspections. Under the terms of the foreclosure renovations initiative, the city does not put any money into the property — the contractor fronts the money and is reimbursed only if the house sells.
“I’m offering them nothing,” Building Inspector Eric Shilling said. “Every bit of financial risk sits on them. That’s the beauty of this: the onus is all on them.”
Shilling said the city was in no danger of being bilked by Pappas — and he emphasized that he felt Pappas’ past had no bearing on his current efforts.
In 1999, Pappas stole from his employees’ retirement fund, failed to pay employee health insurance premiums and did not pay employee federal payroll taxes. In January 2000, he filed a false tax refund. His business, Pro Auto Parts, closed in November 1999.
He was convicted of failing to pay $61,000 in payroll taxes and fraudulently filing for a $5,000 income tax refund. He was sentenced to probation and ordered to pay back $66,000. But in 2005 and 2006, he failed to make payments and falsified his monthly financial reports to his probation officers. He was sent to prison for 18 months and ordered to stop running his own businesses.
Under terms of his probation, he was not allowed to run any self-employment business without his probation officer’s approval.
He was also prohibited from opening any lines of credit unless he made his restitution payments on time.
His current business is owned by his wife, Lynn.
After getting out of prison, he first worked for another company, Grateful Heart Construction in Colorado, then he moved on to working for Grace Chapel in Colorado as a construction consultant, he said.
Pappas’ resume includes a phone number for the owner of Grateful Heart, but that number is no longer operational and that company has five unanswered complaints on the Better Business Bureau website. Pappas said he wasn’t aware of the complaints, had left the company before those complaints were filed and did not know the company had closed.
His resume says he still works for Grateful Heart, but it appears to not have been updated in years.
He said he regretted not telling city officials about his embezzlement conviction, even though it had occurred many years earlier.
“It’s clear God is telling me I’m going to be transparent and people are going to know and I’m just going to walk that way,” he said after his ex-wife contacted city officials.
But Mayor Gary McCarthy said he wasn’t worried about the revelation.
“It seems to be the remnants of a divorce,” he said. City officials tried to persuade Pappas to continue work on 14 Myers Alley, but he would not reconsider.
“It is more difficult to watch yet again decisions I had made in the past continue to hurt my family,” Pappas wrote. “Now, it is a very heart-wrenching battle I can’t stand anymore.”