Lexington men used company credit cards to fund their home flipping project, lawsuit alleges

Two Kentucky property managers stole more than $100,000 from their employer, according to a federal lawsuit alleging fraud and other charges.

Steven Wood, of Lexington, and Justin Maddix, of Richmond, were employed as property managers for Wyoming-based property company, Oak 44.

While employees of Oak 44, which managed properties in Lexington, Maddix and Wood were also renovating several properties they owned, according to court documents.

The lawsuit alleged the men worked together to purchase materials for the renovations on their employer’s credit card.

The Oak 44 LLC is owned by John Gatson, who alleges the men committed fraud, breach of fiduciary duty, unjust enrichment, aiding and abetting, and civil conspiracy in a civil suit filed in the U.S. Eastern District Court.

Wood and Maddix own a home on Cayman Lane which they are “flipping” for personal profit, and has no relationship to the Oak 44 company. The lawsuit alleged the men were using Oak 44 credit cards to purchase renovation items.

The largest singular purchase was almost $25,000, and included the purchase of bathroom and kitchen fixtures such as brass faucets, heated toilet seats, kitchen hoods, cook tops, dishwashers, double ovens and a garbage disposal for an outdoor kitchen.

All of these purchases were installed at the Cayman Lane property, according to the lawsuit. The home is currently listed for $1.5 million.

Wood is accused of purchasing two tankless water heaters which he allegedly needed for Oak 44 apartment complexes. The cost was nearly $3,000, according to court documents.

“The water heaters were neither delivered to nor installed at those apartment complexes,” the lawsuit reads. “In fact, tankless water heaters are not compatible with the apartment units at those complexes.”

Other purchases included tool rentals, landscaping costs, additional home fixtures and trailer hookups.

In addition to the fraudulent purchases, the lawsuit alleged Maddix used a “sham company,” called Lexington 859, where he would inflate the cost of services to “skim money off the top.”

Rather than pay the invoice for Oak 44, Maddix would create a fake invoice on a Lexington 859 letterhead based on a fraudulent marked-up price, which is believed to be inflated by 20%, according to the suit.

The Oak 44 LLC is seeking a judgment of monetary, compensatory and punitive damages in excess of $75,000.