Greg Wolfe

The general manager of Aquarius Pools, a Sacramento, Calif.-based builder whose closure left many in the lurch, has been sentenced to two years in state prison for diverting funds.

Greg Wolfe began serving his time on July 29 with 16 days of credit. He had faced a maximum sentence of four years, four months.

In 2006, the Pool & Spa News Top 50 Builder closed its doors, leaving approximately 60 homeowners with incomplete pools and several subcontractors unpaid. The unfinished work and outstanding debt totaled approximately $1.2 million.

The case in which Wolfe was sentenced included 11 customers, who lost a total of $223,000. According to the Sacramento county district attorney’s office, Wolfe and his wife, Teresa, accepted money from customers and diverted it to a non-Aquarius account.

“A thorough examination of all of the banking records of Aquarius … revealed that the only persons responsible for criminally mishandling huge sums of money over a period of several years were Gregory and Teresa Wolfe,” the DA’s office stated in a press release.

Earlier this year, Wolfe pleaded no contest to three counts of diversion of construction funds. Teresa Wolfe pleaded no contest to felony embezzlement and tax evasion, for which she was sentenced to a year’s work furlough. A no-contest plea can carry the same sentence as a guilty plea, though there is no admission of guilt.

Some in the industry believe a two-year sentence isn’t severe enough to deter illegal contracting activity.

“To get off with two years, to me, is a slap on the wrist,” said Mike Geremia, president of SPEC, a California pool and spa industry legislative advocacy group. “It just seems like we’ve got to do something along the way that really shows some consequences.”

When Aquarius first closed, there were questions about company owners Richard Carnation and Kevin Towle. At that time, California’s Contractors State License Board revoked their licenses, including one they held for a non-pool-related business.

“Even though the owners of Aquarius Pools did not face criminal charges in this case, they were administratively responsible for the actions of their general manager,” said David Fogt, CSLB’s enforcement chief.

Fogt further accused Carnation and Towle of being unwilling to help Aquarius customers. But Carnation disputed that characterization. “When the Wolfes’ actions forced Aquarius into Chapter 7 bankruptcy, the law [did] not allow us to do anything further on the company’s behalf, but requires that the court-appointed trustee for Aquarius wrap up all of the remaining business dealings,” he said. According to Carnation, he and Towle gave the trustee $490,000 to help cover the company’s expenses.

In the end, Carnation and Towle were completely exonerated by the Sacramento County DA. “Kevin and I maintained from the very beginning that we weren’t aware of the things the Wolfes had done,” Carnation said. “We weren’t involved with the running of the company. The Wolfes bought [it] from us, I believe it was in 2003. We just held the paper, and they were making payments and doing what they needed to do per our purchase contract.”

When the firm closed, he said, the Wolfes owned about 10 percent of Aquarius’ stock. Aquarius Pools was founded in 1969 and ranked on the Pool & Spa News Top 50 Builder list for two years, peaking at No. 35. Aquarius reported nearly $10.5 million in construction revenue for 2005.