An incomplete construction site plagued by delays and financial issues.
Tracie J. Kelley, owner of KellCo Custom Homes in Little Rock, is facing multiple lawsuits from couples alleging fraud and financial mismanagement related to custom home projects. Accusations include significant delays, cost overruns, and misappropriation of funds. The Arkansas Contractors Licensing Board has issued a cautionary letter and fine against Kelley amid growing complaints, raising concerns about her business practices and the integrity of the custom home building industry.
Tracie J. Kelley, a builder based in Little Rock, Arkansas, is facing serious fraud allegations from multiple couples who claim they were unable to move into their dream homes constructed by her company, KellCo Custom Homes Inc. The builders are being sued for broken contracts and what these couples describe as deceptive practices associated with multi-million dollar homes.
The Arkansas Contractors Licensing Board recently sent a letter of caution to Kelley, accompanied by a $500 fine. This action was prompted by Kelley’s oversight in failing to disclose ongoing litigation when filing for her contracting license renewal as of April 2025. This development indicates that her legal troubles are not yet behind her.
Among those taking action is Dr. Matthew Williams and his wife, Hannah Henson Williams, who employed KellCo to build a home worth $1.2 million. They entered the agreement with the expectation that construction would be completed within eight months. Instead, they faced repeated delays, with costs escalating by at least $500,000. The Williamses assert that Kelley misappropriated funds from a construction loan designated for their home and improperly listed the property for sale while under contract to sell it to them.
Another couple, Daniel and Ellen Williams from Pulaski County, has also filed a lawsuit against Kelley. They claim to have paid $1.6 million for a home that was never fully constructed. They allege that Kelley promised to void their contract and refund their money, yet she only returned $310,000 after moving into the house herself. These allegations highlight troubling patterns of behavior that have led to significant financial distress for her clients.
In May 2025, Kelley and her company found themselves under a foreclosure decree after defaulting on loans totaling $1.4 million associated with the construction of four homes. This legal decision underscores the mounting financial issues stemming from Kelley’s business practices and her inability to deliver properties as agreed.
The lawsuits also detail allegations of fraudulent behavior concerning Kelley’s interactions with subcontractors. Claims indicate that Kelley collected funds intended for specific construction items yet failed to pay those subcontractors, intensifying the fallout from her supposed mismanagement.
Kelley’s troubles extend beyond the current lawsuits. The Palms, previous clients who commissioned a $475,000 home, have filed suit against her, highlighting concerns around negligent construction and breach of contract. They allege that they incurred an additional $50,000 in repairs due to Kelley’s failure to meet her obligations. Issues include uninstalled or improperly installed features that contradict initial agreements.
Furthermore, the Williamses’ contract specifically required regular updates on construction progress, a provision that they claim Kelley neglected. Such failures have left many clients frustrated and seeking justice through legal channels.
Although Kelley’s contracting license remains active, the Arkansas Contractors Licensing Board has asserted that they will reassess her status should new complaints surface against her. This proactive measure demonstrates the board’s commitment to ensuring ethical standards within the construction industry.
The first hints of trouble materialized back in 2022 when the Williamses filed their lawsuit, marking the beginning of a troubling trend for Kelley. With growing allegations and financial disputes surrounding her construction projects, the repercussions could extend beyond her immediate clients, affecting the broader community in Little Rock.
The situation is drawing increased scrutiny as parents voice complaints about the impact of similar allegations affecting local organizations, including those associated with sports events. The intricate web of legal and ethical issues surrounding Kelley and her company will continue to be unraveled as cases progress in the courts.
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