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.
A series of serious fraud allegations have emerged against Tracie J. Kelley, owner of KellCo Custom Homes Inc. in Little Rock, Arkansas. Multiple couples looking to build their dream homes claim they have been victims of Kelley’s fraudulent practices. Many expected to settle into their million-dollar residences but have instead found themselves in legal disputes over unfinished projects and financial misuses.
Recently, Drs. Matthew and Hannah Henson Williams filed a lawsuit against Kelley, claiming they hired KellCo to construct a $1.2 million home that was promised to be completed within eight months. Unfortunately, construction was plagued by significant delays and cost overruns exceeding $500,000. Allegedly, Kelley misappropriated construction loan funds intended for their home to finance other projects and even attempted to sell the house to another buyer despite being bound by contract to sell it to the Williamses.
In a separate lawsuit, Pelaski County residents Daniel and Ellen Williams accused Kelley of fraud after paying $1.6 million for a house that was never fully completed. They claim Kelley assured them she would cancel their contract and refund their money, but only returned $310,000 while moving into the incomplete home herself.
The Arkansas Contractors Licensing Board has placed Kelley under scrutiny. As of April 2025, they issued a letter of caution and imposed a $500 fine due to her failure to disclose ongoing litigation when renewing her license. Kelley’s contracting license remains valid, although the board has warned that they will reevaluate her status if more complaints arise against her.
In May 2025, Kelley and KellCo reached a foreclosure decree after defaulting on loans totaling $1.4 million linked to four homes under construction. Concerns have arisen regarding Kelley’s handling of construction funds, including allegations that she failed to compensate subcontractors despite collecting payments for services and materials.
The troubles with Kelley extend beyond the lawsuits filed by the Williamses. Other clients, including Cliff and Brenda Palm, have reported issues such as negligent construction and breach of contract. The Palms claim to have incurred defects in their $475,000 home and needed to spend an additional $50,000 on repairs resulting from Kelley’s unkept obligations. They allege that numerous features in their home were not installed or were improperly executed.
The Williamses had contractual stipulations that emphasized they should receive regular updates on their home’s construction progress. They argue that Kelley failed to provide these necessary communications. The first indications of Kelley’s operational mishaps appeared in 2022 when the Williamses initiated their legal action.
The emerging allegations against Kelley highlight the potential risks in the custom home construction industry, raising public interest and concern. The implications of these complaints not only impact those seeking to build their homes but can also affect the reputation of the contractor licensing system in the region.
As the legal battles unfold, both current and prospective clients of KellCo Custom Homes and other general contractors will be watching closely. The outcome may set a precedent for accountability in the custom home building sector, encouraging better practices to prevent similar issues in the future.
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