Two prominent home builders have ceased operations after the owner filed suit against two longtime executives, alleging they've been stealing from the companies for years.

J. Greg Allen, who also operates a commercial division that developed downtown's Allen Plaza, said in an interview that trusted employees at Greenwood-based J. Greg Allen Builder and Princeton Homes stole nearly $1 million, "over a long period of time, cleverly, and in small amounts."

He said the thefts surfaced only after the residential construction market slowed and creditors began to complain that the home-building companies weren't paying their bills, even though the financial statements Allen received showed they were up-to-date.

"They couldn't really come to me and say 'this is where we are' because a deeper look into things would have revealed there was a lot of money missing," Allen explained. "When Pandora's Box opened, there was no way to hide what they'd been doing for years."

J. Greg Allen Builders and Princeton Homes are plaintiffs in the case against Jeff West, the builders' former president, and Kim Hutchinson, the former treasurer. The suit, filed in Johnson County Superior Court in February, claims West and Hutchinson co-mingled company funds and concealed unauthorized payments to themselves by claiming they were going to vendors.

In court papers, West denies having any role in "his subordinate's purported scheme to embezzle funds." In a counterclaim filed in April, West asked a judge to enforce a verbal settlement agreement he claims he reached with Allen in 2010 after leaving the company to start his own home-building business.

West repaid more than $164,000 to the companies as part of the agreement. The figure includes the repayment of a long-overdue loan from the company for West's own home, along with $55,000 the company lost on construction of a home for West's son.

Allen said he didn't realize the extent of the fraud until he began reviewing financial records and realized the company's bank statements were missing dozens of photocopies of canceled checks. He ordered up reprints from the bank, and the missing checks had been hand-written and paid either to West or Hutchinson, and in some cases were forged with Allen's signature.

West's counterclaim argues the company still owes him an unspecified sum for unused vacation time, and more than $8,000 for a bill from a supplier he had to cover personally. He also is seeking compensation from Allen for making "false defamatory statements with malice and solely for the purpose of injuring West, both professionally and privately."

"A number of persons now suspect West of having embezzled or stolen money and refuse to have any further business dealings with West," the court filing says.

Allen also accuses West of stealing committed customers of J. Greg Allen Builder by telling them Allen planned to exit the custom-home business.

Hutchinson's attorney, Matthew Solomon of Franklin, did not return a phone message.

Allen in January wrote in a letter to subcontractors and suppliers promising any funds recovered from West and Hutchinson will be used to cover unpaid obligations.

"I am personally and professionally disappointed about the situation Jeff and Kim have caused," he wrote. "They were trusted completely and have grossly violated the good faith placed in them to carry out their responsibilities honestly."

Unpaid subcontractors aren't the only ones eager for some resolution to the dispute between Allen and his former employees. The biggest concern for recent buyers is that their new-home warranties apparently are worthless.

Kyle Young, who owns a Princeton home in Bargersville, said he and other neighbors seeking fixes that should be covered under their warranties have been told they're out of luck. There's no one to respond to service requests, and subcontractors aren't much help, either, since many of them haven't been paid.

Young's house is only six months old and he figures the minor fixes would cost a few thousand dollars. He said others in the neighborhood have more serious issues, such as plumbing problems and an unfinished fireplace.

"It's just a shame they can just go operate under another name the next month," Young said.

Allen said most of the homes his companies built are past their warranty term, and he said he was not aware of any outstanding warranty claims.

J. Greg Allen Builder, founded in 1986, ranked ninth among Indianapolis-area custom home builders in IBJ's most recent Book of Lists with $5.7 million in revenue in 2009. It closed on 12 homes that year with an average sale price of $525,000.

Princeton Homes was the area's 10th largest home builder in 2009 with 30 permits filed.