At the end of July, North Carolina officials awarded Dynamic Group LLC a contract to demolish, repair and rebuild western North Carolina homes that were destroyed by Hurricane Helene.
Two years earlier, almost to the day, Dynamic — along with its founder and affiliated companies — was served federal court papers. In that suit, a Texas business partner is accusing CEO Joshua McCoy of running a racketeering scheme, allegedly using the partner’s company to qualify for million-dollar loans, pay off debts and enrich his “spiderweb” of LLCs.
A complaint filed in Texas federal court in 2023 alleges that Dynamic’s business partner was “just the latest in a series of victims of McCoy and his enterprise’s modus operandi of fiduciary breaches, falsification of financial[s] and embezzlement.”
The case has been on pause since December 2023, but remains open. Dynamic’s attorney calls it a “commercial dispute” in which Dynamic is “owed significant funds.”
Now, the Baton Rouge, Louisiana-based business is one of 20 that will be paid by the state to rebuild homes after the deadliest storm in North Carolina history. The companies will play a crucial role in a $1.4 billion federal grant program.
State officials are aiming to avoid the errors that plagued past recovery efforts. During North Carolina’s recovery from Hurricanes Matthew and Florence, errant communications and jumbled accounting led to countless construction delays. Survivors waited years to be able to go home, as the state agency charged with building housing racked up a deficit of hundreds of millions of dollars.
Gov. Josh Stein’s administration has pledged to chart a more efficient path as it rebuilds from Helene, frequently citing an unprecedented timeline for recovery thus far while it navigates uncertainty from Washington.
Dynamic is not the only contractor hired by the state that has landed in court. Other companies have previously settled lawsuits both in and out of court with customers, subcontractors and the federal government, court records reviewed by NC Newsline show.
At least five of the companies are still parties to open federal litigation as of mid-August. And two other companies do not currently hold general contractor’s licenses in the state.
The businesses are set to enter three-year contracts with North Carolina. State officials can choose to renew each contract for up to three additional years.
Companies that submitted bids were required to disclose their history of litigation, including any pending cases. Failure to comply “may disqualify” the company, according to the state. And officials can reject a bid if the legal history “demonstrates … unsatisfactory performance, adversarial or contentious demeanor or significant failure(s) to meet contractual obligations.”
Documents provided upon request to NC Newsline detail the state’s grading and recommendation process for all bidders.
While a vendor’s litigation history was not a specific criterion used by the division’s selection committee, that factor was indeed a part of the overall review process related to evaluating a given vendor’s ability to perform.
– David Rhoades, spokesperson, N.C. Department of Commerce
The state received 46 bids in total. Twenty were deemed not eligible, seven others were eliminated after a review of financial documents and one declined the state’s offer.
All 20 contracted companies were graded “recommended” or “highly recommended,” with department officials praising their records of past performance, capacity and proposed plans for western North Carolina.
Many of them are based in the South, and most are national in scope — frequently bidding for significant disaster rebuild contracts across multiple states battered by hurricanes. The businesses’ levels of experience were frequently cited by state officials as key factors in selecting them.
“While a vendor’s litigation history was not a specific criterion used by the division’s selection committee, that factor was indeed a part of the overall review process related to evaluating a given vendor’s ability to perform,” said David Rhoades, spokesperson for the N.C. Department of Commerce, which issued the contracts.
RICO suit, manufactured home complaints & federal fund claims
Multiple companies that won contracts with North Carolina are parties in open federal lawsuits.
Dynamic is accused of breaching contract, fraud and civil conspiracy, among other charges, in the Texas case.
Drew Zarallo, who founded a solar energy company called Cogent, has alleged in that lawsuit that McCoy, the CEO of Dynamic, used his majority stake in the company “to exploit Cogent for the benefit of other companies he owned and/or controlled.”
Among the specific allegations leveled against McCoy and his company in the action: moving to apply Zarallo’s company for a $2.5 million bank loan without his knowledge; embezzling that loan to pay down debt for a separate company; “impersonating” Zarallo’s wife in emails to contractors; and “emptying” Cogent’s main bank account before selling their stake in the company.
“Dynamic is an experienced contractor and is excited to be part of rebuilding homes for North Carolinians,” said Paul DeClouet, general counsel for Dynamic, in an email. “This years-old lawsuit arises from a commercial dispute in which we are owed significant funds and was fully disclosed in our proposal.”
Eli Ness, the attorney representing Zarallo, confirmed to NC Newsline that the suit remained open. In a filing last week, he requested a formal update from the court. The case has been effectively frozen for more than a year and a half, after Dynamic and McCoy filed a motion to dismiss it.
Dynamic will have “the capacity to do repairs, rebuilds and manufactured housing” in western North Carolina, DeClouet said. The company has previously won $88 million in contracts for hurricane levees in Louisiana, and in 2022 was tapped as a construction manager for the state’s federally-funded homebuilding program. State officials marked the company as “highly recommended” in a memo.
Other cases involving contracted companies appear to be nearing resolutions.
In one of those cases, two Louisiana residents who purchased a manufactured home from Regional Enterprises LLC allege that there were “instantly noticeable issues and defects.” They cited uneven and sinking floors, incomplete painting and sheetrock work, faulty electrical work and vegetation growing between the two halves of the home.
Attorneys for the Mississippi-based Regional pushed back on many of those complaints, and described them as “manufacturer issues” (a separate company, also part of the suit, assembled the home).
A judge ruled in March that the case should be settled in arbitration. Regional Enterprises LLC did not respond to NC Newsline’s requests for comment.
Two other businesses tapped for North Carolina homebuilding are named in a New York-based suit.
A pair of residents, on their own behalf and on behalf of the federal government, sued Baumgardner House Raising LLC and SLSCO, along with New York City agencies. They allege that the companies submitted “false claims” and received federal funds for home repairs after Hurricane Sandy.
Both companies have denied the allegations and previously moved to dismiss the case.
You’re going to have people that end up wanting to either complain about the work, or some people run out of money on a project. Then all of a sudden, every issue becomes the contractor’s issue, even though it may not be a valid complaint.
– State Republican Sen. Steve Jarvis of Davidson
In a statement to NC Newsline, Texas-based SLSCO called the matter a “nuisance value case that has been settled (pending approval from the court).” Bids from the company “always disclose any litigation as required.”
The president of Baumgardner House Raising, Christian Baumgardner, declined to comment on the lawsuit when reached by phone. But he said the New Jersey-based company was experienced working with federal grant programs, and was hiring western North Carolina-based subcontractors.
“You don’t often hear of hurricanes that cause this type of damage up in mountainous regions,” Baumgardner said. “So that’s going to be a challenge. But the best way that I can think to conquer that … is with local knowledge and a team from the area.”
A storm damaged apartment complex in a landscape scarred by Hurricane Helene on March 24, 2025 near Swannanoa, North Carolina. Communities in western North Carolina continue the recovery process. (Photo by Sean Rayford/Getty Images)Timberline Construction Group of Alabama is also moving toward arbitration in a 2023 suit in which they accused a contractor of unjustly firing them from a temporary housing site in Florida. Timberline did not respond to a request for comment.
State Sen. Steve Jarvis (R-Davidson), who is a general contractor by trade, said lawsuits were all but inevitable given the amount of projects some larger contractors take on. And bidders involved in active litigation, he said, should be judged on a case by case basis.
“You’re going to have people that end up wanting to either complain about the work, or some people run out of money on a project,” Jarvis said. “Then all of a sudden, every issue becomes the contractor’s issue, even though it may not be a valid complaint.”
A last-minute filing to operate in state
Two of the companies awarded contracts do not hold active general contracting licenses in North Carolina.
Searches for Nexlegacy LLC and Lamar Construction Co. of Louisiana LLC on the database do not return any matching results. A Department of Commerce spreadsheet tracking license info confirms that the two companies do not have active licenses.
An employee with Lamar Construction confirmed that the company was currently working to secure its license in North Carolina, and that the company was hiring licensed subcontractors local to the region.
Nexlegacy’s president, Kendrick Whittington, did not respond to a request for comment.
“While builders were not required to have a North Carolina (general contracting) license in place prior to signing the contract, no builder will be assigned any work nor be paid without having this license in place,” Rhoades said.
He added that the department has alerted all contractors about the requirement.
Nexlegacy was also lacking a certificate to do business in North Carolina until this week, state business records show.
The Texas-based company had its certificate of authority revoked in 2021 after failing to file an annual report, according to records kept by the North Carolina Secretary of State’s office. It submitted its first filing in four years on Wednesday, after NC Newsline inquired about the company on Tuesday.
Whittington did not respond to separate requests for comment about the certification status.
Contractors “were not required to have” an active certificate in order to submit a bid, said Rhoades, the Commerce spokesperson. But they are required to get one upon being rewarded a contract and “prior to receiving any projects from us.”
“It’s not uncommon for out-of-state contractors to not maintain their North Carolina certificates of authority if they are currently not doing business here,” Rhoades said. “We are reaching out to all the builders to be sure they have a (certificate) prior to signing any scope of work for a specific project.”
The company filed an application to be re-certified on Wednesday and is now listed as “active” as of Friday.
The secretary of state’s office has previously advised the state to cross-check vendors with its records while issuing contracts after natural disasters.
In a letter to former Gov. Pat McCrory during Hurricane Matthew recovery in 2016, Marshall told his office to “emphasize the importance of making sure (local and state governments) check the state’s business registration database, and work with reputable and appropriately registered contractors.”
Suits involving contractors lead to settlements, arbitration
Many lawsuits involving the awarded companies ended up being dismissed. Almost all of those that did reach a resolution were settled out of court between the two parties, or in arbitration with a neutral mediator.
Those complaints included disputes with homeowners, subcontractors and in some cases, state and federal governments that hired the contractors previously. Settlement agreements do not imply guilt or admission of wrongdoing.
One of the contractors, Thompson Construction Group of Sumter, S.C., settled with the federal government in March for $191,000. Prosecutors in West Virginia had alleged that the company submitted false claims for federal disaster grant dollars, and falsely certified that homes met required conditions.
Thompson was one of four companies named in a West Virginia legislative audit released in 2018, as the state’s recovery program and contractors came under scrutiny. Thompson later faced complaints from a subcontractor under that same program, but those complaints were disputed by state officials, the Parkersburg News & Sentinel reported in 2019.
Also named in that audit was Horne LLP, which is serving as prime contractor for North Carolina’s homebuilding program. Mississippi-based Horne is now facing a ban on government contracts in West Virginia, NC Newsline previously reported. Horne has denied any wrongdoing and said it will dispute the state’s decision.
Among the other previous cases and complaints brought against contractors hired for homebuilding in North Carolina:
Regional Enterprises LLC has settled or gone to arbitration in recent years with multiple customers who purchased manufactured homes. A North Carolina resident and Regional agreed to arbitration in a complaint in October 2024. An Alabama homeowner who had alleged plumbing issues and subsequent flooding settled with Regional in August 2024. And the company settled a Mississippi case that included allegations of a faulty septic tank and cracked floors in March. The owner of DSW Homes LLC of Texas was accused of improper installation and fraud during a Florida county licensing board hearing in April, 10 Tampa Bay News reported. The owner was cited, but was not fined and did not have his license suspended or revoked. Persons Services Corp. of Alabama settled a dispute last year with a subcontractor in North Carolina that stemmed from constructing a Family Dollar Tree. Six months after Hurricane Helene ravaged western North Carolina a storm damaged building was still standing in Asheville. (Photo by Sean Rayford/Getty Images)A year post-Helene, NC inches closer to starting construction
The construction contracts mark another step toward getting shovels in the dirt for the Renew NC homebuilding program. Leaders in the governor’s office, as well as the Department of Commerce, have been under pressure from state lawmakers wary of past struggles and itching to see visible progress.
Those efforts are complicated by the slow trickle of aid from FEMA — including the billion-dollar grant that will be used to pay contractors and build homes.
“I would settle for a little reckless spending right now, just to get money in the hands of the people,” Sen. Tim Moffitt (R-Henderson) said last month.
Officials leading the recovery have frequently cited the state’s record speed at getting federal money secured. An agreement releasing the $1.4 billion housing grant has been signed, but other requirements remain for the money to become available.
Jarvis, the senator who also sits on the legislature’s committee overseeing hurricane recovery, said he was optimistic thus far of the state’s transparency and process. He’s glad to see specific timelines laid out for demolition and mobile home building, for example.
Errors in past recovery efforts, he hopes, have taught the state what to do — and what not to do.
“If what’s on paper actually translates into an effective on-the-ground result, I think that is critical,” Jarvis said.
Homebuilding and Helene recovery in western NC: A rundown
How many homes will the contractors have to build? That depends on how many applications the state receives. The Department of Commerce said the program had surpassed 1,500 applicants for the single-family housing sector. The state will open applications for multi-family and workforce housing later this year.
When will construction begin? State officials have set a goal to begin construction in earnest by the early fall. The program cannot begin working at full capacity until the federal government unlocks the $1.4 billion in grant money that will fund homebuilding and pay contractors.
How do I apply? Visit the Renew NC website or read our story detailing the eligibility requirements and application process.
How are contractors selected for rebuilds? The state and Renew NC’s prime contractor (Horne) will assign projects (or “scopes of work”) to construction companies depending on which are best-suited and available.
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