Judge Dominic Flatley was due to sentence Robert Craig Howden, 43, on a charge of theft in a special relationship in the Alexandra District Court, but balked after he heard no reparation was being offered.
He told Howden unless he made a genuine effort to find the money, including asking family members for a loan, he was facing home detention or prison.
"These people need their money back," Judge Flatley said.
"Why should they lose?"
Howden and his wife were directors of Meadd (2018) Ltd, trading as Sentinel Homes Wānaka, when on February 14, 2020, he entered a contract with the victims, a married couple, to build a house in the Northlake subdivision.
The foundation was poured in September the following year, but no more work was completed.
On November 21, 2021, the couple paid $35,000 on an invoice for timber framing, but their subsequent inquiries showed Howden never placed an order with the supplier.
They also discovered he had not paid other contractors who had completed work on the build, despite the victims making payments on his invoices.
Between November 10 and 30, Howden made 41 transactions totalling $24,070 from Meadd’s bank account to his personal account.
Over the same time he made nearly 200 payments, totalling more than $22,000, to online gambling website "Parimatchwin".
Earlier in the hearing, defence counsel Justine Baird said Howden could not pay any "substantial" reparation because he needed to support his wife and children.
His company had been liquidated, he had lost his family home and had no other assets.
He could not draw on his KiwiSaver funds because early withdrawals could only be made on hardship grounds, Ms Baird said.
She asked for a sentence of community detention, community work and supervision.
After the judge gave Howden some time to reconsider the issue, Ms Baird said he could find $20,000 to repay in the next two months.
Judge Flatley said he wanted all $35,000 repaid, or community detention would be "off the table" and home detention or prison was likely.
"There is a lot of public interest in this sort of offending, because people are being left in the lurch.
"That’s not OK and it needs to stop."
Howden’s sentencing is now scheduled for March.
