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Dishonest Contractor???

well, i am remodeling parts of my house and i have hired a contractor that was recommended to me by some friends. he has already completed on room in my home (turned a semi-converted garage into a bedroom) and now he is about to turn 2 bedrooms into a master suite. he originally qouted me 3000.00 to do the 1st room and when the job was done (with no additional requests) he said the qoute was 4000.00. I told him that i remembered it being 3g but he insisted it was 4g, and that he spent sooo much money on building supplies that thats why it was 4g. well its my fault for not getting it in writing, so I paid up. Oh well, whats done is done. I did some research and found out that he has been lying to me. for example, he said that the insulation he bought was 325.00, i went to home depot/lowes and priced out the same stuff and i came up with 125.00. he said that he spent over 300.00 in closetmaid rackes, i priced all that out too and came up with 164.00. i am sure hes padding the prices. he told me that his qoutes are so good because he doesnt do mark ups, but things seem shady. before he began the 2nd project i insisted that i get a written qoute and that i wanted to pay for materials. I said i would pay for what ever his labor was and then he would bring me reciepts whenever he bought supplies. I gave him half his labor up front and a additional 2000.00 up front for supply money and I would deduct his reciepts from the 2g. well, he did everything in his power to keep from from doing it this way, is he trying to make money on materials? what do you think? oh and this am he calls to tell me that neither lowes or HD had insulation in stock (about 1000 sq feet) so he had to go somewhere else for it. i think hes afraid to bring me a reciept from lowes or HD because i would see what the insulation in the 1st room actually cost me!!! maybe im being paranoid?