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CSLB Press Release - 08/09/13

CSLB Sting in Hanford Finds Phony Contractors Duping Consumers Out of Illegal Down Payments

Nearly all suspects request excessive down payments

SACRAMENTO — The importance of not overpaying to get a construction project off the ground was driven home this week during an undercover sting operation conducted by the Contractors State License Board (CSLB) in Hanford (Kings County). Seven of the eight phony contractors arrested August 7, 2013, on illegal contracting violations also were cited for requesting an excessive down payment. The legal limit is 10 percent of the contract price or $1,000, whichever is lower.

CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as owners of a house near Hanford High School, in partnership with the Kings County District Attorney's (DA) Office. Investigators mostly used the online bulletin board craigslist and a classified ads booklet to contact those thought to be interested in bidding for concrete, landscaping, and painting jobs.

Click to enlarge picture

Investigators process a suspected illegal contractor in Hanford on August 7, 2013.

Several of the individuals arrested for the excessive down payment violation (Business and Professions Code section 7159.5 (a)(3)(b)) asked for half of the total bid amount to be paid up front. For example, one bid for concrete work came in at $5,260, with a down payment sought for 50 percent of that – far exceeding the 10 percent legal limit. A $4,100 landscape bid came with a request for a $2,000 down payment.

“There have been far too many cases of consumers who make a large down payment, only to have an unlicensed contractor disappear,” said CSLB Registrar Steve Sands. “Contracting laws were established to protect consumers. Consumers need to know and practice their legal rights and not pay more than 10 percent, or $1,000, whichever is less.”

The CSLB sting also highlighted the problem of how many purported contractors are forgoing required workers’ compensation insurance for their employees. Of the eight individuals arrested in Hanford, five were cited for failure to secure workers’ compensation insurance (Labor Code section 3700.5) and were issued Stop Orders, prohibiting them from using workers for any jobs until they purchase policies.

“It really is a scary situation when you’ve got an unlicensed contractor with uninsured employees working in or around your house,” Sands said. “If an uninsured worker gets hurt on the job, you may be on the hook for their medical bills or more.”

The eight suspects were cited for contracting without a license (Business and Professions Code section 7028). Only CSLB-licensed contractors can accept projects totaling $500 or more in combined labor and material costs. Seven face charges of illegal advertising (Business and Professions Code section 7027.1). State law requires that contractors include their license number in all forms of advertising, including broadcast and online ads.

Suspects are scheduled for arraignment on October 2, 2013, in Kings County Superior Court, 1426 South Drive, Hanford, CA 93230 (MAP).

NOTICES TO APPEAR:

SUSPECT NAME
CITY OF RESIDENCE
LICENSE CLASSIFICATION VIOLATIONS
Paras Freitas
Lemoore
C33 - Painting and Decorating Contracting without a license,
Illegal advertising,
Excessive down payment,
No workers' compensation - Stop Order
Scott Daniel Azevedo
Hanford
C27 - Landscaping Contracting without a license,
Illegal advertising,
Excessive down payment
Julio Enrique Ramirez
Hanford
C8 - Concrete Contracting without a license,
Illegal advertising,
Excessive down payment,
No workers' compensation - Stop Order
Felipe DeJesus Rodriguez Jr.
Ivanhoe
C33 - Painting and Decorating Contracting without a license,
Ryan Lee Bakers
Hanford
C33 - Painting and Decorating Contracting without a license,
Illegal advertising,
Excessive down payment,
No workers' compensation - Stop Order
Jorge Luis Gomez
Lemoore
C27 - Landscaping Contracting without a license,
Illegal advertising,
Excessive down payment
Kelly David Perreira
Hanford
C8 - Concrete Contracting without a license,
Illegal advertising,
Excessive down payment,
No workers' compensation - Stop Order
Luis Angel Mejia-Tapia
Porterville
C27 - Landscaping Contracting without a license,
Illegal advertising,
Excessive down payment,
No workers' compensation - Stop Order

Visit CSLB’s website for tips about how to hire a contractor.

The Contractors State License Board licenses and regulates about 300,000 contractors in California, and is regarded as one of the leading consumer protection agencies in the United States. It operates under the umbrella of the California Department of Consumer Affairs. In fiscal year 2012-13, CSLB helped recover nearly $44 million in ordered restitution for consumers. More information and publications about hiring contractors are available on CSLB’s website or by calling (800) 321-CSLB (2752). You also can sign up for CSLB email alerts.