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• 12/05/2007

CSLB Press Release - 12/05/2007

Contractors State License Board Undercover Sting Operation Targets Phony Contractors in San Diego Wildfire Disaster Zone

Six-agency operation is part of ongoing efforts in Southern California disaster areas

SACRAMENTO — The efforts of the Contractors State License Board (CSLB) and partner agencies to keep unlicensed contractors out of the Southern California wildfire disaster zones is working.

Yesterday, the CSLB's Statewide Investigative Fraud Team (SWIFT) and California Department of Insurance's (DOI) Fraud Division conducted an undercover sting in conjunction with the San Diego County District Attorney's Office, San Diego Police Department, U.S. Department of Homeland Security and U.S. Postal Inspection Service.

The sting targeted operators who are believed to be unlicensed and advertising illegally. They were invited to a sting house in Rancho Bernardo that was heavily damaged in the wildfire six weeks ago. A SWIFT investigator and DOI investigator posed as homeowners and took bids to demolish the structure and remove the debris.

An operator must have a valid California contractor's license to perform this type of work if it totals $500 or more. Since the bids were in a declared disaster area, those arrested for contracting without a license could face felony charges.

A total of four people were arrested on felony charges of contracting without a license in a disaster area (Business & Professions (B&P) Code 7028.16). Two others were given "Notices to Appear" in court to face misdemeanor charges of contracting without a license (B&P Code 7028). One person, a contractor whose license is on "inactive" status will receive an administrative citation for aiding and abetting unlicensed activity.

"The low number of arrests shows that our efforts are paying off," said CSLB Registrar Steve Sands. "We have learned from past experience that it's important to have a high profile right after a disaster. We're doing everything we can to help fire victims be prepared for the rebuilding process while letting the illegal operators know that if they're caught, the penalty is going to be severe."

"This type of fraud will not be tolerated at any level," said California Insurance Commissioner Steve Poizner. "We are watching over communities and will do everything possible to protect residents as they attempt to rebuild their homes and lives."

If those arrested in Tuesday's sting are convicted of felony charges, they could face a fine of up to $10,000 and up to three years in state prison, or both.

Richard L. Skinner, Inspector General of the U.S. Department of Homeland Security (DHS), Office of Inspector General (OIG) said, "The OIG is proud to work with our California state and local partners to identify and investigate possible fraud and bring those responsible to justice. Today's sting operation and arrests should serve as a public notice to all, that law enforcement agencies will continue to investigate fraud and other criminal acts associated with the wild fires of Southern California."

The CSLB and its partners worked quickly in the aftermath of the Southern California wildfires, issuing warnings and posting signs through out the fire zones, warning residents to be wary of potential scammers who will try to profit from their situation. Warnings were also aimed directly at people who attempt to contract without a license in a declared disaster area, letting them know that they would face felony charges and potential prison time if caught. The CSLB continues to be involved in multiple sweeps each week.

Contractors working on any job - from demolition to roof repair to rebuilding - totaling $500 or more for labor and materials must be licensed by the CSLB. To get a license, a contractor must pass two examinations, verify at least four years of journey-level experience and pass a criminal background check. California contractors must carry a license bond, and provide workers' compensation insurance for their employees. A homeowner could be at risk if workers who aren't covered have an accident while on their property.

With clean-up and rebuilding operations well underway, caution is especially important. "Avoid the urge to rush into repairs with the first contractor you meet, especially if they show up without an invitation," said Sands. "Spend just a few minutes checking the contractor out with CSLB to make sure they're licensed."

Homeowners should look closely at any paperwork or contracts they are handed. A standard home improvement contract is required to have a 7-day "Right-To-Cancel" notification for repairs or restoration of residential structures in an area for which a state of emergency has been declared. It is also important to note that repairs cannot be broken up into smaller projects to avoid the $500 threshold for licensing.

Consumers can verify a contractor's license status through the CSLB's Website at www.cslb.ca.gov or through its toll-free automated telephone system at 1-800-321-CSLB (2752). Find out if the contractor's license is active and in the right classification for the work to be done. Consumers can also see if there are any legal complaints against the contractor, if the business name and address are correct, and if there is workers' compensation insurance coverage for employees. Consumers can download tips and publications on topics like disaster scams, hiring a contractor and home improvement contracts from the CSLB Website.

The CSLB has also activated its Disaster Hotline. The line is open for disaster victims to call Monday through Friday, 8 a.m. to 5 p.m., at 1-800-962-1125.

The CSLB urges consumers to follow these tips when dealing with a building contractor:

• Hire only licensed contractors and ask to see the license
• Don't hire the first contractor who comes along
• Don't rush into repairs, no matter how badly they're needed
• Verify the contractor's license at www.cslb.ca.gov or 1-800-321-CSLB(2752)
• Don't pay more than 10 percent or $1,000, whichever is less, as a down payment
• Don't pay cash, and don't let the payments get ahead of the work.
• Get three bids, check references, and get a written contract.

The CSLB reminds contractors who want to get work in the disaster area that they must hold a valid California contractor's license, in the appropriate classification, in order to perform most work on homes and other structures damaged or destroyed by the wildfires. They must also have the proper business license to work in the fire zone.

The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. The CSLB licenses and regulates California's 315,000 contractors, and investigates more than 20,000 complaints against contractors annually. In fiscal year 2006-07, the CSLB obtained nearly $45 million in ordered restitution for consumers.