The Contractors’ State License Board held two Committee Meetings on Friday, August 29, 2008, in Sacramento, CA.  The meetings were the Enforcement Committee and the Public Affairs Committee, in that order.   

EXECUTIVE ORDER 

Registrar Steve Sands addressed the issue of the Governors Executive Order.  Many of the people do not understand its significance.  Quite a few people were laid off.  When and if the Executive Order is set aside, the people laid off will have to reapply.  They do not just come back to work.  Further, no one (except the Governor) knows when this will happen and most significantly, how many will be rehired. 

THE BUDGET 

Many employees have been laid off and no one knows how many will be rehired to ease the strain on the present CSLB workload.

 PARTNERSHIPS 

The CSLB staff has done such a good job both in its sting operations, publicizing their operations and making significant in roads, that the CSLB has been able to partner with many other entities in public protection. 

Both Committees’ have done outstanding jobs in their respective Committees.  David Fogt (Enforcement) and Rick Lopes (Public Affairs) have exceeded expectations.  As you will see from each specific Committee Meeting, there is very little left to be said other than “Great Job!” 

 

I.                   ENFORCEMENT COMMITTEE MEETING 

The following Committee Members were present: 

Chair, Bob Lamb; Louise Kirkbride; Ed Lang; and new Board Member, Bruce Rust.   

Steve Matich was the only Committee Member absent.

1.                  Public Comment Session 

There were no Public comments. 

2.                  Intake and Mediation Centers 

As stated previously, David Fogt, the Chief of Enforcement, has put together a very potent group with respect to consumer protection.  The following are only some highlights. 

During July of 2008, the Intake and Mediation Centers obtained $676,281.24 in restitution for California Consumers.  These results should stand on its own.  However that would be somewhat unfair because others may not understand how much work is being done to achieve these results.   

Some of the highlights of the cases are as follows: 

A Consumer Services Representative convinced a subcontractor to refund all monies paid totaling $10,580.00 and a new complaint was opened against the general contractor and referred to the field for investigation.  The complainant started off dealing with both the subcontractor and general contractor, but specifically dealt with the subcontractor for delivery and installation of tile.  Somehow, the general contractor picked up the tile and had it installed at a different jobsite.   

Another subcontractor had a contract with a general contractor to install flooring in several homes.  The job was completed but the subcontractor was still owed $20,273.46.  A Consumer Services Representative was able to negotiate an agreement for a payment schedule until the amount owed to the subcontractor was paid in full.   

A Consumer Services Representative obtained a full refund for installation of a leaky roof.  The total amount paid to the contractor was $18,476.00.  The CSLB was able to negotiate a complete refund of the monies paid to the homeowner.   

In a very small complaint, a contractor agreed to go back and replace an off-white piece of skirting with a white piece at a $4.00 savings to the public. 

 

3.                  Reduction of Aged Complaints 

In July of 2005, there were 556 complaints pending that were 60 days in age or older.  Through effective supervision, training, mentoring, and monitoring, the intake and mediation center has reduced the number of pending complaints to an all-time low of 28 complaints aged 60 days or older state wide.   

 

The Sacramento Intake and Mediation Center set a new record at zero complaints over 60 days old.   

4.                  Investigative Center 

The Investigative Center provided examples of five criminal convictions.  In the first one, they received a complaint for a project wherein the work was done without a license at a cost of $12,000.00.  The case was referred to the Stanislaus County District Attorneys Office for violation of diversion of construction funds and contracting without a license.  The unlicensed contractor was sentenced to serve 120 days in jail, pay $4,800.00 in restitution, and was placed on five years formal probation.  In addition, he was ordered not to contract without a license and restitution payments will be paid through the Stanislaus County Probation Department to the victims. 

In a second case, a lady who had just moved to Redding from Arizona began convincing customers that she and her husband were about to become pool and landscape contractors.  Two victims were duped into entering into contracts with unlicensed people who had not even applied for a license in California.  One of the victims had paid a total of $28,200.00 on the project, much of it up front.  The workmanship was substandard.   

Another senior complaint was referred to the District Attorney as a result of the estimate given to correct the project, much of it up front.  The alleged contractor plead guilty to one felony count of misuse of construction funds, elder abuse, and a misdemeanor count of contracting without a license.  The unlicensed contractor was also ordered to pay restitution to both victims.   

Yet another contractor made false or fraudulent statements to reduce workers’ compensation insurance premiums.  For several years, he had misreported his company’s payroll in order to secure lower workers’ compensation insurance premiums.  In addition, a lead prosecuting Deputy Attorney General handled a criminal case to determine the viability of a simultaneous administrative action.  The result was that the bad guy was ordered to pay $50,000.00 in restitution and will serve 60 days in jail.  He also agreed to a suspension of his contractor’s license and will be on probation for three years. 

Another unlicensed contractor entered into a contract in June with a consumer to construct retaining walls on a driveway.  He obtained payments totaling $41,500.00 and performed very little work, having diverted most of the money for his personal use.  The consumer filed a complaint with the CSLB.  The unlicensed contractor was formally sentenced to serve 60 days in jail and to pay $37,500.00 in restitution. 

Multiple complaints were received against Jorge Lopez, the sole owner of a contractor’s license.  The contractor performed some work, although done very poorly, for two of his victims and received large down payments without performing any work for two additional victims.  It became clear to one homeowner that some of the money was going to be used for the personal use of the contractor.  He stated that he needed approximately $20,000.00 to pay the IRS.  The San Francisco District Attorney’s Office was also involved in the criminal prosecution, which resulted in the filing of a felony criminal complaint.  Lopez was convicted of theft by diversion of construction funds and was sentenced to probation for three years and was ordered to pay $42,000.00 in restitution with interest at 10% from the date of the crime. 

5.                  High Profile Investigations 

A consumer purchased a log cabin kit home from a reputable manufacturer and was provided with a video.  The consumer could not put the log cabin home together himself.  He entered into a written contract with an unlicensed contractor to assemble the log cabin kit for $30,800 including tools and labor.  The unlicensed contractor was issued a citation for contracting without a license.  However, it appears that there is more to come. 

6.                  Enforcement Priorities 

The CSLB has come up with the following enforcement investigative priorities to try and provide the highest level of consumer protection with their limited resources:

 

1.      Identifying and investigating contractors engaged in criminal activity with intent to cause significant harm to California consumers;

2.      Health and Safety complaints, relating to unsafe construction practices;

3.      Elder Abuse;

4.      Investigating consumer-initiated complaints against unlicensed contractors;

5.      Triaging and mediating licensee complaints to protect the integrity of the construction industry;

6.      Partnering with other state agencies to address workers’ compensation, tax law violations, and employee safety concerns;

7.      Conducting sting operations in response to industry leads for such things as building departments, construction industry associations, district attorneys and licensed contractors;

8.      Responding to leads if certain criteria is provided, such as site location/estimated duration of project, information available on suspect, photos of workers and/or work vehicles, type of violation;

9.      Establishing a presence in the field.

 

7.                  Complaint Handling Statistics 

Complaints have remained manageable and constant throughout the 2008 calendar year.  Enforcement started the year in January with 4,516 complaints and as of July 31, 2008, there are 4,577 complaints.  This work is awesome given the fact that Enforcement had many fewer people doing the work. 

On Aged Cases, the Board continues to exceed their established goal of 100 complaints.  The majority of the aged complaints stem from offices that have suffered supervisor vacancies.  The Enforcement Division anticipates that the Governor’s Executive Order will have a significant impact on cycle times due to enforcement loss of retired annuitants.  However, complaints over 60 days in age in the Intake and Mediation section have decreased to just 27 complaints. 

Production of the Enforcement Representatives continues to be going very well. 

The Attorney General Costs in the 2007/08 fiscal year, were contained at $4,441,864 compared to the budgeted amount of $4,896,370.  CSLB realized a savings of approximately $450,000.

 

8.                  Partnering with Law Enforcement 

The CSLB continues to work closely with law enforcement agencies throughout the state to target illegal activity and discuss enforcement strategies to combat that activity.  The Enforcement Committee recently met with the staff from Butte County District Attorney’s office and the Mariposa County District Attorney’s office to discuss joint enforcement activities to protect homeowners in those areas following the recent wildfires.  The Los Angeles City Attorney’s office continues to refer all matters involving unlicensed contractors to the CSLB. 

SWIFT personnel and investigative supervisors and enforcement representatives met with Deputy District Attorney David McDonald from the Ventura County District Attorney’s office.  Mr. McDonald was recently assigned to reviewing and handling CSLB criminal cases.

 

                                          a.                        Rocky Delgadillo, Los Angeles City Attorney 

Rocky Delgadillo spoke at the Annual Legislative Conference of the Construction Industry Legislative Council.  He was honored for his efforts to combat unlicensed contractors.  Mr. Delgadillo linked the rise in unlicensed contractors to membership in street gangs.  The “new organized crime…coming to a neighborhood near you.” 

As an aside, he interrupted my presentation.   

                                          b.                        Sweeps and Stings 

Following is a list of law enforcement and government agencies that participated in CSLB sweeps and stings conducted in May, June and July, 2008, they include: 

Riverside County District Attorney’s Office, Palm Springs Police Department, Department of Insurance, Monterey County District Attorney’s Office, California Department of Justice, Employment Development Department, Department of Labor Standards Enforcement, Calaveras County District Attorney’s Office, Santa Cruz County District Attorney’s Office, Department of Toxic Substances Control, City of Corona Building Department, Fort Bragg Police Department, Tulare County District Attorney’s Office, Department of Labor. 

                                           c.                        Criminal Investigation Task Force 

As the Criminal Investigation Task Force winds up its investigation of fraudulent service and repair contractors, another group of predatory contractors is appearing on CSLB’s radar:  Telemarketing contractors. 

In August 2005 CSLB revoked the licenses of four contractors who were involved in telemarketing scams that targeted the elderly with considerable equity in their homes.  Among the elderly was an 88 year old woman who was duped into signing a $65,000 loan that was secured against her home. 

Often, projects are performed without permits to avoid inspection. 

After too many complaints are filed against the telemarketing contractor’s license, the fraudulent contractor will abandon the license leaving numerous victims with unfinished, substandard work and major financial injuries.  The predators then move on to “borrow” another license to continue with the scam. 

Enforcement considers these telemarketing contractors to be a serious threat to consumers.  Alerts have been placed in the newsletters that have been mailed to licensees to warn them of the repercussions that they may face if they illegally “rent” out their licenses. 

                                          d.                        Criminal Convictions 

Arthur Hunter/RAN Construction plead “no contest” to felony diversion of construction funds.  He was sentenced to 60 days in county jail, placed on court probation for three years and ordered to pay $110,000 in restitution. 

Mark Steven Stalder plead no contest and was convicted on felony charges of fraudulent use of a contractors’ license and misdemeanor charges of contracting without a license in Stanislaus County.  He was sentenced to five years formal probation, 210 days in jail, and ordered to pay restitution to his victims and submit to searches for forged or fraudulent documents. 

Jonathan Aaron Teague plead guilty and was convicted on charges of felony diversion of funds, felony use of a contractor’s license, and misdemeanor contracting without a license.  He was sentenced to 180 days in Placer County Jail, three years probation, $4,000 in restitution, and $5,000 in fines. 

Timothy Andrew Schaeffer was an unlicensed contractor doing business as Dynamic Design Systems and was arrested on an outstanding warrant stemming from a CSLB investigation.  He faces felony charges of grand theft and diversion of construction funds, as well as misdemeanor charges of contracting without a license.  He took $86,683 from an Army National Guard Master Sergeant and his wife to perform a major home remodel project.  On July 22, 2008, Schaffer pled guilty to grand theft charges and faces three years in prison, restitution to his victims, and a fine of $10,000.   

                                          e.                        Summer Wildfire Response 

The CSLB has responded significantly to the summer wildfire responses as previously pointed out in these Highlights.  Included in their response were various sweeps, stings and site visits.

A presentation was made by Rick Villucci, Senior Investigator, State Wide Investigative Fraud Team that was very informative.  Villucci reported on how SWIFT has partnered with just about every other possible agency in the consumer protection area, including bonding companies to help the many homeowners that were devastated by the wildfires. 

9.                  Partnering With Industry Associations 

The Contractors’ State License Board has started partnering with industry associations.  CSLB Registrar, Steve Sands and CSLB Enforcement Chief, David Fogt, met with industry association representative to discuss partnering to enhance enforcement.  The CSLB has developed a new speaker request card to industry association representatives.  Completed cards are mailed to the enforcement division where staff coordinates speaker scheduling for the associations next meetings. 

The CSLB looks forward to working with construction industry associates to combat illegal construction activity. 

10.              Partnering With State Agencies 

The CSLB is partnering with various law enforcement entities.  They have also entered into Memoranda of Understanding with various other parties such as the Department of Industrial Relations, Division of Occupational Safety and Health, Department of Industrial Relations, Division of Labor Standards Enforcement, Department Industrial Relations, Office of the Director Legal Unit, and the Employment Development Department. 

11.              Review And Development Of Action Plan For 2008-2009 Strategic Plan 

The goal of the Enforcement Action Plan is to reduce, eliminate, or prevent unlicensed activity and unprofessional conduct that pose a threat to public health, safety, and welfare.  The objectives are as follows:   

1.                  To develop criteria for reactive complaint enforcement to maximize effectiveness with current resources;

2.                  Perform an Enforcement and Case Management program analysis;

3.                  Establish a new investigative center in the Santa Clarita Valley;

4.                  Develop a new electronic mechanism for the public to report violators;

5.                  Develop a multi-agency template for complaint reporting and feedback;

6.                  Develop web-based tools for agencies that award contracts and report violators.

 

Each of these objectives includes an action plan to deal with the specific violation.

 

All in all the CSLB has shown its credibility to the various public agencies and it is getting much easier to file cases with various other counties.  Indeed Alameda used to go after violent crimes only.  That is no longer the case.

 

As anyone can see, the Enforcement Committee, under the tutorship of David Fogt, is doing a wonderful job with limited resources. 

 

II.                PUBLIC AFFAIRS COMMITTEE MEETING 

The following Committee Members were present: 

Chair, Bob Brown; Louise Kirkbride; Bob Lamb; Lisa Miller-Strunk; and Joan Hancock – by telephone. 

The were no absent Committee Members.  

1.                  Public Comment Session 

There were no Public comments. 

2.                  General Comment 

Rick Lopes introduced his staff including Maria Kennedy who everyone knows.  She is also a wonderful advocate for consumer protection. 

The Public Affairs Office is very, very busy and productive.  The Public Affairs Office is responsible for public, industry and media relations for the Board.  The Public Affairs Office provides a wide range of services including proactive media and advertising campaigns; responses to media inquirers; community outreach including seminars, special events and speeches to services groups and/or organizations; publications and newsletter development and distribution; and contractor education and outreach.  Rick Lopes of Public Affairs is very busy and good at his job in working for the Board.   

Some of the information in the Public Affairs packet is duplicative to information provided in the Enforcements Committee’s package.  Accordingly, Mr. Lopes did not report on the duplicative items. 

 

EXECUTIVE ORDER S-09-08 

On July 31, 2008, Governor Arnold Schwarzenegger signed Executive Order S-09-08.  This Executive Order led to the termination of an estimated 10,300 temporary workers.  It also suspended all contracts, banned overtime, froze state hiring and reduced pay for about 200,000 state workers to the federal minimum wage of $6.55 per hour to preserve cash in the midst of a prolonged budget impasse. 

The order is having a significant impact on Public Affairs Office (PAO) operations.  First, PAO was forced to lay off two people, one Retired Annuitant and one Student Assistant.  In addition, the contract for advertising/public relations services with Astone/Crocker/Flanagan has been suspended.  Below is a closer look at the program impact and effects on PAO’s Strategic Plan:

 

PROGRAM IMPACT 

1.      Suspension of Consumer Media Awareness Campaign

2.      Suspension of Consumer & Licensee Research Program

3.      Suspension of Disaster Victim Interactive Video Production

4.      Suspension of Partnership Program

5.      Suspension of Special Events Program targeting low-income & multicultural audiences

6.      Elimination of Employee Wellness Program

 

EFFECT ON STRATEGIC PLAN 

1.          Inability to complete item #2 (from Program Impact section above) 

Conduct statewide consumer and contractor research 

2.          Limited ability to complete item #3 (from Program Impact section above) 

Identify new goals for Web site 

3.          Inability to complete item #4 (from Program Impact section above) 

Develop partnerships to expand educational outreach. 

4.          Inability to complete item #6 (from Program Impact section above) 

Implement an expanded public information campaign focused on the risks of hiring unlicensed operators. 

In addition, until a new state budget is passed, spending authorization and travel reimbursements are halted.  Therefore, PAO, is only conducting Senior Scam Stopper events within a short driving distance to Sacramento and utilizing various CSLB staff for outreach appearances in other parts of the state.

 

MEDIA OUTREACH AND PUBLIC AWARENESS CAMPAIGN SUMMARY 

The PAO continues its policy of aggressively distributing press releases to the media, especially to publicize enforcement actions and undercover sting operations.   

PRESS RELEASES 

The CSLB issued six media releases dealing with stings, wildfires, and other charges.  They also conducted  press events of sting operations along with four media outlets.  

MEDIA RELATIONS 

Between June 1, 2008 and August 15, 2008 PAO staff responded to more than 65 separate media inquirers and provided interviews to a variety of newspaper, radio and television outlets.  They conducted, along with enforcement, undercover sting operations.  They continue its program of alerting industry members to news of importance and interest by distributing industry bulletins.  They continue to distribute monthly “Ask The Board” articles in both English and Spanish to newspapers in and around California. 

CSLB PUBLICATIONS 

Despite the state budget impasse, the Public Affairs Office is continuing its goal of providing educational materials to consumers through a concerted internal campaign to update all CSLB publications. 

Currently in various stages of approval, production or printing are: 

What Seniors Should Know Before Hiring a Contractor – brochure – Spanish

What You Should Know Before Hiring a Contractor – brochure – Spanish

Preventing Mechanic’s Liens – brochure – Spanish

Tips For Hiring a Roofing Contractor – brochure – Spanish

Tips For Hiring a Roofing Contractor – brochure – English

10 Tips For Making Sure Your Contractor Measurers Up – Card – English/Spanish

A Consumer Guide to Filing Consumer Complaints – brochure – English

After a Disaster Don’t Get Scammed – brochure-English

Before You Dive Into Swimming Pool Construction – brochure – English

Blueprint for Becoming a Licensed Contractor – booklet – English/Spanish

Building Officials Information Guide – booklet – English

Know Your Responsibilities as an Owner Builder – brochure – English 

The PAO continues to list seminars. 

The CSLB has an action plan for communication and education.  The Public Affairs meets this goal by : 

Informing the public about the role and function of CSLB;

Educating the public about their rights and responsibilities in the contracting process;

Educating contractors about building codes, construction methods, and business practices; and

Ensuring that contractors understand their professional obligations and responsibilities.

 

OBJECTIVES	TARGET DATE
Update and implement Public Affairs plan through 2009, based on the Board-approved priorities, input from advertising contractor, and available resources.	January 2009
Conduct statewide consumer and contractor research	January 2009
Identify new goals for Web site	January 2009
Develop partnerships to expand educational outreach	January 2009
Create a business practice kit for licensees to help educate consumers	June 2009
Implement an expanded public information campaign focused on the risks of hiring unlicensed operators	July 2009