WestCon Tribune

June Review

Contractors State License Board

Construction Fraud - Horror Stories

Presented by Karen Nicely, Senior Investigator, Contractors State License Board

The Contractors State License Board (CLSB) was established in 1929 as the Contractors License Bureau under the Department of Professional and Vocational Standards. Today it is part of the Department of Consumer Affairs.

A fifteen member board appoints the CSLB’s executive officer, or Registrar of Contractors, and directs administrative policy for the agency’s operations. This board includes nine public members (eight non contractors and one local building official), five contractors and one labor representative. Appointments are made by the Governor and the Legislature.

The CSLB licenses and regulates contractors in forty-two classifications that constitute the construction industry. Currently there are approximately 278,000 licensed contractors in the state. The CSLB also registers home improvement salespersons.

When fraud occurs in construction, it does damage to the industry at large and aids in the deterioration of the trust and knowledge of current and potential clients.  Our speaker for June, a Senior Investigator with the Fraud Unit Division of the California Contractors State License board, Karen Nicely deals with calls from the consumer and construction professionals who have complaints with both licensed and unlicensed construction workers. Most of her current cases are fraud on a criminal level.

One problem of late has been what Ms. Nicely referred to as “travelers”. This is a person or a group of people who may live in another state such as Arizona but have a contractor’s license in California. Since the building season is different in the two states, the person may come to the Bay Area and drive through a particular neighborhood, usually an older community and go door to door trying to convince people that they have a roof or foundation problem needing to be fixed. They offer to “fix” the problem and proceed to do little or nothing of value such as spraying a roof or banging pipes in the crawl space. These types of scams cost the victim an average of $400 to $4000 dollars each. On an average, Ms. Nicely, who is the Northern California Investigator has an average open case load between 40 to 60 a month. District officers have an average of 90 to 120 cases and the department on a whole has experienced budget cutbacks, has a hiring freeze and is understaffed.

Ms. Nicely explained some of the techniques used by the CSLB to determine fraudulent cases, track and locate offenders and what legal steps are taken against these people. All cases filed with the CSLB office need to be supported with documentation and evidence of fraud, abandonment or poor workmanship. One difficulty in convicting construction fraud cases is the fact that jails are already full and the court system is backed up on agendas and appeals.

The CSLB started an Industry Expert Program around 1985 to help determine the issues and standards involved in cases. The expert goes to the job site with the case worker and is given a list of things to look at and submits a written report used by the case worker for negotiation in an arbitration case.

Ms. Nicely handled a barrage of questions and brought numerous handouts for the group including the New Notice and Disclosure Provisions which went into effect this past February.