Wednesday, October 2, 2013

How crooked contractors skirt state law

Posted: Monday, September 9, 2013

A state law designed to protect against home improvement fraud contains loopholes that allow contractors convicted of fraud to continue working, even possibly appear on the state-required registry, according to Bucks County's head of consumer protection office.

Director Michael Bannon also questioned how closely the Pennsylvania Attorney General’s office is vetting and monitoring registered contractors under the state’s four-year-old Home Improvement Consumer Protection Act.

He cited two recent home improvement fraud cases where the contractors with prior histories of civil complaints and criminal convictions continued working in home repairs and construction. Bannon said he’s also found other contractors with customer complaints filed against them on the registry.

“In many cases there are situations where someone owns the business and runs the business, but doesn’t do contracting work. I understand why it’s that way, but what happens is homework not being done on some contractors,” Bannon said.
John Salvatico

Since 2009, contractors in the state who perform at least $5,000 worth of home improvement work have been required to register with the Attorney General's Office every two years. 

The law also requires contractors to provide the state detailed background information including criminal complaints, civil judgments and bankruptcy filings, imposes new, harsher penalties for offenders and lets homeowner easily verify that a potential contractor is state registered.

Melissa Etshied, a spokeswoman for the Pennsylvania Builders Association, which helped write the law, pointed out the registration should not be interpreted as a state endorsement of a contractor.

“We are not aware of loopholes in the Act that would allow convicted or accused contractors to remain on the list,” Etshied added.

Not so, according to Bannon. Among the biggest holes, he says, is the law doesn’t automatically bar a contractor with criminal convictions for fraud or theft from obtaining a state registration.

The Pennsylvania Attorney General’s office confirmed that it has no power to “deny” a registration because of previous crimes, civil judgments or bankruptcies without a court order.

Rather, the law “expressly directs” the office to issue a registration certification after an application is completed and the fee paid.

While the state can “deactivate” a registration if a contractor provides false information on an application or fails to pay the $50 application fee, the contractor can reapply to be listed, again, unless there is a court order that prevents it, according to the Attorney General’s Office. As of last December, 2,768 contractor registrations in the state had been deactivated since 2009, according to the AG’s office.

There also is the lack of any provision in the law that requires registered contractors accused or convicted of home improvement crimes to immediately cease operations without a court order.

Bannon learned about that glitch after the owner of Doylestown Roofing & Siding, an unregistered home improvement company, was convicted a second time of bilking a homeowner.
Steve Dunner

Steven Dunner, 34, was on probation for a prior contractor-related fraud conviction in 2011 when he took $28,000 in deposits from three Bucks County homeowners but never performed the work he was paid for. Dunner was sentenced to two to 10 years in state prison last year.

Dunner, who has other theft-related convictions, also managed to obtain state registration after his 2011 conviction, Bannon said. At his sentencing last year it was revealed that he lied about the past convictions on his registration application.

Bannon said he was shocked to learn after the second fraud conviction that Dunner could apply to be a registered contractor. His office requested and received a court order from a Bucks County judge to get, and keep, Dunner off the registry.

Another way that contractors can skirt the law is getting a third party, like a friend or relative, to register as a contractor and then hire the questionable contractor as an employee.

That appears to be how Doylestown contractor John Salvatico allegedly continued working in home improvement after his most recent conviction in 2008 for deceptive business practices related to a family contracting business. 

Salvatico and his brother Joseph pleaded guilty in Bucks County Court to bilking six homeowners and were each sentenced to 11½ to 23 months of jail time and 10 years of probation.

Recently, Salvatico was accused again of fraud, theft, deceitful business practices, forgery and related offenses in at least four towns in Bucks and Montgomery counties involving his failure to complete work he was paid for. In at least one of the cases, officials said, Salvatico told the homeowner and township that his name was John Farabella.

Salvatico allegedly was working as an employee of Eastern Construction & Roofing LLC in Doylestown, which has been registered as a state contractor since May. The state lists Eastern Construction’s owner as Virginia Schaffer, who authorities say is Salvatico’s wife.

The Pennsylvania Attorney General’s office says it monitors the activities of its registered contractors primarily using information provided by the public, including local police and district attorney offices. Contractors are also required to report to the state any disciplinary action taken against them and a state website includes those details.

As of Friday, though, Eastern Construction & Roofing LLC in Doylestown is still listed on the state registry; it also lists the company’s “associated individuals” including managers, as not involved in any home improvement related crimes or recent civil judgments.

Bannon, who also helped draft the contractor law, believes it’s a great tool for identifying contractors when complaints or concerns are filed with his office. It has made tracking down crooked contractors far easier, he said.

“But it hasn’t been able to stop them,” Bannon added. “I would think if you have a conviction of home improvement fraud, that would prevent you from getting a registration number."

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