Home construction turning into a money pit?

Victoria Corderi Correspondent • Profile

SAN FRANCISCO, CALIF. - Last fall, a San Francisco single mother hired a contractor to do work on her home.  But instead of a finished basement, she says she was left with a rotting frame and plenty of rage.

After spending more than $100,000 dollars, she's broke and facing foreclosure.

Another man says the same contractor walked off with $89,000 and left his house a disaster.

Paul Flores, homeowner:  It’s a nightmare.  It’s the worst nightmare that any homeowner can go through.

The contractor had no license, but he did have a record for grand theft and 57 complaints on file with the state’s licensing board— something his client didn’t know.

The home contracting industry nationally does $200 billion in business each year. There certainly are many honest contractors.  But authorities estimate that millions of dollars are lost to unscrupulous ones. 

Investigator Rick Valluci says that in California, a big problem is contractors who operate without licenses.

Victoria Corderi, Dateline correspondent: They’re ripping people off?

Rick Valluci, investigator:  I would say the good majority of them know that they’re ripping people off. If they finish the job, they finish, if they don’t they don’t.  They get all the money they can and take off.

Undercover operation
That’s why investigators for the licensing board are going undercover, posing as homeowners in a sting operation luring unlicensed contractors before they have a chance to lure consumers. They target the worst offenders.

Karl Vega, California state officer for licensing board:  We’re not waiting for the complaints to come in anymore.  We go out and do stings like this and try to catch the unscrupulous illegal operators.

The operation begins with calls to contractors who use phony license numbers in their ads in the yellow pages and on their trucks. Then they set up shop in a house  and wait to see who shows up.

They’ve called Thomas Pickering of Sacramento— a contractor who installed a faulty heating system for one retiree. Despite having 32 other official complaints and a revoked license, Pickering just keeps on working.

And he’s among the first to show up at the sting house.  He gives undercover investigator his bid. Meanwhile, police are waiting in a backroom listening. They hear the undercover investigator ask about Pickering’s license. Then they move in with the licensing board’s cameras rolling.

The license number Pickering gave them, it turns out, was not his. So he was arrested.  And yet, he didn't seem all that upset.

Thomas Pickering (on camera):  Ahhh And I was being nice and everything.  What do you want to see tears on the camera?

Two men who show up at the sting house work for a tree removal business. Neither one has a license.  Like eight others that day, they walk straight into the arms of the law.

They even caught a pot-smoking contractor. Investigators say, in a worst case scenario, if the unlicensed contractor doesn’t have insurance, the homeowner is taking a huge risk.

Jeff, California officer:  So there's no worker’s comp on the guy that’s going to be climbing your tree who’s high on pot.

Corderi: So they can sue you if the guy who’s high falls out of tree?

Jeff: If he falls out of the tree and lives, and knows anything about worker’s comp laws, he knows he can hire an attorney and sue the property owner for everything he has.

Catching workers with drugs is not unusual.  They say they’ve seen plenty over the years: marijuana, cocaine, Valium.

Valluci:   A lot of these unlicensed people are drug users, repeat offenders and have warrants for their arrests.  Some of them have a history of child molestation.

That’s why they want contractors to have a license—which in California means they have to pass a competency test and be subjected to a criminal background check.

Last year investigators arrested 19,000 unlicensed contractors in California. That's just a fraction, they say, of those who are out preying on homeowners.

But there’s a whole category of contractors that police may not be able to touch.  Because it turns out that even if your contractor does have a license, it may still not protect you from being ripped off.

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