FOX 8 DEFENDERS: New law cracks down on contractor fraud

In the nine years since Hurricane Katrina, Southeast Louisiana has seen its share of rebuilding, some families from the ground up and others whose homes were gutted and rebuilt.

Some contractors tell FOX 8, when floodwaters receded, the area got hit with another wave of problems that hasn't gone away.

"We've seen a house that dropped.  It broke in half!  The contractor didn't have insurance.. the people lost their house!" said Billy Ward with the LA State Licensing Board for Contractors.  Ward explained this is not a unique example.  He said, "every month we see people that have lost either not their complete homes, but also a tremendous amount of money."

"I would say easily more than half of the houses repaired post Katrina were done by unlicensed people," said Floyd Simeon.  He knows that all too well.

"The guy was actually using our company name," said Simeon.  A licensed contractor, he and his company, Crescent City Builders, LLC were the victims of contractor fraud.  In 2011, Michael Hutton applied for a permit in New Orleans to renovate two homes.  Under "contractor name," he listed Simeon's company, Crescent City Builders, LLC.

On the Louisiana Secretary of State's web site, Hutton is registered under Crescent City Builders Construction, LLC.  The one difference is the word "construction" in the company name.

Hutton not only used another company's name on the application, but he also used a completely different company's contracting license number.

A spokesperson for the Louisiana State Licensing Board for Contractors tells FOX 8, "Michael J. Hutton does not have a license nor has he ever held a license with us."

"He was out there doing jobs like that and at least getting checks, payments from clients, potential clients, and I don't know.. sometimes maybe he was doing the work, sometimes he wasn't," explained Simeon.  He says he didn't find out about the fraud till he got a disturbing phone call from a homeowner who entered into a contract with Hutton.  "She was very upset, and she was crying, and she said, you took all this money from me.. you took a check for $35,000 or something in that neighborhood and you've never done the work," said Simeon.

Hutton misrepresented himself, using other contractors' names and license numbers, which are public records online and cashed checks in those names for thousands of dollars and didn't finish the job.  The state licensing board found him guilty for not having the proper license, fined him and issued a cease and desist.

According to the online Orleans Criminal Court docket, Hutton pled guilty this year to 'theft of the aged and disabled contracting without a license and distributing fraud documents.'

Residential contractors, to be legal in Louisiana, must show proof of workers' compensation and general liability insurance.  Same goes for home improvement contractors who have jobs that add up to more than $7,500.

"The state licensing board for contractors requires me to have that, and almost all of that is not for my protection, it's for the protection of the homeowner or the entity who owns the property that I'm working on," explained licensed contractor Rolf Parelius.

Contractors we spoke with said licensed residential contractor costs can be expensive, and that's why they say there's been a lot of unlicensed work.  Now, a brand-new Louisiana law aims to crack down on those people and other examples of contractor fraud.

"We've got teeth in this law that the DA can actually go prosecute them and put them in jail," said Peter Young with the Louisiana Home Builders Association.  The new law also targets anyone who misrepresents themselves as a licensed contractor.  Simeon worries, even with more awareness, what happened to him in New Orleans, could easily happen again.

"When I'm going through the permit process I always ask, well, how do you know I'm the person who's okay to pull a permit for Crescent City Builders?  Often, you'll get a smart answer, 'do you want this permit or not?'" explained Simeon.  Several other contractors confirm checking identification is not common practice.  We've reached out to the City of New Orleans for comment, and at this point, we haven't heard back.

In the future, we could see technology that would be able to check id's in municipalities across the state.  Those possible changes along with educating homeowners are the focus of a new contractor fraud prevention alliance in Louisiana.

Make sure your contractor is who he or she says they are, and cross reference their information with licensed contractor information online with the State Licensing Board for Contractors.

Ask for references.

Ask to see their insurance and verify that information with the insurance company.

If you have a consumer complaint, call the FOX 8 Defenders staffed with volunteers from the National Council of Jewish Women or fill out our online complaint form.

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