It’s Not A Civil Case When Contractors Keep Taking Money And Walking Away

It happens too often in Washington. To law enforcement, from local police to the state Attorney General’s office, repeated contractor fraud is treated as a bunch of private contract disputes rather than a pattern of criminal conduct.

Sure, a single instance of a contractor getting over his skis and going out of business, leaving a project unfinished, bills unpaid, could be civil. It’s one bad job.

But when a contractor repeats the same behavior across victim after victim, takes large upfront payments, does little, uses the money for himself, then moves on, that’s not a possible crime? He’s Charles Ponzi with a nail gun, driving a Ford F150 from victim to victim.

More than 100 people — homeowners and subcontractors — report falling victim to just two crooked contractors in only the past few months, with their combined losses amounting to about $3.7 million. These victims, from a dozen cities and five counties in Western Washington, report hearing the same rote response when they’ve contacted law enforcement: It’s not criminal.

There was a contract. You can file a lawsuit.

This is as wrong as it is frustrating. Law enforcement should stop hiding behind the existence of a contract and start looking at fraud or theft when multiple victims point to a pattern and practice.

“Sometimes I think it’s too easy just to say, ‘That’s civil,’” explains Terry Gallagher, the retired chief of the Port Angeles Police Department. “If you rent a car and just drive away in it and never bring it back, there’s a contract. We don’t call that civil. We call that a car theft.”

Gallagher’s long career with P.A.P.D. started when he joined the force as a patrol officer and was promoted through the ranks to lead the department. As detective sergeant in the 1990s, Gallagher built two criminal cases against contractors who were ripping off multiple homeowners. Both investigations led to criminal charges and convictions against the men responsible.

So what made the difference in those cases?

In the first case, several victims together “came to the police department because they had gone to other agencies and been told their issue was civil,” Gallagher said. “I agreed to sit down and listen to their story. When you take the time to listen, you find out that the guy’s behavior established a pattern common to all the victims.”

Altogether, about 20 victims, whose losses amounted to about $800,000, told Gallagher a similar story:

“What he would do—and I think this is very common—is agree to build you a house. Initially he started as a contractor, and then he began advertising that he would build steel-frame houses. It was something he had no experience doing. He had never done that before, and he never really did it during his time here.

“What he would do is say, “Okay, I’m going to build you a house. Give me $50,000 and I’ll get started.” Then he would do a little bit of work—maybe excavate for a foundation, for example—but then you would never see him again. He would take your $50,000 and use that money to live on. He used it to open an office and to finance his lifestyle, but certainly not to build a house.

“Then he would go to the next victim and do the same damn thing. Once a police officer, sheriff’s deputy, or prosecutor heard that he had taken any sort of step in fulfillment of the contract, they would say, “Well, that’s civil.” I don’t agree with that.

“It might be civil if it were a one-time occurrence and the guy had some legitimate excuse for failing to live up to what he promised. But in this case, he moved from victim to victim, doing the exact same thing and, in my opinion, never intending to fulfill the contracts. That’s fraud. It’s simple, as far as I’m concerned.”

Next, Gallagher gathered records from victims that documented their business relationship with the contractor, and then he started verifying some of the things they had told him. When that was done, he called the contractor and asked him to come in for an interview.

“I told him I had a complaint and needed to follow up on it, that I understood he was a legitimate contractor, but that I needed to get to the bottom of what these people had alleged.

“I asked him to bring any records he had documenting his activities with the different victims. He agreed. He was very cooperative. He showed up with a big box full of records.

“We sat down and I interviewed him just like I would any other suspect. He told me what happened. We went through the whole nine yards. Then I thanked him, and as he got up to leave, he started to take his records. I said, ‘No, I want to go through them, and you’ll get them back sooner or later,’ because in my view they were evidence of a crime.

“So I had their records, I had his records. And I had a prosecutor who, once he listened to the story and had a chance to talk to the different victims, agreed to file charges. We convicted the contractor at trial.”

The contractor got four years and actually paid restitution.

Understand that you can’t force a criminal case, Gallagher said.But you can make it much harder to ignore by showing up together, well-prepared, with a clear pattern and solid records. Stay organized, persistent and tenacious – don’t take no for an answer.

“I know law enforcement is full of good, hard-working people who, on a day-to-day basis, already have more than enough to do,” he said. But victims deserve to be listened to. “They’re talking to public servants who get paid to do this kind of stuff, and I think you need to hold their feet to the fire and make them help you.”

So what should homeowners and subcontractors who believe they were victims of contractor fraud do to get law enforcement out of the reflexive “civil case” mindset?

·Move as a group, not one by one. It’s harder to dismiss a group of people who experienced the same thing.

·Use your records to show a pattern of conduct pointing to fraud or theft across multiple victims.

·Get your individual facts organized into a clear timeline: pin down dates, times, and who said what, connected to contracts, payments, emails, texts, voicemails, etc.

·If you get shot down, keep hunting for an investigator who will actually listen.You need a cop or prosecutor who is willing to look past the automatic “that’s civil” response and treat the conduct seriously.

A shovel in the dirt at the start of a contract should not be an automatic get-out-of-jail free card. A little demolition in a bathroom is not the same thing as good-faith performance. A pattern of behavior can demonstrate intent.

I’ve explained previously how the state’s lack of consumer protections allows and even encourages intentional bad actors – or just incompetents – to register as general contractors by just completing some paperwork and a shelling out a couple thousand bucks.

What I’m at a loss of being able to explain is why state regulators, our legislators, and law enforcement continue to actively ignore this problem and by default, and some laws, shield thieves who are allowed to call themselves registered contractors, with the blessing of the state.

Let’s fix this.