Jan 26, 2010 6:48 pm US/Pacific
On The Money: Public Agency Duped
No One Verified Documents
SACRAMENTO (CBS13) ―
Another public agency is on the hot seat tonight, for failing the check the credentials of a contractor, now missing in action, after receiving thousands of dollars in public money.
This time it's the Sacramento Housing and Redevelopment Agency that shelled out $72,000 to a contractor who used phony paperwork to get the job. But no one took the time to make a simply phone call to verify the documents – and now Advantage Demolition and Engineering – and contractor Peter Michael Scott are gone.
The $99,824 contract with Advantage Demolition and Engineering.
Read document.
called for Scott's crew to knock down a former building used by the Sacramento Police Department, located at 625 H Street. But Sacramento Housing and Redevelopment shut down the wrecking job on January 22nd (after 90% completion), "for failure to perform since no work has been done at this site for the past two weeks and the owner has not responded to our attempts to reach him," said SHRA Executive Director La Shelle Dozier in a statement to CBS13.
SHRA now admits it hired a contractor who used fraudulent bonds to get the job. Merchants Bonding Company of Iowa has confirmed the bonding documents were not valid.
"I was working for three weeks straight and I never got paid," said Manuel Chavez, a laborer on the job. "Not one dime," he added.
His father Tim Chavez was the dump truck driver on the demolition job. He showed CBS 13 his paycheck. "You're looking at the $5000 bounced check that was returned to my bank from Advantage Demolition," Chavez told CBS13.
The construction workers are looking for Peter Michael Scott, the 46 year old sole owner of Advantage Demolition and Engineering, according to records from the Contractors State License Board. Scott has been missing for two weeks and the office he subleased in El Dorado Hills has been abandoned. Public records show Peter Michael Scott owes more than $46,000 in tax liens to the Franchise Tax Board.
Read documents.
The tax liens were overlooked by Sacramento Housing and Redevelopment – the same agency that failed to verify Peter Scott's paperwork. Bricks, rubble and rebar are all that's left of the trail that Peter Scott left behind – a trail that includes broken promises and tens of thousands of dollars in missing money.
As CBS13 first reported last Friday, Peter Michael Scott also used bogus bond information to secure multi-million dollar contracts with the City of Sacramento to install water meters. Scott completed only 20% of the project, then abandoned it, but not before collecting $65,000 in federal stimulus funds. City officials never verified his performance bond.
Read documents.
The bond includes a signature from someone named Jeremy Phillips, but the State Bar has no record of any California lawyer under that name.
We took our findings to California's Inspector General, Laura Chick. It's her job to find fraud in the distribution of federal stimulus funding.
"First of all this is going on my Web site," Chick told CBS13 in an exclusive interview. "Secondly, I'm already reaching out to the District Attorney's Office, the U.S. Attorney and the FBI," she added.
Laura Chick says she's sending out a warning to local governments across California.
"In this case a simple phone call would have exposed the problem," Chick stated.
But no one made a phone call in this case until it was too late. And now California's Inspector General is putting agencies on notice they must do a much better job of protecting public dollars. SHRA has "tightened its verification procedures to include contacting the bond and insurance companies directly to verify their documents," said La Shelle Dozier, the agency's executive director. Sacramento city officials told CBS13 they too are re-examining their contract verification process after this incident.
And while there are plenty of people looking for Peter Scott, no one – not even his family members, seem to know where he is.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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