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Contractor Fraud—What Do I Do Now?

Filed under: Fraud,White Collar Crimes — Tags: , , — Joseph Scott @ 9:15 am April 14, 2017

The August 2016 flooding in Louisiana left record-breaking destruction in its wake. As we’ve seen, these disaster situations bring out the best in people (think the Cajun Navy), and also, unfortunately, the worst.

If you or a family member has been left with an unfinished home, workplace, or other structure, you’re only too aware of the situation. Out-of-state contractors, unlicensed contractors, and even local contractors who have overcommitted have left many home and business owners high and dry when it comes to completing a project.

contractor fraud

Instances of Fraud Cases

Local law enforcement agencies have arrested several contractors recently for fraud after a slew of consumer complaints. Many of them face multiple charges, including residential contractor fraud, engaging in the business of contracting without authority, misapplication of payments, theft of assets of aged persons, and filing or maintaining false public records.

Typically, the contractors involved in this type of fraud use their contract with the homeowners to receive residents’ insurance payments directly and then soak up the funds meant for repairs with inflated or fraudulent bills. They also practice over-billing for work not performed and then systematically acquire thousands of dollars in claims assistance fees. One contractor had a termination clause in his contract that allowed him to collect 50 percent of the overall cost of the job for cancellation. In addition to the fraud, these contractors often placed liens on the property that prevented the owner from receiving any additional insurance payments.

What Actions Can Victims of Contractor Fraud Take?

Naturally, a consumer’s first thought is, “what now?” This person has taken your money and insurance reimbursement, and you’re still left without a completed home or business. I recently had a homeowner contact me regarding one of the contractors who was arrested. I reviewed the construction contract, which clearly included a 50 percent cancellation fee. I advised the client that a civil suit would be a last resort because this contractor clearly had an unfair but legal contract.

As a fraud defense attorney, my recommendations to him are what I would recommend to anyone in the same situation. Report this contractor and his company to everyone. This includes the following:

1) Local law enforcement – file a criminal complaint with your city police or local parish sheriff’s department by reporting the fraud.

2) Louisiana Board of Contractors – this is the state licensing board for contractors; they take consumer complaints seriously.

3) Louisiana Attorney General’s Office – The State Attorney General’s office has a consumer protection division.

4) National Center for Disaster Fraud – This is a federal task force within the Department of Justice that was set up after Hurricane Katrina to deal with disaster-related fraud. They can be reached at 866-820-5271.

If your contractor has already been arrested for fraud, I recommend you contact local police and the district attorney and inform them of your losses. By reporting your claim, you increase the number of charges against that contractor and stand a better chance of recovery through the District Attorney’s victim support programs. If you are among the victims who secure a judgment against the contractor, you’ll probably want to hire a fraud defense attorney to collect on that judgment.

Steps to Take to Avoid Future Cases of Fraud

As with any business dealings, some upfront legwork can save the head and heartache. While this is often difficult in disaster situations, the old saying, “act in haste, regret at leisure” certainly applies. To avoid becoming a victim twice, do the following:

1) Review contracts carefully (or have a fraud defense attorney do so).

2) Check the LA Board of Contractors website for valid licensing information and review complaints against the contractor and how they were resolved.

3) Maintain a paper trail and keep good records. This includes notes, photos, texts, invoices, etc.

4) If you hire a new contractor after a fraud situation, you’ll need to be brutally honest. You need to inform him about your finances as well as the timing and your expectations of the project. Don’t hold the new contractor responsible for the previous one’s mistakes.

While it may feel as though you’re left without options, this isn’t necessarily true. An experienced fraud defense attorney can often help. Contact me today for assistance through this troubling legal matter.

Special thanks to U.S. Geological Survey for the image.


This blog is for informational purposes and is not to be construed as legal advice.

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