News

Palo Alto contractor pleads no contest to theft, sentenced to jail

Alleged fraud was originally estimated at $400,000, police said

A Palo Alto contractor who had been accused of defrauding an Atherton homeowner pleaded no contest to one misdemeanor charge of grand theft and was sentenced to 60 days in county jail under a plea agreement accepted by San Mateo County Superior Court Judge Mark Forcum on Friday, Aug. 15.

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Comments

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Posted by Kenneth R.
a resident of Charleston Gardens
on Aug 25, 2015 at 10:49 pm

One of the biggest discrepancies in bids usually occurs because of building materials. Unless you intend to purchase them yourself, its best to rely on your contractor’s expertise in this regard. You can do some research on the kinds of materials you want to use.


3 people like this
Posted by eagle
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 11:41 pm

Overcharging, even egregious overcharging, is rampant in construction, it's really rare for anyone to be charged with a crime. There are a few reasons for this. For one, fraud is very difficult to prove. Secondly, most lawyers don't even want to prove fraud because usually that means the insurance company for the contractor (errors and omissions/construction defects) won't pay a settlement if there is fraud. Thirdly, construction lawyers are extremely expensive and in California, unless the contract explicitly gives winner of litigation legal fees, the default is for each party to pay their own fees. The contractor's fees will get picked up by his/her insurer, but the homeowner has to wage any kind of case to recover any funds alone, so the homeowner's legal fees will almost certainly come from the settlement. i.e., if the contractor has committed fraud and the insurer won't pay, then the plaintiff's legal fees might not get paid. Lawyers don't do things that way.

The plaintiff must have been really pissed off and rich enough to do this. Usually, the contractor is off doing the same thing to the next person without consequence. People rarely even complain.


Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Aug 26, 2015 at 10:54 am

It is no secret that most GC's operate hand to mouth...and they're typically using your payments to payoff subs or suppliers from the previous job!

One way to solve this problem is to have your GC submit the sub or supplier bills (for your job) to you for payment - you must be willing to accept that the GC charges a mark up on these bills (for their time and effort in managing the subs and/or placing/tracking materials orders). But the mark up would be on the GC's bi-weekly bill, not on the subs or materials invoices.

Many GCs won't go for this --- as they are doing the "new job pays for the old job" cash flow dance. But if you make it a criteria when receiving bids from GCs, you'll at least set expectations from the start.


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