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From Scam to Shining Scam

Contractors on the east and west coast are charged with scamming customers and committing insurance fraud

20 October, 2021

Paint scams in America

Spray Paint Fraud in Pennsylvania

A Pennsylvania painting contractor was arrested on charges of scamming many of his customers in a Delaware County neighborhood, and largely taking advantage of older residents. His partner, according to news sources, is still at large.

A woman in Brookhaven, Pennsylvania reported to police that a contractor came to her home and gave her an aggressive pitch to repaint her driveway for $2,400 cash. She agreed, reluctantly, to give them the work for half price, but when they were finished, they approached her demanding $1,400 more in cash.

She called the police, who upon arrival noticed that the job had been done improperly; the painters had used spray paint instead of sealant. Turns out they had done this same thing to another neighbor, who in fact turned down the job. In that case, however, the painters returned, saying they had purchased supplies and were going to do the work anyway. They demanded payment and then proceeded, just like in the other instance, to spray paint the driveway. In both cases, no receipt or signed contract was created to acknowledge the payment.

The painters face charges of theft and violating Pennsylvania’s Home Improvement Consumer Protection Act. This act was written to protect homeowners from unfair trade practices and fraudulent activities by home improvement contractors. The police believe that more than just these two homeowners were victimized and have asked other area residents to come forward.

The painter in custody is an Irish citizen in America on an expired visa, and his bail was set at $100,000 cash. In similar cases, elderly homeowners stated they paid these contractors out of their retirement money on the assumption they were getting quality work, only to find that it wouldn’t even last a year — or even through one rain storm.

The police warned area residents that there had been a rash of “contractors” from Ireland and England who had specifically come to the United States in order to bilk customers out of money, and further cautioned the residents to do more investigation into who they hire, even to contact the attorney general’s office if they have questions.


Paint Scams


Bay Area Insurance Fraud

In another case on the west coast, the former owners of two Bay Area painting companies were arraigned in an Oakland court on fraud charges filed by the Alameda County District Attorney’s Office and the California Department of Insurance. Rather than preying on homeowners, these contractors targeted insurance companies to the tune of approximately five million dollars and were charged with multiple counts of felony insurance fraud and of workers’ compensation fraud.

The contractors also had a consulting firm, which served as a shell company to pay painting company employees, illegally reducing the workers compensation premium. As a less “risky” job, the premiums could be significantly lower than if they were classified as painters. This caused one insurance company to suffer a loss of $1.9 million, while another reported a loss of $3.1 million. Also, by paying lower premiums than are required, it gave these painting companies an opportunity to charge a lower price.

“If a business creates an environment where they falsely pay a lower insurance premium, that company has an unfair competitive advantage over one that is law-abiding,” said District Attorney Nancy E. O’Malley.

“Fraud hurts consumers and businesses. It puts a strain on our economy as legitimate businesses are forced to pay for the cost of fraud through higher insurance premiums,” added Insurance Commissioner Ricardo Lara.

The business owners used several methods to save in their insurance requirements. They are accused of underreporting payroll in order to pay less premiums. The contractors also entered into agreements to move employees from one company to another as well as pay them under the table. The investigation into the defendants began in 2019 after the State Compensation Insurance Fund submitted a fraud referral to the California Department of Insurance. The fraud began in 2015. The next court date for these business owners is scheduled for mid November.




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