Sat08022014

News

Remodeling fraud sends contractor to prison

Five years ago, a Los Altos woman paid a contractor nearly $400,000 for a major home remodeling project, which included a new roof and revamped kitchen and bedrooms.

Two years later, the roof still leaked, the lights and windows failed and one of the bedrooms remained unfinished. And the contractor abandoned the job.

Now the poor craftsmanship – and embezzlement – has landed him in jail.

Santa Clara County prosecutors reported last week that Michael George Schaeffer, a Redwood City builder using an illegal license, was sentenced Aug. 26 to two years in prison after he applied the $395,524.50 meant for the unrealized project to a failed startup.

Shaeffer, 52, took the woman’s money, which a district attorney said she inherited from her father, to fund the Green Building Exchange in Redwood City, a clearinghouse for environmentally progressive building products. He convinced the victim that the venture would generate enough profit to allow him to finish her renovation project, according to Paul Colin, Santa Clara County deputy district attorney.

But he never moved the startup past the initial marketing phase.

“He was robbing Peter to pay Paul,” Colin said. “The crime is when you use Peter’s money on Paul’s project, which hurts Peter. … She entrusted him with that money and he used it for a different purpose. That’s embezzlement.”

Although a judge ordered Shaeffer, who filed for bankruptcy, to repay the money, the victim may never see it again, Colin said.

“Where are you going to get money?” he said. “The criminal-justice system is pretty good at getting criminals off the street. It’s so-so at getting people’s money back.”

Capt. Andy Galea, spokesman for the Los Altos Police Department, estimated that his agency receives three to four cases of unlicensed contractor scams per year. He said the number increases during the rainy season, because that’s typically when people begin to discover the need for home repairs.

“We get that handful of individuals – and it goes in cycles, especially coming up on the rainy season – who will go door to door and say they’re doing work at a neighbor’s house or that they noticed the roof is ready to leak and can give you a fantastic deal,” he said. “The moral of the story is if it’s too good to be true, it is.”

Galea said door-to-door salesmen are required to obtain a city of Los Altos-issued permit.

“We get victims of all ages and demographics – our seniors tend to be at home more,” he said of those duped by contractor scams.

Colin said those contracting for home improvements should never pay someone prior to completion of the work, nor should anyone pay more than a $1,000 deposit. It is illegal, he said, for a contractor to require more than a 10 percent deposit, with a maximum of $10,000.

“The contractor will tell someone (he or she) needs the money for startup design and to pay workers,” he said. “Find a contractor who is financially solvent.”

To verify contractors’ legitimacy, visit www.cslb.ca.gov.

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