Collaboration Continues to Validate Program's Purpose

SACRAMENTO, Calif., May 24, 2012 /PRNewswire/ -- California's subcontractors knew industry fraud was growing and it would take a focused, coordinated effort among multiple parties to stop the bleeding, which is why they established the LEVEL Program.  The May 22 announcement of charges against the owner of Southland Construction substantiates the purpose of the Program when agencies, such as the Contractors State License Board (CSLB), Department of Industrial Relations, Employment Development Department (EDD), Franchise Tax Board (FTB) and the Orange County District Attorney (OCDA), collaborate in catching deceitful contractors in the underground economy. "Law-abiding contractors are forced to vie against corrupt contractors like the owner of Southland Construction when bidding on work," said California Professional Association of Specialty Contractors (CALPASC) Executive Director Brad Diede. "These outcomes of state and local coordinated efforts are exactly what we intended when establishing the Lasting Effective Violator Enforcement Leadership (LEVEL) Program, that is to level the playing field for honest contractors to effectively compete."

According to recent reports, Southland Construction owner, Reza Mohammedi, previously convicted for criminal threats, is accused of more than 45 felony accounts related to public works contracts, including failure to file tax returns and filing false returns, failure to pay taxes, taking and receiving portions of workers' wages and recording false instruments. 

Operating out of multiple counties, Mohammedi allegedly hired undocumented Hispanic workers whom he threatened to "turn in" if they reported to authorities his elaborate scheme of falsifying payroll records.  Additionally, he allegedly falsely reported wages up to $53 per hour and provided workers with payroll checks in the same amount; however, he required workers to keep wages of only $13 an hour and instructed them to cash their paychecks and use this difference of up to $40 per hour to pay for project supplies or other workers' wages, resulting in more than $350,000 embezzled funds.  Mohammedi also is accused of instructing his workers on how to respond to public works inspectors if questioned about their wages.

"This owner's conduct triggered offenses against multiple agencies," said Doug Chappell, Business Manager, IBEW Local 441, Orange County, California.  "We are pleased agencies are focused on collaborating to apprehend these types of unscrupulous individuals, otherwise their destructive behavior would continue with the state losing millions of dollars, trustworthy contractors losing bids and employers taking advantage of employees."

CALPASC initiated the LEVEL Program in 2010 to encourage state agencies to work closely together in apprehending general contractors, builders and subcontractors who violate important labor and safety laws and regulations to gain an unfair competitive advantage. A prime example of this is the California's Labor Enforcement Task Force (LETF), a multiple agency collaborative effort to combat the underground economy and improve the state's business environment, which recently announced a hotline for California workers and employers to call in documented complaints or provide enforcement tips. 

California Labor Commissioner Julie Su said, "The results of this case and our partnership with the OCDA demonstrate that we take these violations seriously and will crack down on employers who cheat their workers and pose a threat to legitimate employers in the state. I intend to work with district attorneys across the state to ensure public works funds are used properly and workers are paid prevailing wages as required by law."

According to CSLB Registrar Steve Sands, "This is another example of successful collaboration between CSLB and its local and state partners. CSLB also is investigating Mohammedi for Labor Code violations on another public works project which, if substantiated, may result in revocation of his license."

Diede concluded, "When agencies collaborate and coordinate efforts, dishonest contractors will be caught, and the industry will be restored to where it rightfully belongs with the 'good guys' winning and the 'bad guys' behind bars."

The California Professional Association of Specialty Contractors is a nonprofit 501(c)6 trade association advocating on behalf of trade contractors and suppliers of building materials in California. CALPASC is committed to educating members on complex issues and advancing safety and compliance within the building industry.

SOURCE California Professional Association of Specialty Contractors