For years, opportunists have preyed on vulnerable homeowners attempting to rebuild their lives after large-scale catastrophes.
Insureds who enter into unfavorable agreements or end up with subpar (or non-existent) property repairs are often left to pick up the pieces, with little recourse.
Increasingly states across the U.S. are enacting specific legislation to spread awareness and deter the merciless crime. But as insurers well know, the first step to eradicating contractor fraud is devoting investigative resources to catch—and help prosecute—perpetrators.
One case in point is a recent sting operation in New Jersey that uncovered eight alleged unlicensed contractors who tried to defraud property owners impacted by Superstorm Sandy.
According to authorities, the contractors in question offered "wildly varying assessments" of damage to a home and cost estimates for rebuilding. Of course, this was no ordinary home. The Statewide Sandy Fraud Working group within state Attorney General John Jay Hoffman's office used a storm-damaged house in Highlands, N.J. and consulted repairers.
Investigators found home improvement contractors via Internet listings, and after checking each for annu
al registration with the Division of Consumer Affairs, scheduled individual appointments with suspected unregistered contractors. During the exchanges, investigators posed as the homeowners or as their relatives.
Hoffman's office confirmed four of the alleged unregistered contractors have been charged with fourth-degree criminal offenses, which can each carry a penalty of up to 18 months in jail. Those listed are Rev. Victor McGookin III, 53 (pictured); Michael Kaufmann, 48, of Kaufmann Drywall By Design; Jason Storey, 46, of Work-A-Holics LLC; and Anthony DiVito, 61, of DiVito & Sons LLC.
Additionally, the Division of Consumer Affairs issued violations for the "unregistered practice of home improvement" to the following men: Darrell Sorger, 43; Robert Mazzeo, 33, of Mazzeo Construction; Derrick Scott, 54, of Lloyd Home Improvement; and Sebastiao Bonato, 54, of Sebastian Restoration and Design. Each violation carries a civil penalty of $2,500.
In 2006, New Jersey's Contractors' Registration Act made it mandatory for home improvement contractors to register and submit proof of having a minimum of $500,000 in commercial general liability (CGL) insurance coverage. Currently there are about 47,000 home improvement contractors are registered in the state.
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