Contractors State License Board Asks Victims of
Elaborate Home Repair Scheme to Come Forward
Judge sets aside $1.3 million for
restitution after settlement of unfair business practices lawsuit
S
ACRAMENTO
— The Contractors State License Board (CSLB)
wants California consumers to come forward if they have been defrauded by
certain home service and repair companies in the past four years. A
multi-million lawsuit filed in San Diego County by Attorney General Edmund G.
Brown Jr. has been settled and SRVS Charge Inc. (SRVS), the parent business, has
been ordered to pay $3 million in penalties and restitution. This is the largest
enforcement judgment in CSLB’s 80-year history.
Companies that were operated by SRVS engaged in a massive scheme to defraud
thousands of California consumers out of millions of dollars by charging
exorbitant fees for substandard electrical, plumbing and heating/air
conditioning repair services that were not performed by qualified, legitimately
licensed individuals.
"Anyone who believes they may have been ripped off by these companies should
contact CSLB as soon as possible," said CSLB Registrar Steve Sands. "We’re ready
to help consumers who have been harmed with the process of getting some of their
money back."
An extensive CSLB investigation found that SRVS and its affiliated companies
had been cheating some 6,000 customers each year for overpriced and substandard
home repair work since 1989.
To stop the companies’ illegal practices and provide restitution to those who
were victimized, CSLB and the Attorney General reached a settlement with:
-
SRVS Charge Inc. and its affiliates,
-
Principal owner, Sarkis Terabelian, 43, of Burbank;
-
General manager, Zohrab "Rob" Mkhitarian, 40, of Burbank ;and
-
Associates Marine Metspakyan, 33, of Burbank; Avetik Avo Gyandzhyan, 38,
Lilit Lusparyan, 28, and Estine Akopyan, 28, all of Glendale; Alisa Oganyan, 35,
of North Hollywood; and Vardui Terabelian,45, of Van Nuys
"This settlement is a victory for California consumers and legitimate
contractors, and brings resolution to thousands of hours of investigative work,"
said CSLB Registrar Steve Sands. "Victims will now be able to regain some of
their losses, and CSLB will be able to watch this company closely so others
aren’t harmed."
The defendants operated various service and repair companies that employed
electricians, plumbers, and heating and air-conditioning technicians in Southern
California, the San Francisco Bay Area, and the Sacramento region. These
companies routinely targeted elderly Californians.
SRVS’s scheme worked like this:
-
The company bought millions of dollars in telephone directory advertising,
including many full-page ads. The ads, that listed different company names,
claimed a 100% satisfaction guarantee and senior discounts. When customers
called the numbers listed in any of the ads, they would be directed to a central
call center.
-
Many times, repairmen would be dispatched from a different company than the
customer called.
-
Often, these workers had not undergone the criminal background check
required of all contractors and Home Improvement Salespeople licensed by
Contractors State License Board since January 1, 2005.
-
Customers were charged high prices for emergency home service and repair,
often unrelated to the actual home repair work. Much of the work was poorly done
or never completed.
-
If a customer refused to pay, the company would file a lien against the home
to force payment.
Because the company used multiple business names, it was difficult, if not
impossible, for customers to seek recourse for incompetent workmanship,
incomplete work, or any other issue that arose on their project. Customers were
often denied refunds, despite the existence of the "100% satisfaction guarantee"
promised in the ads.
Over several years, CSLB and the Attorney General shut down affiliates of
SRVS. But instead of ending the scheme, the defendants continued to run their
company under a labyrinth of business names and fraudulent contractor license
numbers that were interchangeable. When CSLB either revoked a license or
received an excessive number of complaints, the company would establish a new
corporate identity, and business continued without interruption.
As part of its investigation, CSLB conducted undercover stings against
service technicians suspected of using these fraudulent licenses and referred
instances of the illegal activity to the San Diego, Los Angeles, Santa Clara,
and Sacramento County District Attorney’s Offices. In one instance, the San
Diego District Attorney’s Office found that a service technician had also
committed burglary and theft, and is now being prosecuted for his crimes.
Attorney General Brown entered into a final agreement with the defendants in
San Diego Superior Court on March 12, 2009, and the agreement was made public by
the court on March 20, 2009. The settlement provides for the following:
-
A permanent injunction against the defendants’ prior illegal activities.
This includes:
-
CSLB monitoring of the defendant operations for one year;
-
Mandatory registration of all company service technicians with CSLB. This
requires technicians to undergo a criminal background check;
-
Limiting the number of business names and licenses that the defendants can
use;
-
Preventing the defendants from charging fees that have nothing to do with
the actual work that is performed;
-
Fully disclosing to CSLB the names of the directors, officers, and employees
of their company; and
-
Mandatory customer complaint tracking with proper complaint investigation
and reasonable efforts to resolve them.
-
$3 million in penalties and restitution to be distributed, as follows:
-
$1.3 million to be used for consumer restitution;
-
$450,000 to be assessed in penalties for state Business and Professions Code
violations; and
-
The remainder to be used to reimburse CSLB for investigative and legal costs
and costs of monitoring future compliance with the judgment.
If the terms of the settlement are violated, the defendants may be held in
contempt and face jail time.
"This massive scheme defrauded thousands of California homeowners who were
charged exorbitant fees for shoddy and woefully inadequate home repair work by
unlicensed and unskilled contractors," Attorney General Brown said. "The
agreement stops the illegal practices and gives homeowners a chance to recover
some of their losses."
Consumers who believed they’re victims of any of the following 13 businesses
and have documents to verify their claim are asked to contact the CSLB at
1-800-321-CSLB (2752) and press 7:
-
American Electric (CSLB #834398)
-
American Home Repairs, Inc. (CSLB #834206)
-
59 Minute Service (CSLB #837697)
-
Cal Repair Services, Inc., dba Pick Red Plumbing (CSLB #797241)
-
Answering Resources, Inc., dba Thrifty Electric (CSLB #723375)
-
Orbell Enterprises, Inc., dba Plumbing One (CSLB #713006)
-
USA Services, Inc. (CSLB #775863)
-
Love My Home, Inc. (CSLB #811361)
-
Electric Avenue, formerly A Plus Electric Company (CSLB #569322)
-
American Electric 911 Fast Inc. (CSLB #826916)
-
Pro Electric Co. (CSLB #670171)
-
RG Electric (CSLB #516892)
-
Pacific West Heating & Air Conditioning (CSLB #604150)
In 2009, CSLB, which operates under the umbrella of the Department of
Consumer Affairs, marks its 80th anniversary of protecting consumers by
regulating California’s construction industry. Today CSLB licenses more than
315,000 contractors. In any given year, complaints are filed against only 3% of
licensed contractors. In fiscal year 2007-08, the CSLB helped consumers recover
$35.2 million in ordered restitution.
Read the California
Attorney General's Release
