Tragedies Bring Out the Worst in People - Contractor Fraud Ranking High on the List

Tragedies such as Hurricane Katrina and the ongoing war on terrorism in Iraq affect millions of people. These catastrophes can bring out the best in some people, responding to the suffering of victims. And the worst in others, who use such disasters to prey upon their fellowman.

Floods, tornadoes, earthquakes, fires, and other natural disasters, as well as those created by man; perfect feeding ground for scam artists. When it comes to rip-off professionals cashing in on the misery of others, fraudulent contractors rank high on the list.

Consumers are bilked out of billions of dollars annually from crooked contractors. Through Workmen's Compensation or construction fraud - residential and commercial; by handing over huge sums of money upfront for work never performed. For poor workmanship not up to building code standards, and projects abandoned before completion.

Elderly homeowners are especially at risk; being hit upon by con artists who advertise discounted prices for a quick response. An offer hard to refuse for persons living on a limited income.

Take the case of 82-year old Virginia Rice of Pensacola, Florida. After 2004's Hurricane Ivan, fraudulent contractors rushed to north Florida, ready to cash-in on damage caused by the storm. An incident dubbed another "Fleecing of America" by NBC News Correspondent Kerry Sanders, in which Rice was one of over 1,000 homeowners victimized.

After paying a contractor $36,000, Rice was left with a roof that sagged, requiring bracing; expensive cabinets had disappeared and paint sprayed helter-skelter throughout the kitchen. The only rooms left intact were her bedroom and bathroom - which doubled as a kitchen until repairs could be made.

More recently, the contractor fraud prevalent in Iraq has bilked tax payers out of billions of dollars and stymied efforts to restore a sense of peace and equilibrium to a nation ravaged by terrorism and corruption.

As AP National Writer Deborah Hastings points out in her August 24, 2007 report, "Corruption has long plagued Iraq construction. Hundreds of projects may never be finished...congress gave more than $30 billion to rebuild Iraq, and at least $8.8 billion of it has disappeared...."

In response to "the war on contractor fraud," the U.S. Department of Homeland Security's Federal Emergency Management Agency (FEMA) urges homeowners to be extremely cautious when hiring contractors. Frazzled homeowners anxious to begin the process of rebuilding disaster-damaged property are statistically "easy prey" for unscrupulous operators.

Among other screening practices, FEMA suggests checking with the Better Business Bureau to ensure the contractor is licensed, bonded, and reputable. They also advise homeowners to request proof of insurance; including liability and Workers' Compensation. And most importantly, to get everything in writing.

Some online services such as HandyAmerican.com have a proven track record as a valuable resource that teaches business and homeowners how to screen for a reputable contractor, drastically reducing the risk of being scammed. The platform of project-owner-to-contractor web sites can educate consumers on ways to prevent themselves from becoming another statistic in the growing number of victims who fall prey to contractor con artists each year.

Unsuspecting homeowners of yet another "unseen" hazard. Homeowner-to-contractor matchmaking services that tout pre-screened contractor listings; giving homeowners a false sense of security when hiring a contractor. Consumers are left with the mistaken impression that all contractors connected with such services are reputable and in good standing; with credentials intact. When in fact, contactor information could be outdated or incorrect due to poor screening procedures.

One such prescreening service includes a disclaimer, buried deep within the pages of their web site: "Member service professional information confirmed as described above may change or expire over time...we cannot guarantee that profile and screening information is accurate."

A glaring contrast to the boast, "(Our) service professionals are thoroughly screened before being included in our network so you can be confident in your selection," posted in a more high-profile spot on the same web site.

TRAINING OPPORTUNITIES

Tampa Bay Chapter

Dinner Meetings

March 10, 2009
"Contractor Fraud"
Richard B. Campbell, Esquire
Carey, O'Malley, Whitaker & Mueller, P.A. 

April 14, 2009
"Red Flags of Fraud"
Debbi Drake, CFS. VP/Sr. Corporate Investigator, Mercantile Bank 

10th Annual Fraud & Computer Crimes Seminar

May 26-27, 2009
Ruth Eckerd Hall
Clearwater, Florida
1111 McMullen Booth Road
Clearwater, FL 33759

Association of Certified Fraud Examiners

20th Annual ACFE Fraud Conference and Exhibition - Las Vegas, NV

2008 - 2009
OFFICERS & DIRECTORS

PRESIDENT
Steve Hooper, CIA, CFE, CCSA, CGAP
Clerk of the Circuit Court Hillsborough County, FL
(813) 276-2029 x3703

VICE PRESIDENT
Christine Dever, CPA, CFE
City of Tampa
(813) 274-7166

SECRETARY
Ellen Wilcox, CFE
Florida Department of Law Enforcement
(727) 298-2482

TREASURER
Laura Krueger Brock, CPA, CFE, CFF, CVA
Kirkland, Russ, Murphy & Tapp, P.A.
(727) 572-1400

DIRECTOR
Mark Dubina, CFE
Tampa Port Authority
(813) 241-1893

DIRECTOR
Sharon Shaw, CFE
Tel: (727) 674-8399

DIRECTOR
Debbie Venanzio, CFE
Branch Banking & Trust Co.
Tel: (727) 302-5498

DIRECTOR
Bill Miles, CFE
Florida Department of Law Enforcement
Tel: (863) 701-1474

DIRECTOR
Gary Chapman, CIA, CGAP, CFE
City of Tampa
Tel: (813) 274-7163

CHAPTER TRAINING
Wayne Boytim, CFE
Retired
(813) 274-7167

The bottom line? Consumers need to exercise the same caution and credential verification when using prescreened home improvement, contractor matchmaking services, as when using any other consumer-to-contractor service provider.

The safest, most thorough and accurate way to screen and evaluate a contractor is by the homeowner at the time of hiring. No matter how reputable or unscrupulous a contractor service provider may be, the homeowner is still the one who pays the bill in the end.

If you feel you have been victimized by contractor fraud, contact the Federal Trade Commission (FTC) Bureau of Consumer Protection. Visit https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01 to submit a complaint online. Helping FTC to investigate fraud; this can lead to law enforcement action and possible conviction.

For more tips, tools and articles on how to screen a contractor for your next house remodeling project visit HandyAmerican.com.

Article Source: http://ezinearticles.com

News from the ACFE

Repercussions From Madoff Case Continue To Be Felt

The U.S. Congress continues to debate fraud enforcement efforts, after hearing testimony from Harry Markopolos, CFE (pictured left, with a copy of the ACFE Report to the Nation on Occupational Fraud and Abuse), about his experience trying to blow the whistle on Madoff to the SEC.

Learn more about the alleged fraud, Markopolos' testimony and Ponzi schemes on the ACFE's Madoff Case resource page.

Chapter News

Dinner Meeting News

Our next Dinner Meeting is scheduled for March 10, 2009

Richard B. Campbell, Esquire, of Carey, O'Malley, Whitaker &  Mueller, P.A. will present "Contractor Fraud." Rick Campbell has been a shareholder with Carey, O'Malley, Whitaker and Mueller, P.A., in Tampa since March 2004 where he represents public and private construction owners, contractors, subcontractors, and design professionals in state and Federal trial courts and before arbitration panels.

From 1989 through 2004, he was a shareholder at Carlton Fields, P.A. and has also practiced with firms in South Carolina and Colorado.  He represented the Tennessee Valley Authority, a corporate agency of the United States, from 1980 through 1984 and started his legal career as a law clerk for a United States District Court Judge in 1974.  He received his B.A. (1968) and J.D. (1974) degrees from the University of South Carolina, where he was an editor of the Law Review.

From 1968 through 1972, he served as an officer in the U.S. Air Force.  He has significant experience regarding the construction of water, waste-water, and power generating and transmission facilities, office buildings, high rise condominiums, bridges, tunnels, rail facilities, pipelines and similar facilities.   He has been listed in Who's Who in American Law since 1987 and Who's Who in America since 1994, and in 2008 was recognized by Florida Trend magazine as one of "Florida's Legal Elite."  He is one of the author's of the Florida Bar's book on Florida Construction Law and Practice (4th and 5th Ed)  and has lectured extensively for Lorman Education Services, National Business Institute, and Federal Publications.

The dinner meeting will be held at the Westshore Hotel, located at 1200 N. Westshore Boulevard. The hotel is just north of I-275 and Cypress Avenue on the east side of Westshore (map). Evenings will begin with a social at 6:00 P.M., followed by a buffet dinner at 6:30 and a presentation at 7:00. The cost is $25.00, payable at the door.

To make your reservation, please use the following link Chapter Meeting Reservation and complete the form at the bottom of the page.  You can also make your reservation by emailing Wayne Boytim by February 6, 2009. Reservations will be accepted after that date and walk-ups are always welcome. Please remember that cancellations are accepted up to the afternoon of the meeting. No shows will be billed after the second missed meeting. Please help us keep our costs down by letting us know if you are unable to attend.

Summary of the January 13 Dinner Meeting

Lieutenant Carol Conry of the Office of Attorney General's Medicaid Fraud Control Unit presented Medicaid Fraud.  Medicaid fraud can take on many forms and cost Floridians millions of dollars each year. The most common forms of the fraud involve doctors, dentists, clinics and other health care providers billing for services never performed, over billing for services rendered, unbundling or, billing for tests, services and products which are not medically necessary.  In addition to investigating fraud committed by health care providers, the Unit also investigates abuse, neglect and exploitation of the elderly, ill and disabled residents of long term care facilities for the mentally and physically disabled and assisted living facilities.

National Overview

• In FY 06-07, nationwide Medicaid provided services for 50.3 million recipients in the U.S. and Puerto Rico with payments totaling $324.3 billion.  Coupled with the costs of Medicare, 34 cents of every dollar spent by the Federal government was directly related to health care.  While 48% of Medicaid recipients are children, they only account for 18% of the Medicaid billings.  

• The majority of the billings, 65%, are for the elderly and disabled adults who make up 29% of the Medicaid population.  The projected annual growth for government sponsored health care costs is 7%, but Florida’s growth of the elderly, disabled and lower income individuals is likely to reach double digit growth in the foreseeable future.

• Presently the Medicaid Program, on a national basis, pays approximately $330 Billion per year for care

• Approximately 1/3 of all US births are paid for by the Medicaid Program

• By the year 2010 it is expected the Medicaid Program, on a national basis will pay $400 Billion for citizen’s care.

Florida Medicaid Facts

• Medicaid serves the most vulnerable citizens in Florida:

• 27% of children

• 51.2% of deliveries

• 63% of nursing home days

• 10% of Medicaid budget covers drugs

• 15.6% is paid for prepaid health plans

• Florida will spend approximately $6,841.00 per recipient in FY 08-09

• Florida is the fifth largest state nationwide in Medicaid expenditures

• Florida has the fourth largest Medicaid population is the nation.

For more information, please view the presentation slides: MFCU.pdf (1.187 KB)

Kate Barker (bottom right) brought her MBA class from USF's St. Petersburg Campus to our February meeting. Representing the Tampa Bay Chapter's Student Board Committee are Sharon Shaw (front row, zebra print) and Christine Dever (front row, giraffe print).

Contractor Conduct

States can regulate two aspects of contractor conduct: 1) contractor requirements, such as obtaining licensure, and 2) contract content offered by contractors.

Contractor Requirements

Twenty states require contractor licensure, and 11 states require contractor registration. Fifteen states require prior experience of contractors, and 18 states require examinations. Other contractor requirements include proof of financial responsibility and disclosure of convictions related to home improvement fraud.

Contract Content

Required contract provisions. Some states regulate the content of home improvement contracts, including disclosing information such as the contractor's name, address, and license number; price; work description; and materials. Some states require information regarding the organization or entity to contact for filing complaints.

Prohibited contract provisions. In some states, the contract may not waive the owner's right to a jury trial or any provision of a relevant statute.

Prohibited acts. Thirty-six states prohibit certain kinds of acts. These may include, but are not limited to: 1) abandoning a project; 2) failing to perform as promised; 3) misrepresenting material facts; and 4) demanding or receiving payment before the contract is signed. Many home improvement state statutes apply state Unfair and Deceptive Acts and Practices (UDAP) statutes to protect consumers. These statutes generally provide victims with remedies, encourage merchants to resolve disputes fairly, and deter seller misconduct.

Source: http://www.aarp.org/research/frauds-scams/fraud/aresearch-import-194-FS75.html

Home Improvement Contractor Fraud

Prepared by the Consumer Law Project for Elders

Warning signs to watch for to avoid a bad deal:

• Calling you by name

• Soliciting door-to-door

• Saying “doing work up the street” or “in the neighborhood”

• Claiming has materials left over from another job

• Pointing out house flaws as if he is trustworthy

• Creating a sense of urgency

• Talking fast to confuse you

• Telling you he has a deal for you, one day price only

• Requiring payment by cash only

• Requiring payment for the entire job upfront

• Offering discounts for finding other customers

• Not being registered with the Connecticut Department of Consumer Protection

• Pressuring you for an immediate decision

• Asking to come into your home

Things a homeowner can do before contracting for home improvements to avoid being a victim of a scam:

• Look for long-established company with permanent business location

• Get referrals from family and friends who have had similar work done and were happy with the work

• Make sure the contractor is licensed by checking with Connecticut Department of Consumer Protection

• Make sure the contractor is bonded and has liability, worker’s comp and property damage insurance

• Check with the Better Business Bureau to see if there are any complaints against the contractor

• Get at least two estimates from different contractors and carefully compare costs and materials

• Remember, the lowest bid is not always the best deal

• Ask the contractor of references and then check them out

• Don’t take a loan through the contractor and never sign over the deed to your house

• Make sure you have a signed contract

Get a written contract that includes:

• Contractor’s name, address, phone and license number

• A payment schedule

• Total cost of both labor and materials

• Start and completion dates

• Clause that states the contractor is obligated to get all permits

• How changes in the contract will be handled

• A detailed list of all materials including styles and brand names if important

• Warranties on materials and workmanship

• Clean-up responsibilities

• Right to cancel within 3 business days

• Penalty to contractor if completion date is not met

Actions you can take if you are victimized:

• Cancel your contract and financing agreements within 3 business

• Call the Consumer Law Project for Elders for free legal advice and assistance

• Call the Department of Consumer Protection

• Report the contractor to the Better Business Bureau

The Consumer Law Project for Elders provides free legal assistance to seniors 60 or over who have consumer questions or problems.

President's Message

An old Chinese proverb says, “a single conversation across the table with a wise person is worth a month’s study of books.” To me that make a lot of sense. I believe that classroom learning is better than a self-study environment. One of my goals as Chapter President is to assist our members with their studies and increase the CFE presence within the community and to our national association. With that, I am happy to announce that the Chapter’s board members have made final arrangements to host a CFE Exam Prep Course. See the details under Chapter News above. George Clason, a well-known author and writer, once said to “seek advice from those who are competent through their own experience and success to give it.” I have lined up competent Chapter CFEs to share their experiences during the sessions. If you are interested in attending, please contact me at (hooper@hillsclerk.com) or, through our website (TampaCFE@TampaBayCFE.org).

What a huge success our dinner meeting was on February 10th. We had reservations for 74 attendees! Kate Barker brought her class of 16 MBA students from USF St. Pete. We always enjoy their attendance and being able to network with them.

We also enjoyed meeting our first time attendees:
Donna Scarpetta – America’s Mortgage Brokers
Robert Scarpetta – America’s Mortgage Brokers
James Jimenez, Guida & Jimenez, P.A. CPAs
Jessica Huebner – Deloitte Financial Advisory Services
Shannon Coram - Deloitte Financial Advisory Services
Wesley Nichols - Maximus
Lisa Scopal – Visionary Financial Services
Sheree Dones – Visionary Financial Services
Will DeBouver – Fraud Investigation Services, Atlanta, GA
Brian Giglia – Guest of Chapter Member Laura Brock
Jeannine Hodges – Guest of Chapter Member Jacqueline Maltry
Jessie Ray – Guest of Chapter Member Sheryl Waters

Congratulations to Ellen Wilcox, a Chapter Director. She was selected as a finalist for Florida’s Law Enforcement Officer of the Year. What a huge accomplishment Ellen!

Our two-day Fraud and Computer Crimes Seminar is fast approaching. We have secured the facility and have set the dates (May 26 & 27, 2009). Speaker negotiations are ongoing as I write this message. I want to thank Christine Dever and Gary Chapman for all the hard work they have put into organizing this event for you. Good job!

I want to leave you with this quote as we move to improve services to our chapter members. A wise person once said, “I will study and get ready, and perhaps my chance will come.” That person was Abraham Lincoln, America’s 16th President.

Steve Hooper, CFE, CIA, CGAP, CCSA
President, Tampa Bay Chapter - ACFE