Contractor Accused of Kickbacks : Employment: Workers claim they had to give boss part of their pay on a Caltrans job.

The California Department of Transportation is investigating charges that a Carlsbad landscaping contractor took kickbacks from employees’ checks instead of paying them prevailing wages, and then fired them when they complained.

At least one of the men was repaid the money he says he was directed to hand over to Tarzian Landscape Construction. But the company’s owner, Stephen Tarzian, says the $476 payment--which was made in two separate checks after Antonio Delgado claims he complained about the scheme and was fired--remedied bookkeeping errors that stemmed from confusing prevailing wage requirements.

Tarzian insists the company never intentionally defrauded the men or Caltrans, that payroll mistakes were made only in Delgado’s case because the required Caltrans wage for the type of work he was doing was especially confusing, and that the men never turned portions of their checks over to the company.

“This is our very first Caltrans job, and we had a very tough time ironing out some of the bugs,” Tarzian said. “(Delgado) brought it to our attention, and we remedied it. It just got totally by us. Then we missed some more hours and he brought this to our attention again, and we just paid him. Any mistakes we made, we made good on.”

But another former employee--Sylvestre Ventura-Hernandez-- says he returned $190 to the company from each of five separate paychecks for a total of $950 he says he is still owed.

In total, four men have said they were fired within a five-week period beginning Sept. 11 after they complained about the company’s pay arrangements. They estimate that the company kept thousands of dollars of the Caltrans contract money between late July and mid-October.

But Tarzian insists that the four employees all quit, and he has made his position clear to the Employment Development Department, which has denied their claims for unemployment benefits.

Delgado and Ventura-Hernandez are appealing that denial.

The laborers describe an employer who had paid decent wages for years, and who they claim began bilking the men when times got tough and work on the Caltrans contract began.

Delgado had always earned $8 an hour for his labor, and most of the other men made $6 an hour, they said. Then, in June, Tarzian submitted a $171,215.10 bid on a Caltrans contract and was awarded the job. The work includes planting and installing irrigation systems beside the freeway from Dairy Mart Road south to the border, and is now in the final stages.

The contract stipulates that employees make certain wages, spelled out in pages of prevailing wage scales matched to specific types of work. For example, under the category “landscape operating engineer,” the contract specifies that anyone who operates a trencher be paid $28.62 an hour.

But the workers say they continued to make the same wages as before, even though their checks reflected the legally required prevailing wages.

One of the employees--who signed a letter that was sent to the Employment Development Department and Caltrans investigators alleging the kickback arrangements--has gone back to work for Tarzian Landscape Construction and no longer wants to pursue his complaint.

But he, Delgado, and Ventura-Hernandez all separately told The Times how the purported kickback scheme worked: When the laborers began landscaping and installing irrigation systems in late July along Interstate 5 in San Ysidro, they say company foreman Apolinar (Poli) Flores told them that their checks would reflect state prevailing wages for the Caltrans work, but that they would continue to make their regular wages.

They were instructed to return to the company the amounts written out by the office manager on yellow sticker notes attached to their biweekly checks, the men said.

“We were told we had two choices. We could return the money, or we could leave,” said Delgado, who worked as a laborer, and also drove the company’s trencher. “Poli Flores said, ‘The company’s very poor right now, and we can’t afford to pay you the full amounts.’ ”

In addition to the alleged kickbacks--a California Labor Code violation designated as a criminal misdemeanor--both Ventura-Hernandez and Delgado say they worked hours for which they were never paid. Ventura-Hernandez also said he and another worker did some landscaping at Poli Flores’ home, on Hesmay Drive in Vista, which was billed to Caltrans.

Tarzian said that never happened.

“No way,” Tarzian said. “Poli and I do the budget. We’re not the kind of company where I wouldn’t see that.”

But Flores said the men were taken off the Caltrans project to work on his house, and that Tarzian was aware of it, but the work was billed as a private job.

“It was the company paying, but it was OKd by me and Steve. They were getting paid, but it had nothing to do with Caltrans,” he said.

Ventura-Hernandez, who lives in Tijuana with his wife and four children, said that on two paydays, Flores followed him to the Chula Vista branch of San Diego Trust & Savings Bank on H Street to collect the money that he was to return from his check.

Flores said he went to the bank for another reason.

“I know that they have been saying that I have been chasing them to the bank, but that was my money,” Flores said. He followed Sylvestre to the bank on one occasion to get paid back for a $65 loan, he said, and has followed Sylvestre’s brother, and another worker who lives in Tijuana to the bank to collect on loans.

In fact, Flores said, the company has been unusually generous about lending money to the men. In the past few weeks alone, Tarzian has lent $850 to two men who are still working there, Flores said.

Delgado, who lives in a one-bedroom Oceanside apartment with his wife and three children, said he was never followed to the bank, but was instructed to return money to the company on two occasions, beginning with the first check that covered work he did on the Caltrans contract.

Delgado has kept detailed documentation of the alleged kickbacks, including all his check stubs and records of how much he was asked to return to the company, and when he returned the money. He also kept photocopies of the checks that were sent to him after he says he was fired, on Sept. 11.

Although he says he made $8 an hour, his checks show him making $8 an hour for private jobs, $10.06 an hour for Caltrans labor, and $28.62 an hour for driving the trencher on the Caltrans job site--the wage classification which Tarzian said created the payroll confusion.

On Friday, Aug. 14, Delgado received a check for $934.17 that showed him working hours at all three pay scales. But Delgado says he was told to return $293 from that check, which he says he handed over to Poli Flores at the Madison Street office in Carlsbad on Monday, Aug. 17.

On the following payday--Aug. 28--he was asked to return $183.48 from his check, made out for $804.24, Delgado alleges. He cashed the check that afternoon at the San Diego Trust & Savings Bank in Carlsbad and handed the money directly to Stephen Tarzian, who thanked him, Delgado said.

Tarzian denies ever having received money from Delgado.

During the following pay period, Delgado tried to get his children on Medi-Cal, but when a Department of Social Services worker saw his check stubs, she told him he was earning too much money to qualify. Delgado said he brought a form to Tarzian’s office, and asked them to fill in the amount he was actually making.

“(Tarzian) said, we’re going to have a big problem. And I said, ‘Yes, but you need to fill it out and say how much I actually make or I won’t be able to get my children on Medi-Cal,’ ” Delgado said.

The office manager filled out the form on Sept. 11--the day Delgado says he was fired--but left blank the portion that asks how much the employee makes.

Tarzian said there was a misunderstanding about the form.

“I thought he wanted welfare, and I said, ‘There’s the system being taken again,’ ” Tarzian said, adding that Delgado was not fired. “He quit,” Tarzian said. “Honest to God, I don’t know why he quit. I gave him money to have his kid born in the hospital. I would write checks right to the doctor. I did anything I thought I could for him.”

According to Flores, Delgado was making the prevailing wages, but wanted the company to fudge the Medi-Cal forms to reflect the lesser amount.

“He said, ‘I’m just making so much money, I’ve got problems,’ ” Flores said, adding that Delgado then decided to quit, rather than make prevailing wages and jeopardize his Medi-Cal arrangements.

But Delgado said that at 10 p.m. on Sunday, Sept. 13, two days after he allegedly was fired over the Medi-Cal form and his complaints about the wage system, another worker was sent to his apartment to pick up the keys to the company truck.

Delgado has been unemployed for 10 weeks, and unable to collect unemployment.

“If they had just kept paying me $8, and it said so on my check, that would have been fine,” Delgado said. “It’s fine with me to make $8 an hour. But to have to return money, to have trouble getting my children on Medi-Cal, and to have the company keeping this money while we are being taxed on the full amount, that’s not correct.”

Delgado did not return money to the company for the pay period that ended Sept. 11, and he said he asked them to reimburse him for the money he had returned to them from his previous checks--$476.48.

He received a check dated Sept. 12, for $366, and when he told them it was still short, he received another check, dated Oct. 23, for $110--for a total of $476, along with a note from Bratton saying the error was her fault.

Tarzian said the checks were for money Delgado should have received for driving the trencher at Caltrans’ prevailing wages--$366 of it for the first pay period when Delgado did the Caltrans work.

“The $366 was for the very first week when he was working on the trencher for us, and we didn’t even know what the trenching wages were yet,” Tarzian said. But Delgado’s pay stubs for that pay period reflect that those prevailing wage hours were already included.

Other employees did not keep all their records, but had similar stories.

Unlike Delgado, Ventura-Hernandez says he threw away most of his check stubs. But one photocopied stub shows him making the prevailing wage of $10.06 an hour. He says, however, that he made $7 an hour for the Caltrans work, and was told to return the rest. But he said it was not being paid at all for hours that he worked that prompted him to complain on Oct. 9.

“When I went to ask them to pay me for the hours, they said, ‘If you don’t like the system we have here, you can leave,’ ” he said.

A photocopied pay stub of another employee who says he was fired--Jose Maldonado--shows the sticker note with the dollar amount he says he was required to return to the company.

Tarzian said he didn’t know what the note was for, but that Maldonado must have owed them money.

While the Caltrans labor compliance officer could not comment on the investigation, she said kickback cases are not that unusual. And while she thinks they are even more prevalent in bad economic times, they rarely come to light.

“It’s not uncommon. But people don’t complain, and the problem is, the records usually look perfect,” she said.

The last kickback case in the region--which includes all of San Diego and Imperial counties and part of Riverside County--was two years ago.

That case--a fencing company that was taking kickbacks from its Caltrans contract--was based entirely on the testimony of the employees, Spanish speakers who had been fired when they complained of the scheme, the Caltrans official said.

“Latino workers tend to be a lot of our usual victims,” she said. “(The fencing company employees) spoke very little English. They normally wouldn’t complain, but one of them was fired. He came in to see us.”

The cases are rarely turned over to law enforcement agencies, she added. “We normally take care of it at our level here. We take money directly out of the contract. We give the employer a chance to give restitution.”

No complaints have ever been filed against Tarzian with the state Labor Commission or the Contractors State License Board, and a review of court records revealed only a minor worker’s compensation lawsuit.

Tarzian has also completed contracts at UCSD, for National City and for a school in Chula Vista, workers said.

Both Delgado and Ventura-Hernandez, who have worked for Tarzian on and off for the past five years, said that he was always a good employer before the Caltrans contract.

Then, they say, not only were they asked to return money from their checks while paying taxes on the full amounts, on several occasions they were not paid for their labor. Delgado said he and several other men worked Saturday, Sept. 5, to make up for Monday the 7th--the Labor Day holiday--but were not paid for those hours.

“I always worked 80 hours, but they never paid me that. There was always something missing--8 hours, or a day and a half,” said Ventura-Hernandez.

Tarzian, however, says that Ventura-Hernandez was a bad worker, and sometimes said he was working when Tarzian says he never showed up. “One day he left early and lied to me about it. I’m not going to pay him for that. Jose (Maldonado) and Sylvestre were working together when I got mad at them for trying to cheat me out of hours. I really let them have it. And bingo, now they’re letting me have it,” Tarzian said.

But Delgado has always been a good worker, Tarzian said. “I would still hire Antonio back. He’s dependable. He’s always showed up. He’s trying to learn English.

“I’m trying not to get mad about this. We’ve been out of work so long, and now we’re finally working again, and people are complaining,” Tarzian said.

Tarzian said the prevailing wage scales, which are constantly updated, are particularly confusing. The company that does his payroll, Paychecks, also made some mistakes, he said.

“These are all just paycheck mistakes,” Tarzian said.

And if he is confused by the varying pay scales, his employees are more so, he asserts.

“Their educational level isn’t all that high, and for them to understand all this is really a language barrier block,” Tarzian said.

“Sylvestre doesn’t understand any pay scales. He threw away his Christmas bonus coupon by mistake . . . As far as following Sylvestre to the bank, that was one incident when he owed money. He was going to quit, so of course we followed him to the bank.”

Tarzian said the prevailing wage requirements are so confusing to keep track of that the company had underpaid Delgado by $476--the exact amount that he said he was told to return out of his paychecks.