BURBANK : Sting Traps 5 Unlicensed Contractors

Private contractor Javier Castaneda Perez took a quick look at Don Hill’s driveway Thursday, then offered to replace its asphalt surface with concrete for $1,250 up front and another $1,250 later.

Within minutes of getting the job, Perez learned Hill was no average homeowner in need of repairs, but an undercover officer named Dan Hitt with the state Department of Consumer Affairs.

And the gray, two-bedroom stucco house in Burbank that Hitt claimed to own was no typical residence, but the headquarters of a sting operation aimed at netting private contractors who work illegally without licenses.

Hitt quickly handcuffed Perez and took him to a back-yard patio table, where the 43-year-old man was booked and released on his own recognizance.

“I got four kids and I need work,” Perez told deputies. “I don’t think I’m a criminal because I’m working. You do this with people who are working?”

Under state law, unlicensed contractors cannot bid on any project totaling more than $300.

Even licensed contractors are restricted to receiving down payments of only $1,000 or 10% of a project’s estimated cost, whichever is less. If Perez was licensed, for example, he could only legally accept a $250 down payment, investigators said.

State officials believe there are about 270,000 licensed contractors in California and just as many working illegally--which is generally considered a misdemeanor punishable by up to one year in jail or a $10,000 fine or both.

“It’s an ongoing problem we’re out every day looking for,” said Ralph Hollier, a supervising deputy with the state. “This will never stop. The problem is the homeowners are suffering. If something goes wrong, you have no recourse.”

Since the Northridge earthquake, authorities said hundreds of unlicensed contractors have sprung up throughout the San Fernando Valley, leaving homeowners vulnerable to exorbitant payment demands by workers who do not always complete the job.

Unlicensed contractors, state officials said, typically ask for down payments of as much as 50% and do not have the mandatory $7,500 insurance bond that protects homeowners from shoddy workmanship, among other things.

More importantly, they added, the circle of people willing to do illegal contracting work includes a small percentage of burglars and other criminals, who want a fast way to make money without being traced by state regulators.

Through newspaper ads and flyers, investigators found six contractors suspected of working without licenses and asked them to drop by Thursday to estimate the cost of various home repairs.

By day’s end, five were arrested and one was released after investigators learned he had recently obtained a contractor’s license.

“The danger of unlicensed contractors is that they do not have contractors’ bonds and are not regulated by our agency,” Hitt said. “The criminal element in the unlicensed contract industry does not pay taxes and moves around from one disaster to another . . . and commits construction fraud crimes.”