Firm Faces Charge of Fraud

The construction company that allegedly bilked Los Angeles County out of $1.5 million in cash and construction costs while one of its top executives was in jail for drug trafficking will be charged next week with at least one count of fraud, a source close to the investigation said Thursday.

Meanwhile, details continue to emerge about the company, Jaguar Rehab and Preservation--the fifth incarnation of a family-run firm, most of whose principals have been convicted on cocaine, firearms and fraud charges.

County housing administrators, who awarded the firm a $3.5-million contract to rehabilitate a child care center and build 41 units of low-income housing in unincorporated south Whittier and East Los Angeles, said they never learned about the company principals’ background because they only ran checks on the latest name attached to the family’s operations.

The county did not check on the principals’ criminal records, nor for civil suits against them, nor whether they individually had contractor’s licenses, said Carlos Jackson, executive director of the county’s Community Development Commission. Nor, he said, were checks run on any on the firm’s previous names.

“We don’t care what their name was [in the past],” Jackson said. “We want to know are they registered with the state and do they have a legitimate state license.”

The county’s checks are done by phone, Jackson said. References are not checked.

A Jaguar vice president, Howard Tyrone Ferguson Jr., did not deny that funds were diverted from the low-income housing project and a child care center that the firm was hired to build or that the company’s work was shoddy.

But Ferguson, who goes by the name Tyrone to distinguish himself from his father--company founder Howard Tyrone Ferguson Sr.--said the fault lay in poor management, not fraud.

“They trusted us, and I feel bad because in some ways the trust was betrayed,” Ferguson said. “But all of the monies that were missing were put back into the company to pay employees.”

He said Jaguar intentionally hired workers with criminal records, as well as people who had had alcohol problems, as a way of rehabilitating them.

The “deficiencies in construction” were due to the employees’ lack of experience, he said. “We gave people a chance--people with criminal records . . . alcohol problems,” Ferguson said.

He confirmed that the company stopped paying its employees in August, and that work stopped soon after on the two projects.

Ferguson also alleged that someone in the company forged the signature of his brother, John Chatric Ferguson, on a state contractor’s license so that the firm could bid for the county’s business in 1996.

John Ferguson was in federal prison on cocaine and firearms charges at the time.

Not listed on the state license for Jaguar but key to its operation, according to his son, was Howard Tyrone Ferguson Sr., who has led a number of construction-related businesses since the 1970s.

The senior Ferguson, whose Northridge office was listed as the official address for Jaguar, was convicted in 1982 of fraud for diverting funds from a construction job for Southern California Edison.

In 1985, he went to prison for conspiracy, forgery and receiving stolen government property in what prosecutors said was one of California’s biggest stolen check schemes. During his forgery trial, he was arrested on cocaine trafficking charges when a car registered to his firm was seized with 30 pounds of cocaine inside. Those charges were dropped.

Several family members, including Tyrone, his stepmother Michelle, who is also listed on the contractor’s license, and his brother David were convicted of a variety of misdemeanors and felonies, including weapons, cocaine and receipt of stolen property charges.

“But upon my father’s release from prison and my brother [John] going to prison, there was a concerted effort by us to stay away from that.”

Tyrone Ferguson went back to school, completing a bachelor of science degree in urban planning at USC. He served an internship with the county Community Development Commission, the same agency that awarded the $3.5-million contract to his father’s company a few months later.

Tyrone Ferguson said he knew nothing about funds being diverted from the project, and that his father had not told him that John’s name was being used for the contractor’s license.

“He promised me he was going to do it right this time,” he said. “And I believed him.”

The Jaguar case was referred to the district attorney’s office late Tuesday after the Board of Supervisors agreed to pay $691,000 to cover the cost of the missing funds. The surety company that guaranteed the project will pay the cost of completing construction and repairing errors, estimated at about $900,000.

According to a source close to the investigation, prosecutors are expected to charge one or more principals of the company with insurance fraud, failure to report and pay unemployment and disability taxes, and failure to pay the prevailing wage to employees.

A charge of defrauding the county also is under consideration, but the investigation on that allegation is incomplete. Charges are expected to be filed late next week, the source said.

Tyrone Ferguson said investigators indicated that he will not be charged. “It does look sort of suspicious,” Ferguson said. “We are cooperating with law enforcement, and hopefully nobody will go to jail.”