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Alleged Fraud Scheme Nets 42 Felonies

Wednesday, October 16, 2013

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A former California contractor was charged with 42 felony counts after allegedly scamming his employees out of wages and raking in over $81,000, prosecutors announced.

Sourin Babayan, 64, a general contractor from Glendale, CA, the owner of SDB Construction, was charged Oct. 9 with 14 felony counts of taking and receiving a portion of a worker’s wage on public works project and 19 felony counts of recording a false and forged instrument, according to a release by the Orange County district attorney’s office.

Costa Mesa
D Ramey Logan and WPPilot / Wikimedia Commons

Sourin Babayan, the owner of SDB Construction, was indicted on 42 felony counts. Many of the counts were attributed to taking a portion of employees' wages on a public works project in Costa Mesa, CA, according to prosecutors.

He also faces two felony counts of attempted taking and receiving a portion of a worker’s wage on a public works project and seven felony counts of dissuading a witness from prosecuting a crime, which includes sentencing enhancements for property damage and/or loss over $65,000, according to prosecutors.

Babayan now faces nearly 60 years in jail.

Between Feb. 15 and June 22, Babayan required his workers to return a portion of their wages to him or lose their job, prosecutors allege. Prosecutors say he supervised 17 employees.

Babayan is being held on a $200,000 bail and must prove the money is from a legal and legitimate source before posting bond, prosecutors note. The contractor is set to appear for arraignment Friday (Oct. 18).

State Hospital Project Scam

The case involved a project to make improvements to a state developmental hospital in Costa Mesa.

On Jan. 9, Babayan’s company was contracted by general contractor DJM Construction, to install fire sprinklers for several buildings with multiple floors at the Fairview Developmental Hospital.

sprinkler
fire.escondido.org

The contractor was hired to install fire sprinklers throughout several buildings at the Fairview Developmental Hospital in Costa Mesa.

Babayan originally submitted an estimate of $820,000 for the work, the district attorney’s office said.

As part of the scheme, Babayan was said to have submitted fraudulent and forged certified payroll records for labor to DJM and received a lump sum for payroll. After issuing payroll checks for the correct amount due to his staff for proper bookkeeping, he forced his employees to return a portion of their wages back to him for his personal use, prosecutors allege.

Around the first week of July, Babayan resubmitted the contract with DJM with a new estimate of $2.3 million to finish the job. At that time, Babayan's company was let go from the project.

On July 12, the contractor allegedly lured the employees to his house to give them their final paychecks, but instead Babayan attempted to dissuade them from serving as witnesses against him in any prosecution and did not pay the workers.

The prosecutors said SDB Construction employees had contacted the district attorney’s office earlier in the year, which led to the July investigation.

Labor Commission Involvement

The state Division of Labor Standards Enforcement also conducted an investigation and completed a civil wage and penalty assessment to help the employees get their full wages returned. 

"This case is another example of the serious nature of wage theft and our commitment to ensuring maximum civil and criminal penalties to put an end to it,” said Labor Commissioner Julie A. Su.

Deputy District Attorney Donde McCament of the Insurance Fraud Unit is prosecuting this case.

If convicted on all charges, Babayan faces a maximum sentence of 57 years and nine months in prison.

Common Issue

According to the California Professional Association of Specialty Contractors, wage theft is common in the construction industry.

CALPASC
CALPASC

California Professional Association of Specialty Contractors have a program called LEVEL that is designed to address unscrupulous contractors and bring them to justice.

“Unfortunately, stealing from employees and coercing them to remain silent isn’t that uncommon in the construction underground economy, which is why these perpetrators must be brought to justice,” Brad Diede, executive director, CALPASC, said in a statement.

The trade association has initiated a program, LEVEL, designed to address unscrupulous contractors and bring them to justice. LEVEL stands for Lasting Effective Violator Enforcement Leadership.

For more information on the program, visit www.calpasc.org.

   

Tagged categories: Business matters; Contractors; Criminal acts; Ethics; General contractors; Rehabilitation/Repair

Comment from Greg Internicola, (10/17/2013, 7:51 AM)

There are many Non Union and a few Union Contractors that also do this. Mostly Foreign born jerks. If the worker keeps written documentation and saves his pay stubs. Then the chances of his records and the Inspectors probably will be a close match. I hope this SOB gets to bend over and pick up the soap for many years to come.


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