The Oregon Construction Contractors Board (CCB) recently uncovered a security breach involving 8,013 of its online contractor accounts.

Unauthorized individuals gained access to contractors’ usernames and related password information, according to a CCB press release. The incident occurred between Oct. 27 and Oct. 29, 2018, and was discovered on April 12, 2019, during a routine audit of the agency’s information technology databases by the Oregon Enterprise Security Office.

A review of the breach revealed that personally identifying information in 466 of the accounts was accessible, the CCB stated.

State information technology experts closed the pathways used by the unauthorized individuals to gain access to the accounts and then enhanced password protection security.

Compromised information included contractors’ names, email addresses, physical addresses and password hashes (codes that protect passwords). Of those compromised accounts, 466 also included an identification number such as a government-issued ID or driver’s license.

The CCB is asking all affected account holders to reset their passwords. The agency also informed those account holders that it is offering identity theft protection and ID theft recovery for one year.

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A sampling of the 115 civil penalties issued by the Oregon Construction Contractors Board in November:

• Danny W. Berentsen, Umatilla County – fined $5,000 for working without a CCB license.
• Gerardo Pimentel, Hood River County – fined $5,000 for working without a CCB license.
• John Kelly Ketzenberg, Lincoln County – fined $5,000 for working without a CCB license.
• ADI Security Inc./Security One Video Surveillance Technologies, Clackamas County – fined $5,000 for working without a CCB license.
• Richard N. Anderson, Multnomah County – fined $5,000 for working without a CCB license.
• Animal House of Oregon LLC, Multnomah County – fined $5,000 for working without a CCB license.
• Fernando Cavares, Multnomah County – fined $5,000 for working without a CCB license.
• Samuel J. Cross, Multnomah County – fined $5,000 for working without a CCB license.
• George Edward Dodsworth, Multnomah County – fined $5,000 for working without a CCB license.
• Jim D. Kinney, Multnomah County – fined $5,000 for working without a CCB license.
• Danny R. Neubauer, Clackamas County – fined $5,000 for working without a CCB license.
• PDX Home Care Company, Multnomah County – fined $5,000 for working without a CCB license.
• PNW Land Services LLC, Columbia County – fined $5,000 for working without a CCB license.
• Portland Home Repair Company/PDX Home Repair, Multnomah County – fined $3,000 for advertising or bidding without a CCB license.
• Prestige Design & General Contracting Inc., Clackamas County – fined $5,000 for working without a CCB license, $1,000 for having employees while not in a status to have employees and $1,000 for engaging in dishonest or fraudulent conduct.
• Loius Phillips Ramirez/Primavista Landscape Maintenance – fined $5,000 for working without a CCB license.
• Reilly Signature Homes LLC, Multnomah County – fined $10,000 for committing eight lead-based paint violations.
• Sateki Halatahi Vaenuku, Clackamas County – fined $5,000 for working without a CCB license.
• Monte Rex Vandeventer II/Rivercity Sealcoating/Westcoast Asphalt Maintenance – fined $5,000 for working without a CCB license.
• Dustin Wade Winn, Multnomah County – fined $5,000 for working without a CCB license.
• Mark Wayne Merrell II, Douglas County – fined $15,000 for working without a CCB license.
• Oregon Builders Guild LLC, Josephine County – fined $5,000 for working without a CCB license.
• Fitzpatrick Painting Inc., Linn County – fined $6,000 for employing lead-based paint work practices.
• Chris Hewson, Marion County – fined $5,000 for working without a CCB license.
• Juan Pablo Raygoza/Matrix Construction, Marion County – fined $5,000 for advertising or bidding without a CCB license.

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It’s not the driveway Michael Smith wanted.

The retired electrician had agreed to terms with a Craigslist contractor to pave the approach to his Rainier home and add a retaining wall and drainage. But after taking some measurements – and a $7,000 check – the man never came back.

Smith, 68, is now trawling Craigslist daily and offering a reward to help find the man he says ripped him off – Jose Francisco Guerrero Alvarez. And Smith is far from alone. According to the Oregon Construction Contractors Board, this one unlicensed contractor – one of the most egregious violators of contracting law in the state in years – has defrauded at least 20 people to the tune of around a half-million dollars.

Calls and text messages to Alvarez’s cell phone this month were not returned.

Paper trail

In the mid-1990s, Oregon moved from a registration-based system to a licensure system that involves more education and standards.

Some contractors adamantly opposed licensure because they didn’t think government had any business getting involved, construction attorney Jeremy Vermilyea said.

The second major revision to the state’s licensure laws came around a decade ago, in response to an explosion of construction defect lawsuits. The problem was that the CCB regulated commercial construction in about the same way as residential – and there are vast differences between the two. The result of the revisions – which Vermilyea helped write – was more direct CCB oversight of the residential side, where there was said to be more “bad apples.” The commercial side got more focus on education and insurance and bonding requirements.

Today, Oregon’s licensure system is a bit more robust than other states’ – Idaho, for example, has only a registration requirement.

The problem in the case of Jose Alvarez is that so far, this residential contractor has been unwilling to act within the normal bounds of society.

“If someone’s just bound and determined to be a serial violator, it’s really tough, short of throwing him in jail, to stop him from doing that,” Vermilyea said. “It’s just like getting a judgment in a lawsuit. It’s only as good as the paper it’s written on, and only as much as the person against whom the judgment is issued is willing to pay.”

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These days, the name “Jose Francisco Guerrero Alvarez” is a fixture on the CCB’s monthly civil penalties report, appearing in most cases alongside the common offense of working or advertising without a CCB license, which often carries a $5,000 fine.

Today he owes the administration $45,000 in civil penalties tied to 10 cases. The CCB has six more completed investigations waiting to serve him.

Overall, the CCB has interviewed 20 victims, each out between $3,000 and $35,000, for a total somewhere between $300,000 and $400,000, according to CCB investigator Tim Lenihan, who’s worked on Alvarez cases for the past 14 months. Lenihan has spoken with an additional 25 possible victims who’ve declined for one reason or another to help prosecute Alvarez for fraudulent activity.

The way Alvarez typically operates, Lenihan said, is by moving into a neighborhood and performing one home improvement project that looks pretty good. This garners him more clients.

“In a short period of time, projects are having less and less work completed on them, to the point where the last people to sign on, he doesn’t perform any work for their project – he just takes the money,” Lenihan said.

CCB officials call Alvarez a “salesman-and-a-half,” a confidence man expert in separating homeowners from checks. Lenihan has spoken with people who’ve given Alvarez personal loans of between $5,000 and $25,000, including one man who owned an establishment where Alvarez liked to gamble.

In July 2015, KATU News interviewed a Beaverton woman who said Alvarez failed to deliver on a promise to build a ramp for her disabled son. Without signing a contract, she wrote him a check for $3,500. Then he stopped answering her calls. A neighbor of hers claimed Alvarez cheated her of $25,000.

What’s frustrating to Lenihan, is that he’s actually spoken in person with Alvarez many times – they’re on a first-name basis.

“At one point, I could call him up and he’d tell me where he was and I would go and serve him papers,” Lenihan said. “Now he won’t return my phone calls.”

Lenihan said that in the eight years he’s been a field investigator with the CCB he’s never encountered an offender so prolific.

Alvarez is said to live a transient lifestyle – 30 to 60 days at each stop. Lenihan has known him to live at six different addresses over the past year, including those of an ex-wife, a girlfriend and some friends. He’s known to change vehicles frequently. He recently bought a Lexus, according to Lenihan.

“I don’t know what the endgame is,” he said. “I’ve never had somebody take it this far.”

To be sure, Alvarez isn’t the only offender the CCB is after. In the past quarter, it took 350 new cases – 218 for July. From 572 jobsites checks, it issued 90 field investigation reports.

Lenihan recently served a man who had stolen $100,000 in scams similar to Alvarez’s. Earlier in his career, Lenihan saw cases where the Department of Justice got involved, injunctions were ordered and equipment repossessed to pay for fines. But other than keep doing what he’s been doing, Lenihan doesn’t know what more he can do.

“Discouraging,” is one way to put it, he said, but added, “We refer to it as job security.”

Low-impact man

One limitation facing the CCB is that working without a license is only a Class A misdemeanor, meaning the offense has to get the attention of local law enforcement and the district attorney. Otherwise, about all the CCB can do to compel an offender to stop committing crimes is notify the Department of Revenue so it can withhold money from a tax return refund.

“If (authorities are) not willing to take them on because they think it’s a low-impact crime, we’re pretty much done,” said CCB enforcement manager Stan Jessup.

This is why most habitual offenders deal strictly in cash and don’t report income. The CCB has to prove offenses without any doubt, and that isn’t as easy as it might sound. Discerning an “employee” from a CCB licensee on a jobsite can be a challenge for an investigator.

Because the CCB is a civil administrative agency, the most Lenihan can do to offenders when he witnesses a violation is write a report and send it to his office (unless he teams with a local official like a police officer or a building inspector). He can neither issue a stop-work order nor a penalty in the field. A report must be written and a case officer assigned before penalties can be determined.

“The fastest I’ve seen that happen is three or four days,” he said.

Though Lenihan has had the most involvement with Alvarez, all Oregon CCB investigators are aware of him, Jessup said. They’ve been in contact with local authorities around the Portland-metro area and Southwestern Washington – police departments, building code divisions and cities.

The Washington State Department of Labor and Industries knows of Alvarez, and its inspectors are aware of his patterns of behavior, according to spokeswoman Debby Abe.

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After Alvarez stopped answering his calls and texts, Michael Smith said he realized Alvarez didn’t intend to do his driveway. Soon enough the materials arrived, and waited for days outside on pallets.

The cancer survivor ended up performing most of the work himself, then spending three days on the couch recovering.

Smith is offering $200 through a Craigslist ad to help find Alvarez. So far it’s only helped him find other  victims of Alvarez.

“I have to do it,” he said of completing his driveway project. “I’m still here.”

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The Oregon Construction Contractors Board has penalized a Multnomah County contractor for seven violations of state law.

The offenses by Robert Kadeem Pasiaka occurred last year, between September and October. He had been issued a “limited” Oregon contractor’s license in August 2014. A limited license costs the same as a “general” contractor’s license, but carries a lower bonding amount.

Pasiaka’s two most serious violations involved his CCB license: working outside the scope of his category drew a $5,000 fine, and employing people but not being licensed to do so drew a $1,000 fine.

The other penalties were:

• two $100 fines for failing to provide clients with Consumer Protection Notice documents;

• a $200 penalty for failing to meet minimum contract standards;

• a $200 fine for failing to provide an Information Notice to a homeowner; and

• a $50 violation for not using an assumed business name.

Pasiaka’s CCB license is currently suspended because he hasn’t paid the fines, according to the board’s enforcement manager, Stan Jessup.

In addition to the $6,650 he owes the CCB, Pasiaka could be on the hook for much more. He also is the subject of three complaints before the board’s Dispute Resolution section, and its mediated agreements typically cost contractors tens of thousands of dollars, Jessup said.

Pasiaka also is listed as a defendant in Clackamas County Small Claims Court for an action filed in November 2015. The plaintiffs are a man and woman from Damascus.

Oregon law requires all construction contractors to be licensed with the CCB before they advertise, bid on or perform construction, remodeling or repair work.

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A Washington-based builder of custom treehouses has been fined by the state of Oregon for a second offense of operating without a contractor’s license.

Nelson Treehouse and Supply of Fall City did not contest the $5,000 penalty for building a single-family residence this year in a Sitka spruce tree in Neskowin, according to Cheryl Martinis, spokeswoman for Oregon’s Construction Contractors Board.

The CCB levies dozens of fines each month, but took the rare step of publicizing this one because of its interesting nature and the fact that it’s a second offense, Martinis said.

The operator of Nelson Treehouse and Supply, Pete Nelson, appears on the Animal Planet reality series “Treehouse Masters,” and the Neskowin project was featured on an episode. A CCB investigator became aware of the project when a local news station reported on the episode’s upcoming broadcast.

A company representative sent the following statement to the Daily Journal of Commerce:

“Nelson Treehouse and Supply is a licensed, bonded and insured treehouse building company based out of Washington state. While working in Oregon, our company purchased supplemental workers’ compensation coverage which comprehensively insured the talented team who worked on the project. It should also be noted that the structure itself was fully engineered, permitted and signed off by the local building authorities.”

The CCB requires a license for anyone performing homebuilding or renovation projects valued at more than $1,000. Subcontractors can also be fined for knowingly assisting an unlicensed builder. Operating without a license is a Class A misdemeanor, though the charge is rarely pursued in Oregon’s criminal courts.

Nelson Treehouse and Supply designs and builds elaborate treehouses – complete with electricity and plumbing – around the country.

The company’s first CCB offense was a $1,000 fine for building a treehouse in Central Point in 2014.

Martinis said Nelson still has not pursued a CCB license.

“Most unlicensed contractors are guys who for one reason or another don’t want to pay to get licensed,” she said.

The total cost to become a licensed contractor in Oregon is approximately $1,200, Martinis said.

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According to an announcement this week, Gov. John Kitzhaber appointed President Andrew Colas and Principal Attorney Melvin Oden-Orr to the to terms that will last through 2015.

The Construction Contractors Board licenses more than 38,000 contractors in Oregon. The new appointments will be two of the nine members on the board, which includes six contractors, two members of the public and one local elected official.

“Each member brings with them the skills and expertise necessary to help us continue our journey to become a model regulatory agency,” said board administrator Craig P. Smith in a release. “We look forward to the efforts that will be made throughout the duration of their term.”

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If the victim of a crime would rather not say where it occurred, detectives would be at a bit of a disadvantage.

That is why state concerns William Boyd, the dispute resolution services manager of the Oregon Construction Contractors Board. Officially, Boyd and the CCB are neutral about the bill, which would require the board to investigate complaints of unpaid wages.

The bill also would prohibit the board from refusing to investigate a complaint if the alleged victim declined to reveal certain details – like the job performed or when it took place.

“This may present a problem,” Boyd told members of the Senate General Government Committee last week.

“Was the work performed in Oregon? If not, CCB has no jurisdiction under ORS chapter 701. Where and what exactly is the jobsite? We need to know. Was the contractor a residential contractor working on a residential or small commercial structure? If so, CCB may process the claim and any damages may be assessed only against the residential contractors bond.”

And what if it was a commercial contractor?

“If so, the court must process the claim and any damages may be assessed only against a commercial contractor’s bond,” Boyd said. “When was the work performed? If the complaint is filed too long after the work was performed, the complaint is not timely and CCB lacks jurisdiction.

“A complaint against a residential contractor that is not also endorsed as a commercial contractor involving work on a residential or small commercial structure or an appurtenance to a residential or small commercial structure must be resolved as provided in ORS 701.145.”

Michael Dale, the executive director of the Northwest Workers’ Justice Project, is more bullish on the legislation. He told committee members that the overall concept of the bill is vital.

“All workers should be paid for the hard work they perform,” Dale said. “But unfortunately, some dishonest employers are failing to pay wages they owe. This is bad for honest employers who are trying to do the right thing but must compete with those who are cutting costs by cheating workers.

“It is bad for the families of the workers affected and depresses wage standards for all workers,” he added. “And it is bad for taxpayers who must make up for the taxes that don’t get paid when wages are not paid in full.”

Problems are acute in the construction industry, Dale said.

Sen. Brian Boquist, R-Dallas, asked Bureau of Labor and Industries officials to submit data on wage claims failed between July 1, 2009 and June 30, 2010. The numbers are telling, Dale told committee members.

“Despite the fact that employment in construction during that period was severely depressed due to the economic crisis, claims for wages in construction represented nearly 20 percent of the claims from all industries in the state,” Dale said.

Members of the CCB have concerns with the way the bill is written, Boyd said, but not with the goal of protecting workers.

However, he said, the bill – as written – is problematic.

One section states that an aggrieved employee doesn’t need to provide documentation of employment by a particular contractor; witnesses suffice. That won’t work, Boyd said.

“CCB needs evidence that a particular licensed contractor was the employer,” he said. “Without such evidence, there is no way to establish a valid employee claim against the contractor-employer.”

It’s a balancing act, according to Boyd.

“We support laws that protect consumers and Oregon workers and recognize regulations must balance these protections with the effects on the business community,” he said.

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The Oregon Construction Contractors Board has hired more inspectors and increased its surveillance of online bulletin boards to sniff out illegal construction activity. But some contractors are still willing to risk working without licenses.

The state board from April 1 through June 30 issued 256 penalties to unlicensed contractors and contractors who hired unlicensed subcontractors. That’s a slight uptick from the same time last year, when 234 penalties were issued. Though most contractors agree that financial instability is the main reason why contractors forgo licenses, they have different opinions on such actions.

Contractors are notified to renew their licenses six weeks before they expire; the cost is $260 every two years. The Construction Contractors Board employs people to periodically check construction sites for proper licensing, and also has online forms and a phone hotline for reporting unlicensed workers.

A contractor caught working without a license can be fined up to $5,000.

Before the recession hit in 2007, the number of contractors caught working without a license was significantly lower, according to Gina Fox, education manager with the Construction Contractors Board.

Between April 1, 2006 and June 30, 2010, only 61 penalties were issued. However, in just the last quarter, Fox said that 42 e-mail warnings were sent to contractors advertising for work without a license.

“It’s an ongoing process working to try and deter unlicensed contractors,” Fox said. “Our agency has reached out significantly through Craigslist and other bulletin board-type services to check if people are licensed.”

Dave Seigner, owner of commercial painting company Seigner & Co., says unchecked, unlicensed activity continues to be a problem, especially in the residential market. He said he knows of at least one residential painting contractor working without a license because his credit is so bad that he doesn’t qualify for liability insurance.

“The excuse that permits are too expensive rings hollow for me,” Seigner said. “If you’re working for yourself, you don’t even have workers’ compensation. I suggest people that find the permits too expensive get out of business.”

But for smaller contracting operations, a $260 fee isn’t small change, according to Kathryn Merritt, owner of Great Kate Construction Co. Merritt said she is aware of unlicensed work taking place in Portland, but that it’s hard for her to blame these contractors, considering the dire financial straits some are in.

“The construction industry is an incredibly difficult place to survive right now,” Merritt said. “I make sure the people I hire are licensed and bonded because I have to protect myself. But I don’t hold it against these individual firms. They are just out there trying to survive.”

Someone painting a house without a license is one thing, but the thought of unlicensed workers performing electrical, construction and other work that could affect the safety of a building is a scary one for John Killin, executive director of Independent Electrical Contractors of Oregon. The pay rates for construction these days, Killin said, are already lower than in the past, so the threat of a consumer paying an unlicensed contractor under the table for a better rate is diminished somewhat.

Killin is especially concerned that the activity is notoriously difficult to track. He has encouraged IEC members to report any unlicensed activity they see.

“The numbers we see on unlicensed contractors are a function of what we can catch as opposed to what’s really out there,” Killin said. “This issue and how it presents a safety hazard to the public is always a concern for us.”

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