Question

Hurricane Sandy.  Both New Jersey and New York continue to identify and prosecute contractors that have taken advantage of victims of this storm.  What types of services did victims of Sandy buy?  Who can be a contractor?  Who regulates these contractors?  Why is it so easy for someone to become a victim?  What protections are there for these victims?

Please describe the frauds that have occured.  How were they perpetuated and why is it so easy to commit these frauds.

Answer 1

1. Types of services that victims of Hurricane sandy buy:

• Mediation service to resolve insurance claim disputes between homeowners and businesses and their insurance carriers.
• Legal assistance for storm related insurance issues for property damage
• Health & Medical Services
• Construction services to rebuild the homes.
• Repair services for the Motor cars and other equipments.

2. Who can be a Contractor?

A person who provides the above services should get registered with SAM (System for Award Management). Subsequent to registration, they can respond to the solicitations and bid on performing the required work.

3. Who regulates these contractors?

The contractors are regulated by FEMA – Federal Emergency Management Agency (The Department of Homeland Security – which oversees this agency – will inturn regulate the contractors)

4. People living in Hurricane prone areas can become victims of the disaster.

5. Description of some of the fraud (sourced from net)

• A New Jersey contractor was charged with theft by Ocean County, NJ, prosecutors for defrauding a Hurricane Sandy victim out of almost $100,000 for construction work he never performed, NJ.com reported.
• Contractor Greg Montgomery, who was hired to raise and renovate a Berkeley Township, NJ, home damaged by the storm, but never completed the work — despite receiving payments totaling $92,000, according to authorities.

6. How were they perpetuated:

Case: A New Jersey contractor is accused of raking in $348,000 in federal disaster relief funds while using deceptive business practices and performing shoddy work on the homes of Hurricane Sandy victims.

7. How it was done:

DJM households Inc was the accused contractor in the above case. Complaint was filed against the contractor. On verification, it was found that the company had abandoned a storm-damaged home in the middle of the work without completing it, making it unhabitable. The walls were cracking.

The company is accused of using high pressure sales tactics with false promises to hook the victims

8. Why is it so easy for someone to become a victim?

There is a loophole in the law that allow even convicted persons to receive state approval to do home improvement works. The home owners who were affected by hurricane, believed that the state had done back ground verification on contractors. However, as there was no proper background verification done, they ended up hiring these contractors who easily cheat the home owners.

9. What protections are there for these victims?

The victims can file complaint in State superior court under State Consumer Fraud Act, for violating the provisions of the act. Under the Act, the contractors would be fined and also may be barred from rendering services in future.