Santa Clarita / Antelope Valley : Contractor Jailed in New Fraud Case

Former Lancaster electrical contractor James H. Paxin, convicted of payroll fraud in 1991, was ordered jailed again Thursday pending a hearing on new allegations he also defrauded several hundred employees of more than $640,000 in pension contributions.

Los Angeles Superior Court Judge Charles Horan, who handled the original case when he was based in Lancaster, ordered Paxin held in lieu of $250,000 bail pending another hearing set for Tuesday. Paxin’s attorney, Timothy Orr, said his client had no money to post bail.

Prosecutors earlier this month convinced Horan to revoke Paxin’s three-year probation on the 1991 conviction, alleging Paxin Electric Inc. underfunded its employee pension fund by $641,451 between 1989 and the company’s December, 1991, demise while trying to juggle finances.

After the brief court hearing, prosecutors and Orr met for more than an hour behind closed doors, at times with Horan, discussing terms of a possible settlement. Deputy Dist. Atty. Stephen Cooley declined to discuss the details, but said the aim would be to reimburse Paxin’s former employees. Prosecutors have doubted Paxin’s claims of poverty.

During the court hearing, Paxin formally denied violating his probation. Orr said the 40-year-old former Palmdale resident has been living with his mother in Lake Havasu, Ariz., for the past 1 1/2 years. And Orr said Paxin has been sued by scores of creditors seeking payment of other debts.

Court documents also showed Paxin has been the subject of a federal Department of Labor investigation over his alleged mishandling of his company’s pension fund. In a letter last month, the department found that Paxin had repeatedly violated federal pension law.

Among the allegations, the Labor Department cited Paxin for making two ill-advised pension fund loans in 1990 that were never repaid: one for $34,000 to Paxin Electric and the other for $158,458 to developer James Godde that allegedly allowed Godde to repay a like amount owed to Paxin’s company.

In court documents, Orr argued that federal pension law preempted Paxin’s state criminal prosecution in the matter, a claim that was not resolved Thursday. And Orr maintained that Paxin was an honest businessman who tried to save his company and employees from internal mistakes and the recession.

Orr asked that Paxin be released pending the hearing, but Horan disagreed, saying Paxin no longer had assets guaranteeing he would remain in California. “So the money is long gone and there’s no way of getting it back,” Horan said of the missing pension funds.

In the prior case, Paxin was sentenced to 180 days in County Jail in February, 1991, ordered to pay $65,816 in wages and fined $10,000 for failing to keep accurate payroll records in 1988 and 1989. Prosecutors alleged he underpaid workers by about $170,000 on two government public works projects.