Contractor With History of Complaints Operating in Northridge

A contractor who authorities say left a trail of unfinished houses and an investigation by the district attorney’s office in San Diego earlier this year is doing business in quake-ravaged Northridge with a new company and using a license that is not registered to him.

In Los Angeles, he blends easily with the hundreds of other contractors repairing quake-damaged homes, attracting relatively little attention to himself. But 120 miles away in San Diego, contractor Mac Bagby has earned a distinction that some of his customers and authorities won’t soon forget.

The San Diego district attorney’s office is investigating Avon Home Remodelers and Builders Inc., a company of which he was executive officer, on allegations of fraud. State authorities revoked Avon’s contractor’s license--under which Bagby operated--and angry homeowners have filed numerous lawsuits accusing Avon and Bagby of fraud and breach of contract.

“Somebody has to stop him before he just does it to more people,” said Karen Isbell of San Diego, who has filed complaints with the Contractors State License Board and the San Diego district attorney’s office, alleging that she lost thousands of dollars in her dealings with Bagby.

“Now he’s in L.A.,” Isbell said. “It just keeps going on and on.”

For his part, Bagby said in an interview that he is unaware of any criminal investigation in San Diego and that none of the accusations made by homeowners there “have anything to do with my work in the Valley.”

“I have numerous satisfied customers out here (in the San Fernando Valley) who are happy to be back in their homes,” he said.

But Bagby is already the subject of a complaint filed with the state contractors board by a Woodland Hills couple alleging that he took a deposit check and is refusing to return it.

Board officials said they have not started their investigation of that complaint, but that Bagby no longer holds a valid contractor’s license and is not registered as a sales agent. It is illegal for unlicensed contractors to perform construction work that requires a license. Home improvement sales agents, who sell and negotiate contracts, must be registered with the state.

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San Diego Deputy Dist. Atty. David Stutz, who is in charge of the investigation, said his office is investigating Bagby and Avon, his former San Diego company, for diversion, a “pyramid scheme” in which money that homeowners pay a contractor to complete a specific job is instead used to begin other jobs.

Stutz said that Bagby was described in many of the lawsuits filed by San Diego homeowners as the main negotiator of contracts, and that he is the focus of much of the district attorney’s investigation there.

It did not surprise him that Bagby had moved to the Valley, he said.

“These guys are like telemarketers,” Stutz said. “They just keep moving on to another customer.”

The quake has been like a magnet, attracting contractors to the Valley from Arizona and Nevada, state contractors board officials said. Calls to the board’s Van Nuys office have increased more than threefold as homeowners have made complaints against licensed and unlicensed contractors.

Since February, Bagby and his brother, Shawn, have been associated with U.S. Builders and Development Corp., a Northridge company with an office on Reseda Boulevard. Signs placed in the yards of homes under construction indicate that U.S. Builders is involved in at least four Valley projects.

In an interview, Bagby--who is also known by the name Mehrdad Baghbeh--said he is only acting as a consultant on behalf of the company. But on a construction contract viewed by The Times, his name is clearly signed as the contractor/seller.

Joseph Mazzei and his wife, Linda, say they contracted with Bagby to repair their quake-ravaged Northridge home in early July after seeing a sign for U.S. Builders in a nearby yard. According to Joseph Mazzei, “Bagby represented himself as the contractor and even signed the contract as seller and contractor.”

The Mazzeis are satisfied customers, their only criticism being that the work is a few weeks behind schedule, as is typical of large construction jobs.

“It seemed like (Bagby and his brother) have good taste, plus they also helped us out with the insurance agency to get more money to repair our house,” Joseph Mazzei said.

Last year, thousands of San Diegans watched Bagby on the evening news as tearful homeowners accused him of abandoning their homes before the jobs were complete, or of performing shoddy work.

A local ABC affiliate aired seven segments featuring Bagby--six in 1993 and one in 1989. In at least one program, Bagby contended that the unfinished homes were the result of shoddy performance by subcontractors working for him.

Had she seen those news segments, Tina Van Benschoten of Woodland Hills said, she might have thought twice before signing a contract with Bagby.

In June she and her husband, Matt, contracted with Bagby to repair their quake-damaged home. In their complaint to the contractors board, the couple said they gave Bagby a check made out to U.S. Builders for $14,500 as a deposit on a $44,500 contract.

The Van Benschotens said that after their insurance company, State Farm, gave them the first estimate of how much the repairs would cost, Bagby met with insurance officials and negotiated an additional $34,000 in repair money.

When the couple refused to agree to the higher estimate and told Bagby they were unhappy with what they called his poorly crafted job contract, he refused to return the deposit, they said. Tina Van Benschoten said the check has since been cashed, even though no work was ever done.

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Bagby, whose name is signed on their contract as the “contractor/seller,” admits that he cashed the $14,500 check and said he will not return the couple’s money. They should honor the contract and let him do the project, Bagby said.

“They never let me start building,” he said. “They are the ones who tried to take advantage of us.”

The Van Benschotens have retained a lawyer and demanded that Bagby return the money or face a lawsuit.

State law provides that only a licensed contractor can legally request a deposit and only in the amount of “$1,000 or 10% of a contract, whichever is less,” said officials with the state contractors board.

Neither Mac Bagby nor his brother is licensed as a contractor or a home improvement salesman, officials say. According to the contractors board, the license number listed on the Van Benschotens’ contract belongs to another company, W.B. Schulte Construction, formerly of San Diego.

Bagby is not listed on Schulte’s license nor is he a registered salesman for that company. Repeated phone calls to the company’s owner, W.B. Schulte, were not returned.

In addition, the state contractors board has no record of U.S. Builders & Development, even though the Northridge company is listed with the phone company and Bagby answers the phone there.

Bagby has a long and tangled history of violations with the board--violations that prevent him from working again as a licensed contractor for at least five years, said Paige Rousch, an assistant regional deputy with the board.

In 1988, Bagby was issued a contractor’s license for a company he owned, Cadillac Builders. But within a year, board officials cited Bagby for offenses including poor workmanship, diversion of contract funds and requesting excessive down payments.

The case was resolved and that license was revoked in January, said Philip Treas, district supervisor in San Diego with the state contractors board.

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Bagby eventually began working as executive officer for Avon Home Remodelers and Builders, a company owned by his father-in-law, Bernard Greenberg. Bagby was investigated four times by the contractors board for allegedly committing the misdemeanors of selling construction contracts even though he was not a registered sales agent, officials said.

Those cases were referred to the San Diego district attorney’s office, which began an investigation in 1992.

State officials revoked Avon’s license in July for a string of violations they say were linked to Bagby, including abandonment of projects, diversion of funds, poor workmanship, deviations from plans and specifications, and violation of contract.

Under state law, neither Bagby nor his father-in-law can reapply for a contractor’s license until July, 1999, and then the company would have to pay a disciplinary bond of $75,000.

The violations that resulted in the revocation of Avon’s license also form the heart of several lawsuits. Those violations are part of the San Diego district attorney’s investigation, Treas said.

One investigation resulted last year in prosecution, during which Bagby pleaded no contest to “attempted illegal disposal of hazardous waste (asbestos) and destruction of evidence,” said Steven Gold, who heads the Consumer and Environmental Protection Unit of the San Diego district attorney’s office.

As part of his sentence, Bagby was ordered to pay $20,000 in restitution to the San Diego couple who owned the house in question, take out asbestos warning ads in the local paper, and perform community service. Bagby is still on probation from that case, according to court records.

Many of the San Diego homeowners who contracted with him ended up with multiple problems.

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According to state contractors board records, in case after case--often contracts negotiated by Bagby--Avon failed to pay debts to subcontractors: construction workers, specialists such as cabinetmakers and roofers, and the suppliers of lumber and other building material. Those companies placed liens against the homeowners’ properties.

Gilbert and Maria Murietta, who paid Avon $34,700 to remodel their Chula Vista home, found themselves with more than $17,000 in liens against their property after the company allegedly abandoned the project. According to the state contractors board accusation, which preceded the license revocation, “Mac Bagby also known as Mehrdad Mac Baghbeh, an unregistered home improvement salesperson, negotiated and presented the contract” to the couple.

That Bagby has managed to escape serious repercussions, and is still in the contracting business despite the revocations and investigations, frustrates not only those San Diego homeowners who feel they were wronged by him, but also the officials investigating him.

“I can’t stop him from what he does tomorrow,” Deputy Dist. Atty. Stutz said. “I can only penalize him for what he did yesterday.”