SACRAMENTO – Jose Cruz, 41, of Salinas , pleaded guilty today to charges of contracting without a license and making false statements to obtain workers’ compensation benefits in Monterey County Superior Court in Salinas . The Contractors State License Board’s Statewide Investigative Fraud Team (SWIFT) member assigned to Monterey County found Cruz contracting without a license and without workers’ compensation insurance on November 10, 2010, based on an industry lead.

The SWIFT investigator found Cruz and an employee (to whom he was paying cash) doing concrete work on the driveway of a Pacific Grove apartment complex. Cruz told the investigator he did not have a contractor license and did not have workers’ compensation insurance coverage for his employee, both violations of state law. California Business and Professions (B&P) Code requires that any home improvement or construction project valued at greater than $500 for labor and materials be undertaken by a licensed contractor. State Labor Code requires all employers to purchase workers’ compensation insurance coverage for their employees. The price for the Pacific Grove project was $3,050. Cruz obtained half of that as a down payment, also in violation of state law. The B&P Code prohibits solicitation of a down payment larger than 10 percent of the entire contract price or $1,000, whichever is less. There is an exception for about two dozen contractors who purchase special bonds for consumer protection.

Further investigation by partnering investigators from the Monterey County District Attorney’s Office turned up evidence that Cruz had been collecting workers’ compensation insurance for an alleged on- the-job injury in January 2010. While claiming he was too injured to work at a Monterey business, Cruz was receiving disability payments and contracting without a license, under the business name of Peppe’s Handyman and Landscaping. Making a false statement to obtain workers’ compensation benefits is a violation of the California Insurance Code.

Cruz is scheduled for sentencing on August 31, 2011.

“CSLB is gratified that its partnership with the Monterey County DA has resulted in the prosecution of this individual, who was engaging in fraud against employers and property owners,” said CSLB Registrar Steve Sands. “This activity in the underground economy drives up prices for legitimate licensed contractors and other businesses, which are ultimately passed on to the consumer.”

CSLB urges consumers to follow these helpful tips before hiring anyone to do work on their home or property:

  • Hire only licensed contractors and ask to see their license and a photo ID to verify their identity.
  • Always check the license number on CSLB’s website at or to make sure the license is in good standing, and that the contractor has workers’ compensation insurance for his/her employees.
  • Don’t pay more than 10 percent or $1,000, whichever is less, as a down payment. There is an exception for about two dozen licensees who carry special bonds to protect consumers. These exceptions are noted on CSLB’s website.
  • Don’t pay in cash, and don’t let payments get ahead of the work.
  • Get at least three bids, check references, and get a written contract.