Latest Actions Allege Contractors Bilked $1.4 Million in Storm Relief Funds from Homeowners
NEWARK – Continuing the State’s crackdown on Superstorm Sandy fraud, Attorney General Christopher S. Porrino and the Division of Consumer Affairs have filed two separate actions against home improvement companies and their owners alleging they used deceptive business practices in order to obtain $1.4 million in federal relief funds from 51 homeowners who paid them to repair and elevate their storm-damaged properties.
Named in the first Complaint are father and son contractors Paul Zaidinski, Sr., and Paul Zaidinski, Jr., and their Point Pleasant-based company, Shore HL, Inc., which does business as “Shore House Lifters.” Named in the second Complaint are contractor George Rex and his Pleasantville-based companies, Atlantic Coast Housing Lifting, LLC and George Rex Construction, LLC.
The defendants engaged in “unconscionable consumer practices” that include taking money from consumers to renovate, rebuild, and/or elevate Sandy-damaged homes and then failing to begin work, performing the work in a substandard manner, and/or abandoning unfinished projects without returning for weeks, months, or at all, according to the State’s Complaints, which were filed in Superior Courts in Ocean and Atlantic counties, respectively.
The Complaints bring the number of civil actions the State has filed against home improvement contractors alleging fraud in connection with Superstorm Sandy to seven.
“Long after the floodwaters have receded, we remain committed to holding accountable each and every contractor who financially exploited the victims of this catastrophic storm,” said Attorney General Porrino. “With every civil action we file, we are reinforcing the message that we will not allow unscrupulous contractors to prey on New Jersey residents, especially those struggling in the wake of a natural disaster.”
The alleged victims specifically identified in the two Complaints paid contractors, in part, with federal Sandy relief grants they received from the Department of Community Affairs. Forty-eight received grants from the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program, the state’s largest rebuilding initiative. The three other alleged victims were recipients of the Landlord Rental Repair Program (LRRP) that provided grants to landlords for the restoration of storm-damaged rental properties through rehabilitation, reconstruction, elevation, and/or other mitigating activities.
“For people devastated by Superstorm Sandy, those federal grants represented a chance to rebuild their homes and begin putting their lives back together. But that didn’t happen for the alleged victims in these cases,” said Steve Lee, Director of the Division of Consumer Affairs. “That healing process was thwarted by the alleged actions of these contractors who walked off with the grant money, leaving behind unfinished projects, shoddy workmanship, and construction that was not up to code.”
“The Department of Community Affairs remains committed to helping thwart fraudulent activity as our state continues to recover and rebuild from Superstorm Sandy,” said DCA Commissioner Charles A. Richman. “Contractors who scam Sandy survivors do so at the expense of these families’ lives and the communities in which they live, which is why the State continues to investigative dishonest contractors and help Sandy-impacted families get back to rebuilding their homes.”
According to the Complaint against Shore House Lifters, Paul Zaidinski, Sr. and Paul Zaidinski, Jr., the Division of Consumer Affairs received 51 consumer complaints against the defendants, including 42 complaints from RREM recipients who lost $1,046,451 of their federal relief funds. Three other complaints were from LLRP recipients who allegedly lost $79,257 of their federal relief funds. Six of the consumers who submitted complaints to the Division did not receive federal funding.
The Complaint against George Rex, Atlantic Coast House Lifting and George Rex Construction alleges that six RREM recipients lost $277,100 of their federal relief funds.
According to the Complaints, the defendants violated the Consumer Fraud Act, the Contractors’ Registration Act, the Contractor Registration Regulations, the Home Elevation Regulations, the Home Improvement Regulations, and the Advertising Regulations by actions that include:
Shore House Lifters/Paul Zaidinski, Sr./Paul Zaidinski, Jr.
- Performing home improvements and/or home elevations in a substandard manner, including improperly disconnecting water and sewer lines, improperly repairing a front staircase, and spilling concrete on a back deck and driveway.
- Failing to properly complete home elevation projects, which in some instances resulted in the homes failing required municipal inspections, and thereby preventing consumers from moving back into their homes.
- Performing home elevation work and/or home improvements contrary to current codes, or without adhering to the agreed upon engineering plans, resulting in delays in the completion of the work.
- Abandoning home elevation projects while the homes were raised on temporary supports, resulting in consumers not having any access to their homes for a lengthy period of time.
- Failing to complete the contracted for home elevation work and/or home improvements, thus requiring the consumers to complete the work themselves, or to hire another contractor, all at an additional cost to the consumers.
- Failing to honor the statutorily required cancellation clause in the Shore HL Contract.
- Agreeing to provide consumers with a refund of RREM funds after the consumer cancelled the Shore HL Contract due to the failure to commence or complete the work, but then failing to provide such refunds.
Atlantic Coast House Lifting/George Rex Construction/George Rex
- Performing home improvements and/or home elevations in a substandard manner, including constructing structurally unsafe walls, failing to build floors at the proper elevation, and failing to install proper footings.
- Abandoning projects and leaving homes uninhabitable.
- Failing to complete work, thus requiring that consumers live in only part of their house.
- On at least one occasion, after abandoning work, asking a consumer to sign a contract release agreement and to sign a new contract with one of the defendants’ subcontractors, which would exceed the original price to be paid to defendants.
- On at least one occasion, failing to complete work, thus requiring a consumer to hire other contractors to correct and complete the work performed by defendants, at substantial additional costs to the consumer.
- On at least one occasion, failing to pay a subcontractor which resulted in the consumer being issued a “stop work order” and requiring that the consumer pay the subcontractor directly.
The Complaints seek consumer restitution, the disgorgement of unlawfully acquired or retained RREM and/or LRRP funds to the Department of Community Affairs, reimbursement of attorneys’ fees and costs, and civil penalties. The State also seeks to permanently revoke the Home Improvement Contractor and Home Elevation Contractor registrations issued to Shore HL, Inc., Atlantic Coast House Lifting, and George Rex Construction; to cancel the Certificate of Formation in the State for Atlantic Coast House Lifting and George Rex Construction; to permanently vacate or annul the corporate charter in State of Shore HL; and to permanently enjoin the defendants from owning or operating a home improvement business, including home elevation, in New Jersey, and from advertising and or performing home improvements, including home elevation, within the State.
Investigators Joseph Iasso, Maureen Browne and Brittany Kieran of the Division’s Office of Consumer Protection conducted the investigations.
Deputy Attorney General Jeffrey Koziar, of the Consumer Fraud Prosecution Section within the Division of Law, represents the State in the Shore HL action.
Deputy Attorney General Mark E. Critchley, of the Consumer Fraud Prosecution Section within the Division of Law, represents the State in the Atlantic Coast House Lifting action.