Unlicensed Contractor Now in Northridge : Reconstruction: Mac Bagby lost his license in San Diego, where he has been the subject of lawsuits.

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

In Los Angeles he blends easily with the hundreds of other contractors repairing quake-damaged homes and attracts 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 D.A.’s office is investigating Avon Home Remodelers and Builders, a company where he was executive officer, for fraud. State authorities revoked that company’s contractor’s license--under which Bagby operated--and angry homeowners have filed numerous lawsuits accusing Avon and Bagby himself 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 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. It’s amazing.”

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 Valley) who are happy to be back in their homes,” he said.

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

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

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

Stutz, who identified Bagby as an executive officer at Avon, said Bagby was described in many of the suits filed by San Diego homeowners as the main negotiator of contracts and is the focus of much of the D.A.’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 as far away as 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 both licensed and unlicensed contractors.

Since February, Bagby and his brother, Shawn, have been associated with U.S. Builders & 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 and Linda Mazzei 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 Northridge yard. According to Joseph Mazzei, “Bagby represented himself as the contractor and even signed the contract as seller and contractor.”

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

“It seemed like they (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 job was complete or of performing shoddy work.

An ABC affiliate aired seven segments featuring Bagby--one in 1989 and six in 1993. In at least one of the programs, Bagby contended that the unfinished homes were the result of shoddy work by subcontractors who had been 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, Van Benschoten and her husband, Matt, contracted with Bagby to repair their quake-damaged home on Mariano Street. In their complaint to the contractors board, the couple said they gave Bagby a check made out to U.S. Builders for a $14,500 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 describe as his poorly crafted job contract, they contend he refused to return the deposit. Tina Van Benschoten said the check has since been cashed, even though no work was ever done.

Bagby, whose name is signed on their contract as the “contractor/seller,” admits that he cashed the $14,500 check and said that 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 Contractors State License Board.

Neither Mac Bagby nor his brother is licensed as a contractor or a home improvement salesperson, officials say. According to the contractors board, the license number on the Van Benschotens’ contract actually is that of 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 Contractors State License Board has no record of U.S. Builders & Development Corp., even though it has a listed telephone and Bagby answers the phone there.

“No such entity exists,” said Larry Chafe, assistant regional director of the contractors board’s central region, which includes Los Angeles.

Authorities with the contractors board in San Diego said they contacted their Los Angeles counterparts about Bagby. But officials in Los Angeles cannot act “until we believe some law has been violated here,” Chafe said.

Bagby’s difficulties with the contractors board--and with his customers--are not new. He 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 contractors board.

In 1988, Bagby was issued a contractors 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.

After years of winding through the legal system, the case was finally resolved and that license was revoked in January, said Philip Treas, district supervisor in San Diego with the Contractors State License Board.

Bagby eventually began working as executive officer for Avon Home Remodelers and Builders Inc., a company owned by his father-in-law, Bernard Greenberg. But at Avon he once again got into trouble: He was investigated four times by the contractors board for the misdemeanor offenses 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, Greenberg, can reapply for a contractor’s license until July, 1999, and then the company would have to pay a disciplinary bond of $75,000.

“That’s a pretty serious revocation,” Chafe said, noting that the company “is effectively out of business.”

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

One investigation last year resulted 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 in the district attorney’s office in San Diego.

Court records say that in March, 1993, Bagby illegally removed and then dumped asbestos taken from the home of Chris and Dayon Higgins of San Diego.

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

That Bagby has managed to escape serious repercussions and is still in the contracting business despite the revocations and investigations frustrates those San Diego homeowners who feel they were wronged by him.

For years, they have been entangled in legal battles and in some cases face severe financial hardship because of their dealings with Bagby, they said.

Michael and Nancy Biggane, for instance, had plans for an ambitious addition to their San Diego home. In May, 1993, they found Bagby through a friend. Work started in June, but a month later the project stalled.

The couple paid Avon a total of $50,000, according to the contractors board, but the company failed to pay both the lumber company and subcontractors. Eventually the construction workers stopped showing up for work.

Left with their home half done, the Bigganes did the only thing felt they could do.

“We had to take over the building of it,” Nancy Biggane said.

But finishing it meant shelling out more money, and the money ran out before the job was done. More than a year later, the house is only about 90% finished.

It wasn’t long before the couple learned from a local news report and by word-of-mouth that more than a dozen other San Diego families were claiming to be in the same straits--alleging they were victims of Bagby and the Avon company. In fact, said Nancy Biggane, she later hosted meetings of those families as a kind of group therapy.

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

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

Under California law, a person or company can file a lien to recover payment for improvements to a property. The action can eventually result in the loss of a home.

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.

The Murpheys, Mary and Tro, contend in their civil suit that they paid Bagby more than $120,000 to build their dream home last year. But after just one month of construction, the work suddenly stopped. A complaint brought by Chris Higgins, who claims Bagby failed to finish a second-story addition to his home last year, is scheduled for trial Dec. 2. Higgins said he is fighting to make sure Bagby “pays for what he has done to so many families.” But he is worried that the Bagbys may know the legal system better than he does.

Beyond the financial burden of pursuing legal action and finishing their houses, the ordeal has levied a heavy emotional toll on the families involved. Nancy Biggane said her elderly mother-in-law, who owns the house, was baffled by the idea of liens and the possibility of losing the home she has owned for years. “She’s totally bewildered by all of this,” Nancy Biggane said. “She’s distraught. She’s been hospitalized just because of this whole thing.”

In 1993, about the same time the lawsuits and debts began piling up, Bagby tried to file for bankruptcy, saying he was more than $350,000 in the red, court records show, but his petition was denied. His father-in-law, Bernard Greenberg, filed for bankruptcy in February.

Real estate records indicate that Bagby has deeded property to his wife. According to records, Bagby transferred property in October, November and December, 1993, and as recently as March of this year. His wife, Joan, is the owner of property in both Los Angeles and San Diego valued at more than $2.1 million, records show.

Although that kind of transfer is a common device to try to protect property from seizure in a court settlement, San Diego Deputy Dist. Atty. Stutz said if criminal charges are filed against Bagby as a result of the Avon investigation any property he has owned during the last few years can be frozen.

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