On The Money: Water Meter Fraud
By Mike Luery
SACRAMENTO (CBS13) -- Tens of thousands of your tax dollars are missing in action. Prosecutors say federal stimulus funds were used fraudulently by contractor Peter Scott of Roseville.
CBS 13 found Scott on his way to federal court, where he is facing fraud charges – including 13 counts of conspiracy and submitting phony documents to land a multi-million dollar contract with the city of Sacramento.
Scott was hired, as CBS 13 first reported in January 2010, to retrofit water meters for homeowners using federal stimulus funds. When authorities discovered the alleged fraud, they pulled the plug on the project.
"The case is a serious one in terms of taxpayer dollars," said Benjamin Wagner, the U.S. Attorney for the Eastern District of California.
Wagner told CBS 13 the damage could be as high as $100,000 in fraud. He is prosecuting Peter Scott and his nephew Robbie Scott.
Many of the former workers from Advantage Demolition and Engineering say the Scotts owe them thousands of dollars for work they completed, but were never paid for.
"It's $35,000. He wrote me, they wrote me a check for $5,000 and it bounced," said Tim Chavez, a former worker.
Daniel Vasquez, another former worker told CBS 13, "It looks like he didn't really care about us, trying to take off with our money. No answers, no return calls or anything."
But there were no answers from Peter Scott when CBS 13 caught up with him at federal court in Sacramento.
On The Money asked Peter Scott, "you're charged with defrauding the city of Sacramento and I want to get your side of the story. What do you have to say for yourself?"
But Scott did not respond, nor did he answer this reporter's follow up question:
"A lot of folks here think you abandoned the jobs in the middle of the works and left a lot of people high and dry. Don't you have anything to say in your defense?"
Scott was speechless as he walked into court – and so was his co-defendant Robbie Scott.
"So you're being charged with defrauding the government. What do you have to say for yourself? Anything in your defense?" this reporter asked Robbie Scott.
Scott just kept on walking. Robbie and Peter Scott could face significant time behind bars if found guilty.
"There's multiple counts here. Each one has a 5 year in prison maximum penalty. There's a fine of $250 thousand dollars," said U.S. Attorney Benjamin Wagner.
As for the Scotts' former workers, most received partial payment from the government for the work they did, but they say they'll be watching this case closely.
"I'm here to see justice served on Peter Scott," said David Vasquez, another former worker.
Peter and Robbie Scott will be back in federal court on February 23rd for further proceedings on their case.
If you have a story idea about government spending, fraud or waste, send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/#!/mikeluery
