New Jersey Strips Contractor of Authority to Own or Run a Business for Alleged Consumer Fraud

1226071_72386977.jpgThe New Jersey Attorney General’s office and the Division of Consumer Affairs (DCA) recently announced a $7.7 million judgment against a contractor in a lawsuit alleging multiple violations of New Jersey consumer protection statutes. The lawsuit named the contractor individually and various businesses that he owns as defendants. In addition to the monetary judgment, the contractor is permanently barred from owning or managing a business, or from performing home improvement services, in the state of New Jersey. A co-defendant reached a separate settlement with the state. According to the Attorney General, complaints involving home-improvement services accounted for the largest share of consumer complaints received by the state in 2011.

The state reportedly received around seventy complaints from consumers against two contractors, John Kot and Gabriel R. DaSilva, Jr., and companies owned jointly or individually by them. The New Jersey Attorney General’s April 23, 2012 press release announcing the lawsuit alleged that the defendants held themselves out as “home improvement contractors” and performed home improvement services without registering with the DCA. The defendants also allegedly performed substandard work, and failed to make repairs or remedies despite guarantees or warranties. One of the businesses, Roofing Police, Inc., reportedly used vehicles painted to resemble police cruisers. The Attorney General alleged that they used multiple business entities and assumed business names, but that all business entities and names had common addresses in Fair Lawn, Garwood, Hackensack, and Maywood.

The lawsuit, filed in the Superior Court of Bergen County on April 17, 2012, asserted eleven causes of action. Most involved alleged violations of the New Jersey Consumer Fraud Act (CFA) and the Contractors’ Registration Act (CRA). Alleged CFA violations included unconscionable commercial practices; deception, false promises, and misrepresentations; use of an unregistered assumed business name; and simulation of a government agency. Both defendants and their businesses allegedly violated the CRA, N.J.S.A. 56:8-136 et seq., by offering to perform and performing “home improvements” without registering with the DCA. The CRA requires any person or business advertising or performing home improvements, defined as nearly any improvement or modification to a residential or non-commercial property, without registering and paying a fee to the DCA annually.

DaSilva settled with the state via a consent judgment. The court suspended a $30,000 civil penalty against him, provided he abides by the settlement terms and state law. He may continue to work in home improvement as long as he maintains state registration. The court entered a default judgment against Kot, however, for $7.7 million. This amount reportedly includes $7.5 million in civil penalties and $150,000 in restitution to consumers. The remaining amount covers the state’s investigative and legal expenses. Kot is banned for life from owning or managing a business within the state, as well as from performing home improvement services.

The business attorneys at Samuel C. Berger, PC offer fixed-fee packages of legal services to businesses and entrepreneurs who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.

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