By Brandy Robinson
First Assistant District Attorney in Austin County, and
Nancy Hebert
Assistant District Attorney in Montgomery County
“Hey, I was just paving your neighbor’s driveway down the road, and I happen to have some asphalt left over. I can make you a real good deal if you let us pave your driveway today.” And so the scam begins.
What is a paving scam, anyway?
Paving scams may be unfamiliar to some, but many rural prosecutors have dealt with this particular menace for decades. For a variety of reasons, scammers favor rural communities with numerous gravel driveways and a significant elderly population.
The scam works this way: The scammer shows up in a work truck and claims to have some leftover asphalt or sealant. He offers to pave or seal the victim’s driveway for a fairly low cost and asks for payment up front. (Asphalt paving is the most common scam, but some scammers will offer to do other handyman-type work such as roof repair, insect extermination, or tree trimming.) If the scammer gets significant money in cash and is moving on from the neighborhood fast, he may simply leave and never come back to start any work.
Most paving scammers do a very small amount of poor work, especially if they intend to hit other houses in the same neighborhood. The scammer may, for instance, place a sticky, tar-like “sealant” on a gravel driveway that makes the driveway impossible to use without getting the black coating all over a vehicle. Then the scammer comes back and demands an unreasonable amount of extra money to lay down cheap asphalt to make the driveway useable again.
A particularly bold scammer might tell the homeowner that he wants a flat fee, say $2,000, up front for the entire job. After he puts down cheap black sealant, the scammer may come back and demand $10,000 instead of the agreed fee. Despite the poor performance and original deal, the scammer will try to shake down the homeowner for an additional $8,000.[1]
When a homeowner refuses to pay, the scammer typically curses, yells, and threatens to call the police or sue the homeowner. If the homeowner stands firm, the scammer may come back with more men to try to intimidate the victim. Generally, the pavers stop short of threatening physical violence. However, the harassment causes most victims, especially the isolated and elderly, to pay up anyway, thus completing the scam—or what we prosecutors like to call “theft.”
An ounce of prevention
Any time we deal with organized criminal activity, an ounce of prevention is worth a pound of cure. Here, effective prevention requires two things:
1) early law enforcement identification of scammers, and
2) effective public outreach to educate potential victims.
Identification. A scammer’s ability to pass himself off as legitimate and hide his true identity from law enforcement and potential victims is one of his strongest weapons. What are the hallmarks that help distinguish these criminals from legitimate businesses?
Tools of the trade. A scammer typically carries at least some asphalt paving tools and raw materials with him in a professional-looking work truck. Some trucks even have logos that identify them as “county” vehicles, and those scammers may claim they work for the local road and bridge crew. Other work trucks proudly display company signs (which may be magnetic and easily transferrable to other vehicles). One thing scammer trucks rarely display is valid, in-state license plates. Instead, the vehicles have out-of-state plates, plates obscured by debris, plates that come back to a different vehicle, or no license plates at all.
Scammers also carry professional-looking business cards to dupe homeowners. However, the name on the card may not match the person carrying it. And while a scammer’s card may include the company name, a quick internet search often shows that associated social media accounts are for a company that is not based locally. Likewise, despite a scammer’s claims that he just “happens to be in the area,” any Texas address on his card may be hundreds of miles away, and the address may be for a P.O. Box, not a local physical storefront. Scammers count on the elderly to not look beyond the fake credentials.
Some scammers have even joined chambers of commerce or established Better Business Bureau accounts, only to opt out and then rebrand themselves once they have received a number of complaints. Because scammers are itinerant, they hide in plain sight before moving on once local law enforcement catches on to the grift.
Flight and family. A paving scammer’s success relies on a transient lifestyle. They regularly travel to new towns, counties, or states to avoid investigation and prosecution. They often have an interconnected network of family and friends who travel and form brief bases across the country, sharing information and helping each other perpetuate these schemes.
Investigators and prosecutors should be aware that identifying one scammer is rarely the end of the road. Rather, we should look for other members of the family or group who may continue to operate even after the first suspect is caught. Also, be mindful that larger organized groups often share work trucks, vehicle registrations, fake IDs, business cards, and signs to help confuse law enforcement. For example, an officer may investigate Joe Smith with “Four Brothers Paving” for scamming people in one town, only to learn that the same man in the same vehicle is now calling himself Bill Jones with “Four Sons Paving” in the next town. Meanwhile, a fellow scammer will take on Joe Smith’s identity in a new town of his own.
Partial performance. Paving scammers also rely, in large part, on our prosecutorial indifference. I mean, isn’t this sort of case civil? After all, these cases differ from a simple no-performance case where the scammer takes the money and runs without doing any work. Likewise, these scammers largely avoid threats or violence that would make a clear-cut robbery. Instead, scammers attempt to work in the space between extremes, relying on intentionally poor performance as a shield against prosecution.
The scammer who charges an exorbitant price to put down a layer of cheap tar in some poor grandmother’s driveway has succeeded in two ways. First, he has created a nuisance that he can then use to extort even more money from the victim to fix. Second, he can argue that he has, at the very least, partially performed their agreement. (A poorly performed contract is still a contract, right?) Especially if the scammer aggressively demanded more money but never physically threatened anyone to get it.
Our office has dealt with some scammer groups who keep a criminal defense attorney on permanent retainer specifically to make that argument when caught. This lawyer earns his keep by giving the State the usual spiel: “This is a civil matter; this was all a misunderstanding” and “Since my clients provided partial performance, you will never prove this case.” At most, the attorney will ask how much restitution the scammers need to pay to get prosecutors to drop the case completely. It can be a tempting offer. If the victim is made whole, what better outcome could you expect from prosecuting the case, especially considering the significant backlog of trials on our dockets these days? The danger with this resolution is the welcome mat that it lays for additional scammers in your jurisdiction. You have just set the cost of doing business in your county for all like-minded members of this criminal organization if they get caught.
Education
A well-informed public is not only more likely to better identify and avoid scams; they are also more likely to notify law enforcement as soon as scammers are spotted, which makes proving these cases that much easier.
A proactive office can take simple steps to protect the public. The elected DA in Austin County, Travis Koehn, routinely gives speeches to community groups where he informs citizens about common scams, including paving scams, and how to identify and avoid them.
You may consider issuing a press release warning the community about the scam and advising them to call local non-emergency law enforcement to report suspicious activity. If local newspapers are willing to publish the release, it can be tremendously helpful in educating the public. Also, if your agency has a Facebook or Twitter site, this is a great way to inform others and ask them to pass along warnings to older relatives.
Once you have a press release drafted, you can coordinate with local law enforcement agencies to put “alerts” on social media pages any time scammers are seen in the area. Alerts like these on community bulletin boards and social media pages can spread like wildfire and help prevent other victims.
Warning signs
Any community education should include warning signs that the public can use to identify potential scammers. These warning signs help them avoid being scammed and also alert them to valuable clues they can give law enforcement when questioned. The first red flags often include:
• door-to-door solicitation
• overly aggressive sales pitches
• the common catchphrase of “I just happened to be in the neighborhood with leftover material”
If pavers present themselves as local and claim they “just happened to be in the neighborhood,” other common clues include:
• an out-of-state or non-local phone number on the card
• websites for an out-of-state or non-local company using the same phone number
• an out-of-state or non-local address on the card
• a P.O. Box rather than a physical business address on the card
• a work truck with either no license plates, obscured plates, or out-of-state plates
• a work truck they claim belongs to the county but which lacks local identifiers
If our offices educate citizens on how to identify scams early, we not only prevent them from becoming victims, we also turn them into more observant witnesses for law enforcement.
Prosecuting such cases
Prosecuting these complex cases requires special attention in three main areas: the pleadings, the proof, and the plan.
The pleadings
Theft and Fraud provisions. These can cover much of the conduct committed by paving scammers. Texas’s Theft statutes (Penal Code §§31.01 and 31.03) provide a way to prosecute a defendant who intentionally promises things that he knows he will not provide in a scheme to induce an owner to pay him.
Put in overly simple terms, when a contractor makes promises he knows he cannot or will not keep to get a victim’s consent, then the contractor likely has engaged in deception.[2] When the contractor then uses that deception to get a victim to pay him, and the contractor intends to deprive the victim of that property (money) through the deception, then the contractor likely has committed theft by deception.[3]
Deceptive Business Practices Act (DTPA).[4] The DTPA offers another charging option that could be useful. It is a Class A misdemeanor to represent the price of a service falsely or in a way tending to mislead.[5] When a scammer initially represents a single, flat fee for the entire service and later tacks on an additional undisclosed fee prior to completion, he likely runs afoul of this subsection.
It is also a misdemeanor to make a materially false or misleading statement of fact concerning the reason for, existence of, or amount of a price or price reduction.[6] Scammers who claim they run a local business and have extra materials from a neighborhood job easily meet this element if this information proves to be false. However, this may be difficult to prove, as it would require the State to show the scammer had not sold other services in the area.
Ch. 162 of the Property Code and Misapplication of Fiduciary Duty.[7] The Property Code contains a consumer protection statute that provides another possible charging avenue. Under certain circumstances, this statute defines money given to persons who perform improvements to real property as “trust funds.”[8] Improving a driveway would constitute an “im- provement to real property.” The statute also makes the holder of these funds a “trustee.”[9]
The statute further states that the “trustee acts with intent to defraud when the trustee … retains, uses, disburses, or diverts trust funds and fails to establish or maintain a construction account as required by Tex. Prop. Code §162.006” (for projects greater than $5,000.00) or fails to establish the accounting required under Tex. Prop. Code §162.007. The penalty ranges from a Class A misdemeanor to a Felony 3.[10]
Prosecutors are not limited to prosecuting under the Property Code. In fact, the Property Code actually allows for prosecution under other statutes.[11] This law allows prosecutors to consider Texas Penal Code §32.45, Misapplication of a Fiduciary Duty. This statute defines a “fiduciary” as “a trustee” or “any other person acting in a fiduciary capacity. …”[12] As we see above, a contractor receiving funds to make improvements to real property can qualify as a “trustee” of those funds. Caselaw has also found contractors to be acting in a fiduciary capacity using the common understanding of the term.[13]
The statute defines “misapply” as dealing with property contrary to an agreement under which the fiduciary holds the property (money).[14] Caselaw has clarified that a written agreement is not even required—a verbal understanding is sufficient.[15] “Misapply” is also defined as dealing with property (money) contrary to “a law prescribing the custody or disposition of the property.”[16] Chapter 162 of the Texas Property Code constitutes just such a law.
Misapplication of a Fiduciary Duty occurs when one “intentionally, knowingly, or recklessly misapplies property … [held] as a fiduciary … in a manner that involves substantial risk of loss to the owner of the property. …”[17] The level of the offense is based on a value ladder similar to the theft statute. It even contains an enhancement for elderly victims.
The proof
Once you have a suspect and have decided on the appropriate charge, the real identification work often begins. Due to the transient nature of the scams, it is crucial for officers to positively identify the defendant. Scammers often have priors and warrants in other counties and states. Make sure to run a criminal history from across the country that includes a name and all possible aliases. A search of a vehicle incident to arrest or based on a warrant may turn up other possible identifiers.
Also encourage law enforcement to identify where the defendant has been staying. Canvassing local motels, RV parks, and trailer parks to look for vehicles involved in scams can be useful because scammers may set up temporary shop in these areas while they hit a county. This can help law enforcement identify targets for search warrants, as well as other people who may be living with and connected to the defendant and the schemes. These search warrants may provide a treasure trove of fake IDs, vehicle registrations, license plates, business cards, and work signs. Each of these items can identify other cases where a defendant may have been involved, other members of the criminal enterprise, and other counties he may have hit. Officers executing warrants may also find evidence of other criminal charges such as Fraudulent Possession of Identifying Information, forgeries, or bad check scams.
Also, because these defendants often work in family groups, it can be particularly helpful to identify anyone visiting or calling a jailed defendant. If you run these associates’ criminal histories as well, you may learn that they match the descriptions of other scammers in the area or that they, too, may have pending warrants out for similar crimes. Paving scammers also may describe their schemes in jail calls, although they may use codes or even another language to hide what they are discussing. Note that some paving scammers we have encountered have spoken a Romani dialect on jail calls. Historically, Romani people, or “Roma,” sometimes have been called “Gypsies,” but many consider that term offensive and discriminatory. Be mindful of those pitfalls before using those terms, even if some defendants self-identify in that way.
Because scammers use various means to hide their identities, getting details from witnesses about the solicitors’ vehicles, business cards, physical descriptions, identifying marks, and clothing is vital. Scammers sometimes wear flashy religious jewelry to help gain trust with religious homeowners, so identifying such jewelry can be particularly useful. Because scammers tend to hit several neighborhoods within a county in just a few days, the faster local agencies share this information with each other, the better. Also, look for area electronic recordings from nearby businesses, Ring doorbells, or electronic home recording device footage. Tracking down and identifying evidence of conspiracy, organized crime, and past bad acts may form the keystone of a criminal case.
The plan
In the September-October 2019 issue of The Texas Prosecutor journal, Ty Stimpson, then an ADA in Tarrant County, wrote an excellent article describing “when civil liability gives rise to criminal prosecution.”[18] Anyone considering prosecuting paving scammers should give it a look. One key point he made was this: “What tends to help prosecutors with ‘partial performance’ complaints is the contractor usually has a history of doing this to other people.” When it comes to paving scammers, the payoff to identifying a defendant’s background, as well as the backgrounds of his family and associates, is that their history often serves as a pipeline to prior acts that show a criminal predatory pattern rather than partial performance in a civil dispute.
Texas Rule of Evidence 404(b)(2) is a fast friend in these cases. Although prior bad acts are generally inadmissible to prove the character of the defendant, they may be admissible when used to prove motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident. Evidence of other similar contract disputes or a recent trend of failure to perform can create a rational inference of a defendant’s knowledge and intent to deceive a victim.[19] Depending on a given fact pattern, a case may rely heavily on proving this is a grander criminal scheme or plan instead of a civil matter. When you plan to use such evidence, remember to provide reasonable notice to the defense well before trial of the defendant’s bad acts.
If paving scams are relatively common in your county, it is a good idea to make and retain a scammer file for your office, because many scammers pass through the same counties in cycles. In Austin County, each time a group of paving scammers passes through, we gather all the information we can on the person or group, link up known associates and AKAs in our system, and put the hard copies in our main scammer file. Because these defendants tend to circle back to areas they find lucrative, this file helps us identify them more quickly when they return. You might even consider calling the district and county attorneys in neighboring counties that scammers could target to warn them. Quickly sharing information between all agencies is key in not only identifying these defendants, but also in proving the scheme and pattern of conduct that ultimately makes their actions criminal.
Sidebar
What can we do to help our citizens? Unfortunately, the law does not require all contractors to be licensed.[20] For instance, a handyman, general contractor, or builder is not required to have a contractor license to operate in Texas. However, some local municipalities may have adopted local laws requiring paperwork or permits. Contractors who specialize in other trades—these include plumbers, electricians, and HVAC technicians, fire sprinkler installers, well drillers, mold remediation contractors, and those installing elevators and escalators—can be required to carry a state license. Failure to comply with licensing requirements is usually a misdemeanor under the Occupations Code. Keep in mind that even if the contractor does not consider himself an electrician, plumber, or HVAC tech, a license may still be required if he is performing those trades.
Here are the top 10 things the public can do to protect against scams:
1) If a license is required, check a contractor’s license status at www.tdlr.texas.gov.
2) Get two to three bids—do not accept the first low bid.
3) Check two or three references.
4) Require a written contract.
5) Do not make a large down payment; make payments as performance is done.
6) Monitor the job in progress.
7) Do not make the final payment until the job is complete.
8) Keep all paperwork related to the job.
9) Photograph the progress of the work.
10) Contact the Better Business Bureau (BBB), either by searching for the company on BBB.org or by directly contacting a local branch of the BBB.
Remember: An ounce of prevention is worth a pound of cure. If something sounds too good to be true, it probably is. So, the next time someone just happens to be in the neighborhood and starts offering an unbelievable deal for that leftover asphalt, tell your family, friends, and neighbors to just say, “No!”
Endnotes
[1] See Boswell v. State, 2012 WL 3629922 (Tex. App.—Austin 2012) (not for publication), for a textbook example of a common asphalt scam fact pattern.
[2] Tex. Penal Code §31.01(1)(A) or (E).
[3] Tex. Penal Code §31.03(b)(1); § 31.01(1)(e); See Taylor v. State, 450 S.W.3d 528, 535-40 (Tex. Crim. App. 2014); Merryman v. State, 391 S.W.3d 261, 272 (Tex. App.–San Antonio 2012, pet. ref’d).
[4] Tex. Penal Code §32.42.
[5] Tex. Penal Code §32.42(b)(9).
[6] Tex. Penal Code §32.42(b)(10).
[7] Tex. Penal Code §32.45.
[8] Tex. Prop. Code §162.001.
[9] Tex. Prop. Code §162.001.
[10] Tex. Prop. Code §162.032.
[11] Tex. Prop Code §162.033.
[12] Tex. Penal Coe §32.45(a)(1).
[13] See, Berry v. State, 424 S.W.3d 579 (Tex. Crim. App. 2014) (should use common meaning of fiduciary, but did not apply in this case); Merryman v. State, 391 S.W.3d 261, 270 (Tex. App.–San Antonio, 2012, pet. ref’d).
[14] Tex. Penal Code §32.45(a)(2)(A).
[15] Gonzalez v. State, 954 S.W.2d 98, (Tex. App.–San Antonio, 1997, no pet._; and Merryman v. State, 391 S.W.3d 261, 270 (Tex. App.–San Antonio, 2012, pet ref’d).
[16] Tex. Penal Code §32.45(a)(2)(B).
[17] Tex. Penal Code §32.45(b).
[18] www.tdcaa.com/journal/when-civil-liability-gives-rise-to-criminal-prosecution.
[19] See Taylor v. State, 450 S.W.3d 528, 535-40 (Tex. Crim. App. 2014); Merryman v. State, 391 S.W.3d 261, 272 (Tex. App.–San Antonio 2012, pet. ref’d).
[20] See, 2022 Texas Businesses Licenses and Permits guide, published by the Governor’s Office at https://gov.texas.gov/business/page/business-permits-office.