Herrera uncovers $420,000 in check fraud by former building commission president

Forged permit scandal at Santos & Urrutia Associates grows to nine properties

SAN FRANCISCO (March 12, 2020) — City Attorney Dennis Herrera announced today that a lawsuit filed against construction engineering firm Santos & Urrutia Associates Inc., its principals, and several clients and contractors has been expanded to include check fraud and to add six more properties that were part of complex schemes to circumvent state and local building laws that protect workers and the public.

City Attorney Dennis Herrera

The amended civil complaint, which was filed Jan. 22, 2020 and partially unsealed today in San Francisco Superior Court, now includes a total of nine properties involved in permit fraud. Additionally, the amended complaint adds allegations that former Building Inspection Commission President Rodrigo Santos and his firm stole more than $420,000 from clients through check fraud. Herrera initially brought the lawsuit in September 2018 after he discovered unpermitted excavations at three properties where Santos & Urrutia Associates were the engineers of record. The continuing investigation uncovered more misconduct.

“San Francisco and California have building codes for a reason. They keep people safe,” Herrera said. “These defendants endangered both their workers and unsuspecting San Franciscans. They cut corners and put people’s lives at risk to line their own pockets. It’s despicable. The fact that Mr. Santos is the former head of the commission that oversees building safety makes it all the more disgusting. He tried to use that knowledge to cheat the permitting system, but we caught him. Justice is coming. Our office works tirelessly to make sure that those who abuse the law — no matter their position — are held to account.”

All nine properties were part of the firm’s scheme to give the company a competitive advantage on cost and speed during construction or renovation while circumventing required oversight, which violated a host of state and local laws. Details of the permit fraud varied by property, but overall it included forged documents, an unlicensed contractor, outright lies to City agencies, and a dummy set of plans to trick inspectors, the lawsuit says. The illegal strategy endangered construction workers, residents of nearby homes and the general public, according to the lawsuit. The illegal work undermined the foundations of at least three neighboring homes.

Check Fraud
Herrera’s investigation also found that the Santos & Urrutia firm and its chief financial officer, Santos, stole more than $420,000 from clients through check fraud. The check fraud plot involved Santos requesting partially filled out checks from clients, which were signed and made payable to City departments but with the dollar amount blank. Instead of providing these checks to the payee City departments, as Santos had promised his clients, Santos would instead write in a concocted dollar amount, forge the endorsement of the payee City department and then deposit the checks in his personal checking account. Occasionally Santos would instead change the payee name on the check to his own, misspelled name. For example, he would change “DBI” to “RODBIGO SANTOS” and then deposit the check in his account. The fraud involved more than 200 checks over a three year period.

Besides naming their firm, the lawsuit was brought against both Santos and the company’s chief executive officer, Albert Urrutia. Santos and Urrutia are both licensed engineers. Santos is a former president of the Building Inspection Commission, the public body responsible for ensuring that building codes are followed to protect life and property within San Francisco. Santos has also sat on the City College Board of Trustees and the City’s Workforce Investment Board.

According to the civil complaint, Santos’ and Urrutia’s decades of experience and familiarity with the Department of Building Inspection was used to circumvent regulation and oversight by that department and the Planning Department.

That lawsuit also names the contractors that did the unlawful work and three property owners. The lawsuit now covers nine properties involved in permit fraud: 107 Marietta Drive, 147 Marietta Drive, 457 Roosevelt Way, 601A Fell Street, 1672-1674 Great Highway, 1740 Jones Street, 1945 Green Street, 2030 Vallejo Street and 2050 Jefferson Street.

Dodging Permit Laws
The permit fraud involved three types of schemes.

At three homes, 147 Marietta Drive, 601A Fell Street and 457 Roosevelt Way, the property owners hired Santos & Urrutia to assist in adding lower floors to their homes by digging below the existing foundation. These types of excavations require extensive regulatory oversight to ensure they’re done safely.

However, the defendants in this case misrepresented the work they planned to do as uncomplicated construction, like remodeling a bathroom or kitchen. They quickly obtained over-the-counter building permits for simple construction and then did major excavations far beyond the scope of those permits or without permits at all. They also failed to notify adjacent property owners of the excavations as required by law.

Only after being caught and cited by the Department of Building Inspection did the defendants file permit applications to get the correct permits. But even then the defendants repeatedly falsified the information on those applications and continued to work beyond the scope of their permits and in violation of numerous City stop-work orders.

The defendants used another tactic at four homes, including 107 Marietta Drive, 147 Marietta Drive, 1945 Green Street and 1740 Jones Street. At these properties, defendants fraudulently used the identity of licensed contractors and misappropriated these contractors’ specialized California Occupational Safety and Health Administration excavation permits to pretend that qualified contractors were actually working at the properties when they were not. This endangered the health and safety of their construction workers.

At seven of the nine properties, 107 Marietta Drive, 147 Marietta Drive, 1945 Green Street, 2030 Vallejo Street, 1740 Jones Street, 1672-1674 Great Highway and 2050 Jefferson Street, Peter Schurman, an engineering technician, forged civil engineer stamps and signatures on falsified special inspection reports submitted to the Department of Building Inspection. Special inspection reports are critical because they assess the quality and safety of construction materials and work.  Instead of hiring actual special inspectors, the defendants submitted Schurman’s forged reports to DBI. This threatened the safety of the workers on these projects as well as nearby residents. Schurman has been added as a defendant in the amended complaint. Meanwhile, the Department of Building Inspection ordered that all seven properties be re-tested and re-inspected, and all defects remediated.

The suit alleges the defendants violated San Francisco’s building and planning codes, the state law prohibiting unlawful, unfair and fraudulent business practices, and the State Housing Law. The lawsuit also alleges the defendants created a public nuisance with unsafe buildings.

Herrera is seeking a court order requiring all of the code violations at the properties to be fixed. He is also seeking to have the defendants disclose to the City all work they are performing in San Francisco, among other requirements. Additionally, the City is pursuing monetary penalties of up to $500 per day for each violation of the Building Code, up to $1,000 per day for each Planning Code violation, and up to $2,500 for each unfair business practice violation, as well as restitution for the check fraud victims. The total across the nine properties could be millions of dollars.

“I want to thank the attorneys, investigators, and other professionals in this office for their tireless work uncovering these schemes, as well as the hardworking staff at the Planning Department and the Department of Building Inspection who supported and assisted in this investigation,” Herrera said.

The case is: City and County of San Francisco et al. v. Santos & Urrutia Associates Inc. et al., San Francisco Superior Court case number CGC-18-569923, filed Sept.  20, 2018. Additional documentation from the case is available on the City Attorney’s website at: sfcityattorney.org

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