Lax laws are building resentment

A judge sentenced Sam Cover to seven years in prison for swindling people who hired him for building projects.

Yet three times since he was released in 2002, Washington state has issued new contractor’s licenses to him or his wife. And now the Spokane Valley man is under investigation for defrauding at least 97 more people of more than $500,000.

Short of conducting their own criminal background checks, the people who hired him had no way of knowing about his conviction for stealing $94,000 from 18 customers.

No criminal background check is required for someone who wants to become a licensed contractor, said Tom Pope, a construction compliance inspector in the Spokane branch of the state Department of Labor and Industries. Even if state officials know an applicant has a criminal record and has committed prior illegal acts, they can’t prevent the person from obtaining a license.

“We have made attempts to get those contractor laws strengthened,” Labor and Industries spokeswoman Elaine Fisher said. “But the Legislature has to decide.”

Cover, who is being held in the Spokane County Jail on a drug charge and $25,000 bail, declined a jailhouse interview. In addition to his 1995 theft conviction, he has a 1994 conviction for robbing a bank, court records show.

The current investigation involves Cover and his contracting with homeowners in Washington, Idaho and Oregon to construct pole buildings or garages, receiving payment for a third – or in some cases, all – of the costs, then doing little or no work, Spokane Valley police Sgt. Dave Martin said. In some cases, he finished most of the work but allegedly failed to pay the suppliers as promised in his contracts. The homeowners now have liens against their properties and are having to pay for their construction twice.

Spokane resident Traci Bowles, a single mother of two, was angry when she discovered that Cover had gone to prison for almost identical construction-related fraud. She thinks the government failed to protect consumers by not requiring criminal background checks for contractors when it issued him new licenses in 2002 and 2004 and issued one to his wife in 2005.

Bowles learned about Cover’s previous actions when a supplier gave her a copy of a Spokesman-Review article about his 1995 sentencing.

“The supplier was hesitant to give it to me or tell me or anyone else about this company,” Bowles said. “He said he couldn’t tell me what he knew.”

Bowles has led a crusade against Cover, contacting anyone she’s learned had contracted with him and suggesting they file reports with government and law enforcement authorities.

Bowles says Cover took nearly $5,000 from her, and all she has to show for it are post holes.

“I pay $150 a month on a loan I took out to pay for a garage,” said Bowles, 42. “And I don’t have money to throw around.”

When Cover was released from prison, he obtained a contractor’s license under his own name and did construction work in King County, according to the Labor and Industry records.

The license he’d held when he committed the thefts in the early 1990s was archived in the department’s system, Fisher said. But when it was checked, nothing raised a red flag. Even if the file had noted a felony conviction, it wouldn’t have prevented him from getting a new license.

A person applying for a license needs a bond, insurance and a “unified business identifier,” also known as a tax identification number. The license costs $109.70.

“A person can be denied a contractor’s license if they have prior infractions issued by the Department of Labor and Industries or there are summons and complaints against their bond,” Fisher said. “Once those fees are paid off, they can obtain a license.”

In 2004, Cover moved to the Spokane area from a small town near Seattle and obtained a contractor’s license under the business name ICS Steel Building.

When Cover’s second post-prison contractor’s license was suspended in May 2005, the final license was obtained in Cover’s wife’s name under a slightly different business name: ICS Steel Buildings Inc. His wife, Autumn, put $12,000 in an assigned bank account rather than attempting to get a bond – an acceptable alternative under Labor and Industries guidelines.

Cover used his wife’s license number to continue to make contracts, and he represented himself as the business owner, according to several homeowners who contracted to do business with him after May.

Autumn Cover is not under investigation, Spokane Valley detectives said.

The last license was revoked Dec. 1 because the company owed taxes to Washington, department officials said.

“We were notified by the (Washington) Department of Revenue that the business’s tax identification number had been revoked, so we revoked the contractor’s license,” said Fisher, the Labor and Industries spokeswoman. “Then everything started coming to light.”

Unfortunately, it was too late for ICS customers who say they were swindled.

“I think the state should be liable for the money Cover took because they gave him a license,” said Harold Key, 59, of Wilbur, Wash. “It took me 10 years to save up enough money to get a garage built and I had to take a loan out for an additional $5,000.”

Suppliers can legally put a lien on a person’s property when they aren’t paid, Labor and Industries officials said. They can also put a lien on the contractor, but if the contractor’s bond is tapped out, as is the case with Cover, then a property owner can become liable.

A contractor is supposed to provide a disclosure statement to a customer that explains that state policy. But homeowners who worked with Cover say they never received one. Also, Cover agreed to pay for all the supplies, according to his contracts.

“Spokane Overhead Door’s attorney sent me a letter saying they’d foreclose on the lien in seven months,” Key said. “I’m a disabled veteran and don’t have another $5,000. I’m going to take this to my legislator. I’m almost at my wit’s end about it.”

“This guy took us for a ride,” said Christy Fitzhugh, Spokane Overhead Door’s office manager and the business owner’s daughter. “Unfortunately putting liens on his customer’s properties was our only recourse.”

The family-owned business was out $25,000 as of Monday because of Cover, Fitzhugh said. It was owed $40,000 before Christmas.

“We are just a piece of the rock in the mess that this man created,” said Fitzhugh, referring to Cover. “This man can talk. It was unbelievable how he could make you think he was going to work it out.”

Jim Stillian, of Usk, Wash., said he and two relatives lost nearly $20,000 to Cover.

“My mother-in-law was going to have a snowshed built, my uncle was going to have a garage built and I was also going to have a garage built,” said Stillian, 53.

Stillian didn’t choose Cover randomly. He did his homework.

“I shopped nearly every builder and none of them were very responsive,” he said. “Sam was (responsive), and he was very smooth. His references were all glowing. We talked to the lumber company (that was going to supply wood for the garage), and they said Sam was the best around.”

Holes were drilled for Stillian and his mother-in-law’s garage. The lumber was delivered. But that’s where the construction stopped.

“The issue that bothers us most is that he was convicted for doing this before, and the Department of Labor and Industries gave him another license,” Stillian said. “I was taken, and I’ve been around the block a few times.”