Bond amendment placed on pool contractor bill

Erin Neff

Friday, April 13, 2001 | 10:24 a.m.

CARSON CITY -- Consumers who have filed 2,000 complaints against pool contractors are still going to be out millions of dollars, but a Senate bill passed out of committee Thursday will offer protection against future problems.

Senate Bill 217, which cleared the Senate Commerce and Labor Committee, would prohibit pool contractors from also financing the pool or spa project and requires they post a surety bond for such work.

An amendment allows the state Contractors Board to institute a performance bond for each particular pool project if a valid complaint is filed against the contractor.

Sen. Terry Care, D-Las Vegas, likened negotiations on the bill -- with Monday's committee passage deadline looming -- to the final days of the Vietnam War.

"It's starting to remind me of the last days of Saigon," Care, primary sponsor of the bill, said. "I want to get this baby on a chopper out."

The committee obliged after hearing hours of testimony from victims of a Cascade Pool scam and after four work sessions on the bill.

"There are a handful of bad companies out there, and they have caused broken dreams for consumers in Nevada and have cost consumers hundreds of thousands of dollars," committee Chairman Randolph Townsend, R-Reno, said.

The amended bill requires contractors to post a $100,000 surety bond and gives the Contractors Board discretion to impose a performance bond of up to 100 percent of the project's cost in the event a valid complaint is filed against the contractor.

The bonding should create a fund to help consumers who are ripped off by shady pool contractors.

Pool contractors would also be required to undergo background checks and have all employees receive work cards. The bill also requires the Contractors Board to adopt regulations banning bait-and-switch advertising.

Violations would be categorized as a category D felony, punishable by 1 to 4 years in prison and fines of up to $5,000.

Margi Grein, executive officer of the Contractors Board, testified in support of Care's amendment and urged the committee to support the measure.

"It's our job to protect the public from fraudulent contractors," Grein said.

The Contractors Board has been struggling with shady pool contractors since 1997 when a scam that cost consumers $8 million led to legislation. That legislation passed both houses but was vetoed.

"This industry had a chance to clean its act up and it didn't," Townsend said.

In Las Vegas, dozens and possibly hundreds of homeowners were victimized in the Cascade Pools case.

Cascade had its license revoked last fall by the state Contractors Board for failing to make full disclosures in pool and finance contracts.

Gregory Majeroff is the former owner of the pool company and an affiliated finance business, United Federal Financial Corp. The state Financial Institutions Division issued a cease-and-desist order against United Federal in 1999 because it believed the company was making loans secured by a lien on real property without the required Nevada mortgage-company license.

According to previous testimony, Majeroff would go door to door with brochures about the pools and offer a separate company's creative financing. Some victims signed a credit application for the financing, went out of town and returned to find a giant hole in their back yard.

At that point, Majeroff -- who also served as the loan officer -- would send people notices that foreclosure would begin if they didn't make the loan payments. The problem was, they never got any money from United Federal and most were left with either holes in their yard or nothing.

One contract for a $29,779 loan carried a finance charge of 31.487 percent, bringing the total cost to $281,971 over the life of the loan.

The amended bill will now be forwarded to the full Senate.