Business and Professions Code 7027.3 BPC - Fraudulent Use of a Contractor's License Number
To ensure that construction work in California is performed safely and in compliance with building codes, the state requires all contractors to be licensed. As a result, every contractor is issued a unique license number.
Because any attempt to subvert the integrity of this system could result in unsafe construction, it's also a crime for anyone to use someone else's contractor's license number for fraudulent purposes.
This crime is embodied in California Business and Professions Code 7027.3 BPC. If you're convicted of this crime, depending on case facts, you could face significant fines and up to 3 years in prison.
In other words, the California legislature has moved to penalize anyone who claims to be a licensed contractor and fraudulently uses a contractor's license number. Under BPC 7027.3, using a contractor's license number fraudulently is a serious crime that can be charged as a felony and could even result in a prison sentence.
BPC 7027.3 says, “Any person, licensed or unlicensed, who willfully and intentionally uses, with intent to defraud, a contractor's license number that does not correspond to the number on a currently valid contractor's license held by that person, is punishable by a fine not exceeding $10,000, or by imprisonment in state prison, or in county jail for not more than one year, or by both that fine and imprisonment. The penalty is cumulative to the penalties available under all other laws of this state. If upon investigation, the registrar has probable cause to believe that an unlicensed individual violates this section, the registrar may issue a citation pursuant to Section 7028.7.”
However, to prove someone guilty of violating this law, a prosecutor has to prove, beyond a reasonable doubt, the defendant willfully and intentionally used, with intent to defraud, a contractor's license number. So, let's review this statute further below.
BPC 7027.3 - Explained
As noted, under BPC 7027.3, using someone else's contractor's license number for fraudulent purposes is illegal.
This includes using the license number in an attempt to get around the licensing process and obtain a permit or contract without actually being licensed. It also includes using someone else's license number other than your own to avoid liability for your work.
Specifically, the law makes it a crime for a person to “willfully and intentionally use, with intent to defraud, a contractor's license number that does not correspond to the number on a currently valid contractor's license held by that person.”
For the purpose of this law, “willfully” means with purposeful intent. “Intent to defraud” refers to an unlawful attempt to deceive someone, especially out of money or property.
In the context of using someone else's contractor license number, even if you legitimately intend to do good work, you're earning money unlawfully, so it's a form of fraud.
What Are Some Examples?
EXAMPLE 1: Jimmy has been a construction employee for many years but is not a licensed contractor. His next-door neighbor wants to do a full remodel of his house.
Seeing a lucrative opportunity, Jimmy tells his neighbor he's a licensed contractor and uses his former employer's license number to bid on the job. Jimmy can be charged with a crime under BPC 7027.3.
EXAMPLE 2: Maria has her contractor's license, but it expired because she forgot to renew it. She needs a job, so she uses a friend's valid contractor's license number to bid on the job, knowing that she won't be held liable if something goes wrong with her work. Maria can also be charged with violating BPC 7027.3.
EXAMPLE 3: Fred is a legitimate contractor with a valid license, but he's unsure if his insurance is current. He tells his client she has an active policy and uses the license number of another legitimate contractor to prove it. Even though Fred was merely trying to protect himself from liability, he can still be charged under BPC 7027.3.
What Are the Related Crimes?
In addition to BPC 7027.3, other California laws prohibit similar types of behavior. These laws may result in additional charges depending on the circumstances of the offense. These include the following:
- Contracting without a license defined under Business and Professions Code 7028 BPC: Performing the services of a contractor without a valid license or with a suspended license;
- False advertising defined under Business and Professions Code 17500 BPC: Making false or misleading statements about your credentials or a product or service you offer;
- Forging, counterfeiting, or possessing a fraudulent public seal defined under Penal Code 472 PC: This law makes it a crime to forge a public seal or to counterfeit a design or emblem;
- Diversion of construction loans defined under Penal Code 484b PC: This law makes it a crime for someone to divert money intended for construction costs.
What Are the Penalties for BPC 7027.3?
A violation of BPC 7027.3 is a “wobbler” offense in California, meaning it can be charged either as a misdemeanor or a felony offense.
Factors that will determine which route the prosecutor takes include your criminal history, the facts of the case, and any prior offenses. The penalties include the following:
- If you're convicted of a misdemeanor violation of BPC 7027.3, you face up to one year in county jail and a fine of up to $1,000;
- If you're convicted of a felony violation of BPC 7027.3, you face up to three years in state prison and a fine of up to $10,000.
What Are the Defenses for BPC 7027.3?
A skilled California criminal defense attorney may be able to raise several defenses in your case, depending on the facts of the situation. The common strategies are discussed below.
Perhaps we can argue that your actions were not willful. For example, you may be able to show that you mistakenly used the wrong license number or that you were unaware that using the number was illegal.
Perhaps we can argue that you lacked the intent to defraud. Even if you did use someone else's license number, you might have done so without intending to deceive anyone or to benefit financially.
Perhaps we can negotiate with the prosecutor for reduced charges or a case dismissal. Maybe through prefiling negotiating with the prosecuting agency and law enforcement to persuade them not to file formal charges in the first place, called a “DA reject.”
If you were accused of contractor's license fraud in California, contact our law firm by phone or contact form to examine the case details and legal options moving forward. Eisner Gorin LLP is based in Los Angeles, CA.