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September 26, 2014

FORMER GENERAL CONTRACTOR SENTENCED TO TWO YEARS IN PRISON FOR DEFRAUDING EMPLOYEES BY TAKING $80,000 IN WAGES AND KEEPING MONEY FOR HIMSELF FROM PUBLIC WORKS CONTRACTS

Filed under: California Defense Attorney — fayarfa @ 6:40 pm

SANTA ANA – A former general contractor was convicted and sentenced today for defrauding his employees by taking their wages totaling over $80,000 in loss and keeping the money for himself from a state public works contract. Sourin Babayan, 65, Glendale, pleaded guilty to the court to 17 felony counts of taking and receiving a portion of a worker’s wage on public works project and six felony counts of dissuading a witness from prosecuting a crime. He was sentenced to two years in state prison and ordered to pay $80,200 in restitution.

At the time of the crime, Babayan worked as a sub-contractor and owned SDB Construction (SDB). DJM Construction (DJM), a general contractor who was awarded a project by the State of California, for the improvement of a state developmental hospital in Costa Mesa.

On Jan. 9, 2013, Babayan, through SDB, was retained by DJM to install fire sprinklers for several buildings with multiple floors for an estimated $820,000. Babayan supervised 17 employees and was solely responsible for managing the payroll to complete the job. Although the contract with DJM for the job was still in negotiations, the defendant began work on the project. DJM had agreed to pay all materials, labor, general liability insurance, Workers’ Compensation Insurance, and a 15 percent mark-up directly to Babayan as profit.

Between Feb. 15, 2013, and June 22, 2013, Babayan required his workers to return a portion of their wages and threatened to terminate their employment if they did not comply. Over the course of the projects, the defendant submitted fraudulent and forged certified payroll records for labor to DJM and received a lump sum for payroll. Babayan then issued payroll checks for the correct amount due to his staff for proper bookkeeping. Babayan had his employees return some of their wages back to him and the defendant kept that money for his own personal use.

Around the first week of July 2013, Babayan resubmitted the contract under negotiations with DJM with a new estimate of $2.3 million to finish the job. Babayan was subsequently let go from the project and his staff lost their employment, which they were informed of on July 8, 2013.

On July 8, 2013, the Orange County District Attorney’s Office, who was earlier in the year contacted by SDB employees concerned about their wages and conducted an investigation. 

The Department of Industrial Relations’ Division of Labor Standards Enforcement (DLSE), also known as the Labor Commissioner’s office, also investigated this case and completed a civil wage and penalty assessment to help the employees receive their full wages in a timely manner.

Labor Commissioner Julie A. Su said, “This case is another example of the serious nature of wage theft and our commitment to ensuring maximum civil and criminal penalties to put an end to it. Employers in the underground economy who have concluded that it is cheaper to break the law, the chances of getting caught are slim, and the penalties when you do get caught are minimal should know that those days are over. I am very appreciative of our relationship with the Orange County District Attorney’s Office.”

The Orange County District Attorney and the Labor Commissioner have been working together on joint investigations to ensure that all labor laws are enforced on public works jobs, including payment to workers of the wages they’ve earned.

On July 12, 2013, Babayan invited all his employees to his house under the guise of giving them their last paychecks. He then dissuaded his employees as witnesses in the prosecution of a crime instead of giving them their last paycheck.

Deputy District Attorney Donde McCament of the Insurance Fraud Unit prosecuted this case.

Orange County District Attorney / Case# 12NF0653 / September 25, 2014

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