NEW ORLEANS -- In October, we exposed how Lago Construction, a company with close ties to Gov. Bobby Jindal, was billing state taxpayers for time working on a state Katrina housing program while actually doing other work, including building the owners a mansion.
Two months later, the state is mum about the results of an internal investigation, and Lago is still being paid to monitor construction under the state’s Small Rental Repair Program.
And part of that work is doing reports checking the validity and accuracy of licensed engineers’ work – even though Lago and its employees hold no state engineering or code enforcement licenses.
The effect this is having on public construction work is on display in the three-year saga of Tony Pelicano’s rental property in Metairie.
The house was the first selected by the Jindal administration for construction management by the state’s Small Rental Repair Program.
Before Pelicano’s house, the state was awarding forgivable loans and letting the property owners get their own contractors and construction loans. But then the state began selecting the contractors and managing the work.
But the construction management hasn’t paid off for Pelicano. The rental property is a mess, even though it's never been lived in.
"The steps have been rebuilt three times by the contractor, and this is the outcome,” he said as he shook them with one hand. “And they're not attached to the cement in any fashion or any kind of way,” he added, lifting the whole unit off the edge of a cement driveway.
Bret Hosch, the project manager for state-selected contractor Woodrow Wilson Construction, says he's ready to fix any problems, but alleges that Pelicano has locked him off the property several times and even called the police on him when he’s tried to fix deficiencies. He believes Pelicano tampered with Woodrow Wilson’s work in an attempt to avoid state requirements to rent to low-income tenants.
“There is no way that that many fasteners, whether finishing nails, screws and lag bolts, you know, they don’t just back themselves out over a period of time,” Hosch said. “They have got to be shaken and pulled on in order to do that.”
The real issue here isn't a he-said-she-said over one house. It's about how the state has managed the rental repair program, in part using Lago Construction.
Pelicano’s house was supposed to be rebuilt for $89,000. Now the bill is $116,000 and Pelicano won’t accept it because he contends it was not built according to the plans.
He has two licensed engineering reports to back him up.
“If you go to the auto dealership, Friday afternoon, and you sign papers to buy a Lexus and Monday morning they try to deliver you a Camry, you're going to be upset, right?” said Fritz Gurtler, a civil engineer whose company, Gurtler Bros., was hired by Pelicano to check Woodrow Wilson’s work.
“Foundation beams are not in accordance with the plans,” Gurtler said. “Obviously it's cheaper to put two two-bys in than to put three in.”
Time dragged on and Pelicano, Woodrow Wilson and the state had several meetings. At an impasse, the state sent in Lago. Lago did a long report, opining on whether engineers Gurtler Brothers and Michael Cenac were correct in their assessment of Pelicano's house.
The state took the Lago report and said the house was ready to go. “We've sent out an independent engineer,” state housing program manager Brad Sweazy said, referring to Lago during testimony before a state legislative committee this summer. “We don't know how to move forward except to accept the work.”
But records show that Lago is neither independent nor an engineer.
First, the company was listed on Maier Consulting’s website as "partners" with Mark Maier, the man in charge of construction for the Small Rental Program for the Shaw Group. Maier ran the program under the previous state contractor, ACS. When Shaw sought to take over the project, it emphasized that it would keep Maier in charge and that Lago would provide construction monitoring.
And second, state records show that neither Lago, nor anyone at the company, has a state engineering or home inspection license.
We asked Gurtler how he felt about a non-licensed engineer checking his work.
“Well, everybody's entitled to their opinion in our society,” he said. “However, you have to look at the opinions based on the credentials of the person giving the opinion.”
Angelo Selby, a former Lago employee who was fired when he threatened to expose Lago’s billing practices, said he had an insurance adjuster’s license and some of the other employees had contractor’s licenses, but none of them were qualified to check engineers’ work.
He said Lago owner Praveen Kailas went with him and other colleagues to Pelicano's house in May.
“On the way out here I was like, 'How are we doing this inspection if we're not engineers?' And he said, 'Don't worry about it, just do it,'” he said.
We asked the state about Lago's lack of credentials. Division of Administration Spokesman Michael DiResto said in a statement:
"Lago was never contracted or tasked to perform home inspections or act as a code enforcement officer, but to provide construction monitoring."
Selby said he was hired by Kailas when he responded to an ad on Craigslist that said “inspectors needed.” But after he was hired, Kailas told him not to call himself an inspector.
“Oh, we're monitors,” he said. “That’s it. We're construction monitors. And that way, he wasn't liable."
Even the state’s chosen contractor questions how Lago could be used in that way.
“I was just questioning the validity of the report,” Hosch said. “I would much rather see a licensed engineer, a third party engineer.”
The state is threatening to hold Pelicano in default if he doesn't accept the house as-is.
Lago Construction did not respond to our questions. Our report in October noted that the state also gave Lago special work inspecting handicapped access at the Fischer developments in Algiers, even though Lago’s subcontract under the small rental program has nothing to do with HANO’s “Katrina Cottage” project at Fischer.
We asked DiResto how Lago could determine code compliance at Fischer without a license and he would only say that the state’s internal investigation is ongoing.