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Gas permit investigation exposes web of self-dealing by S&WB officials, city inspectors and contractors

The city and S&WB suspended several employees and stripped contractors of their licenses in response to state investigations and WWL-TV’s findings and questions.

NEW ORLEANS — Justin Schmidt smelled trouble last year when he had a new gas line installed at a rental property he owns.

But the stench didn’t come from the leaky gas line plumbers had just replaced. It was the city’s construction permitting system that had Schmidt sensing trouble.

Days after the work on his gas line was done, Schmidt learned that his plumber had not filed the required city permit to do the work. It was filed after he complained, in the name of Jay Arnold, a public official who oversees all plumbing permits and inspections in the city for the Sewerage and Water Board.

“How can a full-time employee of the Sewerage and Water Board like Jay Arnold have the time in the day to adequately tend to his responsibilities at S&WB while at the same time conducting the inspections and work reflected in these 1,095 (city gas permits),” Schmidt wrote in an email to top officials at City Hall and the Sewerage and Water Board on Nov. 19, 2020.

When Schmidt asked the plumber he hired, Paul Toups of Paul D. Plumber, who Arnold was and why he was involved in a job he had hired Toups to do, the plumber said Arnold had “a side business where he did plumbing and mechanical inspections."

But that wasn’t true. Arnold isn’t certified by the International Code Council and isn’t registered with the Louisiana State Unified Construction Code Council, so he can’t perform any inspections in Louisiana, according to the state Fire Marshal’s Office.

That means the Sewerage and Water Board official in charge of all plumbing inspectors and permitting in the city is not properly licensed to do inspections himself.

Arnold is, however, properly licensed to do private work as a gasfitter, and Sewerage and Water Board policies at the time allowed him to have side jobs as long as they didn’t conflict with his duties for the S&WB.

WWL-TV found a copy of an invoice in city records where Arnold charged Toups $400 to do the work at Schmidt’s house under Arnold’s gasfitter license. The public record includes 26 contracts attached to Arnold’s permits where he charges property owners and subcontractors an average of $880.

Unbeknownst to Schmidt, Paul D. Plumber did not have the proper gasfitter license, and that’s why Toups needed Arnold to pull the permit under his license.

“I think naturally now we're going to have to go back and get somebody else to inspect it and make sure it's all up to code and that there are no problems with it now that we've kind of discovered that this work was done by an unlicensed contractor,” Schmidt said.

Video: Hidden Dangers Part I

Video: Hidden Dangers Part II

City takes action

WWL-TV has been tracking gas-permit irregularities like that for months, using a database of thousands of permits and inspections based on tens of thousands of documents and photographs downloaded from the city’s online One-Stop database.

What the station discovered was a complex web of self-dealing involving Sewerage and Water Board officials, city permit inspectors and contractors. The city and Sewerage and Water Board suspended several employees and stripped contractors of their licenses in response to state investigations and WWL-TV’s findings and questions.

Arnold declined to answer questions from WWL-TV. Toups spoke to the station briefly, saying, “I didn't do anything wrong, so I'm not getting involved in that,” and abruptly hung up.

Schmidt received an email from the State Licensing Board for Contractors last month indicating it had opened an investigation into Arnold and Toups.

The gas line installation at Schmidt’s house covered the full range of issues investigators are targeting: It was work done without a permit; by a plumbing company without a gasfitter license; using a permit filed after-the-fact by the city’s top plumbing regulator; who appeared for the inspection as a side-job during business hours; and it was all inspected and approved by a city official who does unauthorized private work on the side as a plumber.

Legal and safety concerns

But it was just one of hundreds of jobs WWL-TV reviewed that involved serious legal and safety concerns, including some that passed inspection in spite of pressure readings that didn’t comply with the international fuel gas safety code.

The code requires inspectors to check gas lines for leaks by pumping the pressure up above 3 psi and making sure the gauge maintains that pressure over at least 10 minutes. WWL-TV found dozens of inspection photos showing the pressure gauge reading below 3 psi, including the inspection photos from Schmidt’s house that showed it set to 2.5 psi.

“Gas is ignitable with just a spark,” said State Rep. Foy Gadberry, a former inspection company owner. “It's more important to make sure it's properly piped, the pressure on it, there's no leaks in the joints and that type of thing.”

A member of Arnold’s staff at the Sewerage and Water Board was also getting hundreds of gas installation permits on the side each year until he let his gasfitter license expire this past January. Vernon Marcotte is a plumbing inspections supervisor at the Sewerage and Water Board.

Like his boss, he is not certified or registered to do any inspections in Louisiana, according to the Fire Marshal’s Office.

Unlike his boss, Marcotte granted WWL-TV an interview and readily admitted he was “just filing permits… and then a licensed plumber would put in” the gas line.

Marcotte admitted knowing that those licensed plumbers were not licensed as gasfitters, and that’s why he let them use his license to get the work.

“A lot of master plumbers don't want to fool with (getting or renewing their gasfitter license),” he said. “I mean, it's just too onerous. And so, I would file the permit for them to go ahead and do their work.”

That admission appears to run afoul of the state’s criminal contractor fraud statute, which says it’s illegal if anyone “knowingly employs a subcontractor who does not possess the required license."

In a $300 contract filed with one of Marcotte’s permits in 2019, Marcotte hired a plumber named Jimmy Krummel to install gas lines and a gas generator at a house Uptown. But Krummel’s name is printed and signed as “Jimmy Kimmel,” the late-night TV host, and it’s signed in the same handwriting as Marcotte’s signature.

City records show Krummel had an inactive city gasfitter license at the time. Reached by phone, Krummel said Marcotte misspelled his name, but when WWL-TV said the signature was also misspelled, he said he would have to check with Marcotte and did not call back.

In 2020 alone, Marcotte pulled 236 gas permits to install gas lines, water heaters and gas generators in people’s homes and apartments. Asked what he was paid for that, he said, “just reimbursement of a license fee.” But contracts he signed and filed with the city permitting office show him charging an average of $276 for the jobs, usually to a plumber listed as a “subcontractor.”

Even subtracting city permit fees, that can add up to more than $58,000 a year. That’s more than Marcotte's taxpayer-funded salary of about $57,000 from the Sewerage and Water Board. And again, it's for work Marcotte says he didn't actually do.

“You're being paid by the public for your job but yet you're working within those hours somewhere else or inspecting something else,” Gadberry said. “So, it's a misuse of public funds, which is criminal.”

Side jobs during lunch breaks?

Marcotte says he's not double-dipping. He’s an hourly employee, but said he tries to schedule inspections of his gas jobs during his Sewerage and Water Board lunch breaks. But the timestamps on the photos of him at inspections run the gamut, from 8 a.m. to the early afternoon on days when he claims 8 hours working for the Sewerage and Water Board on his timesheets.

He often appeared in those inspection photos in his Sewerage and Water Board uniform and employee badge. In one inspection photo from 2020, he is holding up his master gasfitter license for a third-party inspector from IECI, John Hall. A screenshot of the exact same photo appears in at least five other gas inspections performed by Hall, suggesting Marcotte didn’t really show up for those.

Starting in January when Marcotte’s license expired, he began showing up in inspection photos for permits held by another plumber and gasfitter, Danny Lambert. In some of the inspections, Marcotte shows up in the photos with his Sewerage and Water Board pickup truck, No. 65.

All those jobs, along with the gas work at Schmidt’s house and more than half the jobs under Arnold and Marcotte’s permits in the last three years, were inspected and approved by a city mechanical and gas inspector named Buddy Fraiche.

Fraiche confirmed to WWL-TV that Marcotte was there as the licensed gasfitter, but didn’t know why, given that Lambert had his own gasfitter license and had pulled the gas permits in his name. Marcotte told WWL-TV he was there “making plumbing inspection at the same time, probably.”

But public records suggest otherwise. Some of the jobs involved no plumbing work at all. Some of Fraiche's field inspection forms have the name "Vernon" scribbled on them, including one that adds a phone number confirmed to be Marcotte's cell phone.

And when WWL-TV called Lambert, he said Marcotte "asked me if I could file a couple jobs for him." In other words, now that Marcotte had an expired gasfitter license, he needed Lambert to get the permits for him; the opposite of what Marcotte had been doing for plumbers previously.

The State Licensing Board for Contractors has suspended Lambert’s license, charging him with letting unlicensed subcontractors use it illegally.

The city followed suit by suspending Lambert’s licenses on Oct. 25, but he appeared in city inspection photos as recently as this week. Safety and Permits Director Tammie Jackson said that when WWL-TV informed the city of those inspections she stepped in to make sure no completion certificates are granted.

Fraiche also has issues with side jobs. In addition to his full-time job as a city inspector making $56,000 in salary from taxpayers, Fraiche is also a licensed plumber. In his 2019 state application to be the qualifying license-holder for Hermanos Rivera Construction, Fraiche swore under oath that he had worked full-time for Hermanos Rivera for at least the previous four months.

He was a full-time city employee at that time. He told WWL-TV he continues to work at least 60 hours a week to fulfill both jobs.

That is not permitted by City Hall. Fraiche is also registered with the state as a third-party inspector with IECI, a private company that was caught duplicating inspection photos and where the owner and three other inspectors have been charged with fraud this year.

Jackson said Fraiche was “double dipping” by doing side work without City Hall’s approval and no city inspectors are allowed to work for IECI. She suspended him from his city job, and the state suspended his plumbing license.

And there’s one more layer to the process WWL-TV uncovered.

Fraiche’s plumbing permits are also reviewed and approved by Arnold’s staff or even by Arnold himself, according to the city’s permitting records. In some cases, Arnold stamped permit applications to grant Fraiche plumbing permits on the same home construction project where Marcotte received the permit as the contractor responsible for installing gas or mechanical equipment. Fraiche then inspected or approved the gas or mechanical work on the back end and issued a certificate of completion on the job.

Fraiche acknowledged in an interview that the arrangement made it look “like I'm in cahoots or the Sewerage and Water Board has power over me because we inspect each other's jobs since I do have a master (plumber’s) license.” But, he said, “That couldn't be further from the truth.”

A lot of this has been kept under wraps by the Sewerage and Water Board’s antiquated plumbing permitting system. The board told WWL-TV that no computerized database of plumbing permits and inspections exists, not even an index. The station has fought for over a year just to be able to see the room where permits are kept and maintained by Arnold and his staff during work hours.

The Louisiana State Licensing Board for Contractors sent a scathing letter to the Sewerage and Water Board in January, blasting it for being “obstructionist” to the licensing board’s efforts to root out contractor and permitting fraud.

Arnold’s permitting office “operates on what can only be described as index cards, file cabinets and such, (and) it makes it almost impossible to for state investigators, or the public, to find information on projects,” the letter said.

In response to Schmidt’s complaint in November 2020, former New Orleans Safety and Permits Director Zach Smith raised concerns about Arnold and Marcotte’s activities.

“While we do not manage these folks, it does appear that tax-funded individuals are doing a rather large amount of work in the field, on many projects it would appear that they might also be doing inspections on (for the water hookups, etc. as part of big renovations or new constructions),” Smith wrote in January 2021.

Jackson sent Smith’s concerns to Sewerage and Water Board attorney Yolanda Grinstead on January 11. Schmidt had also sent his original complaint in November 2020 to Sewerage and Water Board Executive Director Ghassan Korban.

But it took WWL-TV compiling gas inspection photographs of Arnold and Marcotte and asking about them for the Sewerage and Water Board to suspend employees and change its side-work policy to forbid them from performing any private work on utility connections – meaning electrical, water or gas -- in New Orleans.

“Your new findings have bolstered the scope of our investigation and expedited disciplinary action,” Korban said. “The fact that there have been employee suspensions is an indication that we are taking this matter very seriously.”

Asked about how employees who approve plumbing permits or supervise inspections are not allowed to perform any inspections in Louisiana, Korban said: “As part of our investigation, we are cooperating with external partners and regulators to ensure all plumbing department employees are in compliance with required certifications.”

The city said it has begun the process of scanning all plumbing permits from the Sewerage and Water Board’s paper-only system and filing them into the city’s online OneStop database, so they will be searchable along with building, mechanical, electrical and other permits and inspections required for construction.

Jackson said that process would be complete by the spring of 2022.

Ed. Note: The TV segment for Part 2 -- which aired Friday, Nov. 5, 2021 -- reported that state and city records show River Ridge Plumbing does not have a licensed gasfitter. State records do, in fact, show the company and owner Michael Ostarly have an active gasfitter license with the State Plumbers Board, but they are not registered with the city of New Orleans as required to do permitted work in the city.

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