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State looks into flap over contractor fraud By CHRIS BRISTOL Is contractor fraud a big problem in Oregon? It all depends on whom you ask. According to the Oregon State Police, it is. According to the state Construction Contractors Board, it isn't. Which explains why the 1999 Legislature got involved in a bureaucratic battle over turf and why Josephine County District Attorney Tim Thompson was recently chosen to head up a new fraud unit in Salem to settle the dispute. The unit, part of the state Department of Justice, was created by lawmakers as a two-year pilot project to assess the extent of "unlawful activity" in the construction industry. With two agencies butting heads over the issue, lawmakers simply want a straight shooter to tell them the way it is, said Kristen Grainger, executive assistant to Attorney General Hardy Myers. "Their intention is to get the facts," she said, referring to the Legislature. "Currently we have two agencies disputing what the facts are." And in Thompson, the DA in Grants Pass since 1986, the state got its man, Grainger said. "His expertise is going to be really valuable," she said. "We're just thrilled to have an experienced prosecutor who can get to the bottom of this." The dispute dates back to 1995, when the Legislature created a fraud unit within OSP to assist the contractors board. Three detectives -- based in Medford, Bend and Salem -- were assigned to the unit, which the board underwrote at a cost of $300,000 a year. From the beginning, there was friction. Board member Mike Daly, an excavation contractor in Redmond, complained that OSP had an arrogant "good guy/bad guy" mentality and said the two agencies "simply didn't fit." "We had a difference of opinion as to how much fraud there was out there," he said. "We didn't think there was as much as (OSP) said." Funding the OSP unit was not "cost-effective," Daly argued. He contends that most contractor complaints are civil in nature (stemming from disputes over workmanship) and can best be settled through mediation. "We get 400 claims a month, and we mediate three-quarters of them away," he said. "They (OSP) were only interested in criminal prosecution." A spokesman at state police headquarters in Salem agreed the two agencies came to bureaucratic blows. The problem, according to Sgt. Kent Zwicker, was philosophical in nature. With more than 7,000 complaints a year, his detectives never lacked for something constructive to do. "Without question there is a number of cases out there," he said, "and there's not the resources to deal with them." The disagreement came to a head in May 1998, when the board voted to stop funding the OSP unit. OSP brass cried foul, which ultimately resulted in the Legislature's decision to hire an experienced prosecutor. Daly said he and other members of the contractors board are satisfied with the compromise. "We have a fellow now who's going to be in charge, which we never had before," he said, referring to Thompson. "I have high hopes this is going to work out." Zwicker agreed, in a way. "We're optimistic that this will essentially bring to light the true level of the problem in the industry," he said. Thompson, 48, said he had been looking for a professional change of pace and jumped at the chance to "quarterback" the dispute. The position was funded for only two years. He acknowledged that depending on which agency is right -- the contractors board or state police -- he may be working himself out of a job. "It may be that there's no problem," he said. "But if there is, we need to figure out what it takes to solve it." Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA