Contractors accuse Lennar of Extortion

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By Sarah Phelan
Lennar has been giving contractors a choice between a rock or a hard place: reduce your unpaid invoices by up to 20 percent—or be excludedfrom bidding work for a minimum of six months. Nice, real nice.

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Marc McGuire, a tile contractor from San Diego, and CALPASC’s Brad Diede on CNBC yesterday to discuss accusations that Lennar is extorting contractors

Three top Lennar executives sent these demands to contractors in Southern California in a letter dated January 16, 2007. So far, no similar letters have emerged locally, but that doesn’t mean similar demands haven’t been happening here, warns Brad Diede. Diede is executive VP of the Sacramento-based California Professional Association of Specialty Contractors, which represents 500 trade contractors and construction suppliers nationwide.

Outraged, Diede fired off a letter to Attorney General Jerry Brown, in which he wrote,
“We believe this potentially criminal act is a flagrant example of the abuses of power builders exercise over trade contractors in the State of California.”

But so far, Lennar has not been found guilty of civil or criminal violations in this case.

As Diede told the Guardian, “We heard from one District Attorney, saying as long as Lennar is paying their contracts there are no civil or criminal problems. The problem is that the builder is still able to back-charge the trade contractors in ways that inevitably reduce their unpaid invoices.”

Hey, with the real estate market tanking, maybe folks who bought homes from Lennar can ask for refunds on their now less valuable property? No? After all, if their homes are depreciating, Lennar surely owes them?

Meanwhile, all this raises more questions about the wisdom of Mayor Gavin Newsom handing over the rest of Hunters Point shipyard to Lennar in a no-bid contract, dunnit?
The last 12 months haven’t exactly added up to great PR for developer Lennar.

First, the Florida-based developer bungled its handling of toxic asbestos dust down at the Hunters Point Shipyard. Then, it got socked with a lawsuit by three employees at the shipyard, who accuse the company of whistleblower retaliation, including racial harassment and discrimination, after they criticized Lennar’s handling of dust and its compliance with minority contracting requirements in San Francisco.

All of which is why it's not OK for the Mayor's Office to refer the media to Lennar's PR person, when the press have questions about the Florida-based developer's role and actions in San Francisco.