Judge Mary H. Strobel, Case 21STCP02831 2023-01-05 Tentative Ruling

Petitioner Evan Mancuso dba Gold Constructors (“Petitioner”) petitions for a writ of administrative mandate directing Respondent Contractors State License Board (“Respondent” or “the Board”) to rescind an administrative decision that revoked Petitioner’s contractor’s license and ordered Petitioner to pay $25,498.49 for the costs of the Board’s investigation and enforcement.

Petitioner filed objections to the record on December 16, 2022, December 19, 2022, and December 22, 2022. Petitioner’s first, second, and third objections are overruled. Pursuant to Government Code section 11523, the items Petitioner objects to are properly included in the administrative record. Although Petitioner does not provide sufficient grounds to exclude items from the record, the court takes Petitioner’s concerns regarding the first amended accusation, Choi declaration, and E3 release of lien into account.

On or about October 24, 2018, Marco Ortmond (“M.O.”) executed a written home improvement contract with Red Vision Construction (“Red Vision”) to convert a recreational room and carport into an Accessory Dwelling Unit (“ADU”) at a residence located on Arleta Avenue in Arleta, California (“the Arleta Avenue Project” or “Project”). M.O. and his mother are the owners of the Arleta property. (AR 1012:10-12.) Red Vision is a construction company operated by David Acosta (“Acosta”). (AR 365-369.) Acosta poses as a licensed contractor to homeowners, but Acosta has never been licensed as a contractor nor has he ever been registered with the Board as a home improvement salesperson. (AR 1335-1336, 1339.)

During the contracting process, Acosta told M.O. that he could help M.O. obtain financing to pay for the ADU conversion, and that Red Vision would be the contractor on the loan paperwork. (AR 381, 1017:5-12.) However, Acosta, unbeknownst to M.O., switched contractors for the Project to Petitioner Evan Mancuso, dba Gold Constructors, license number 548724. (AR 92.) Instead of an ADU conversion, the scope of work listed on the loan application was only for the installation of three items at above-market prices: an energy certified air conditioner ($23,000), energy certified tankless water heater ($14,000), and energy certified roofing ($31,900). (AR 251.) When M.O. eventually asked Acosta about the change of contractors, Acosta told him that Petitioner was the one who would perform the work. (AR382.)

Acosta prepared the Energy Efficient Equity (“E3”) loan application for the homeowners’ electronic signature, and on November 30, 2018, M.O. and his mother electronically signed the loan application. (AR 381- 382, 235-248.) The loan was for $68,900 at the interest rate of 8.48% over 30 years with semi-annual payments of $3,723.27, which was secured by allowing E3 to record liens against MO’s property, with payments to be added to MO’s property’s tax assessments. (AR 235-248, 295-342.)

On or about December 12, 2018—before any work had begun on the Arleta Avenue Project—E3 received a Certificate of Completion with the Petitioner’s electronic signature and the purported signatures of the homeowners. (AR 351-353, 382.) However, neither M.O. nor his mother ever signed the Certificate of Completion. (AR 1079:2-16, 1301:12-19, 1302:6-20.) Having received the Completion of Certification, E3 released the full loan amount of $68,900 to Petitioner on December 14, 2018. (AR361.) Petitioner then transferred $60,000 to an account belonging to Acosta as follows: $10,000 on December 12, 2018; $20,000 on December 19, 2018; and $30,000 on January 17, 2019. (AR 356-358, 1240:6-1241:6.) Petitioner kept the remaining $8,900, but Petitioner never started his work on the Project. (AR 291, 1322:24-1323:8, 1342:14-19.)

Acosta arranged for some work to be done on the Project starting on January 3, 2019, but the work ceased on February 18, 2019. (AR 382-383.) Because the ADU conversion was never finished, the homeowners were unable to were unable to rent out that part of the property and thus were unable to make the loan payments to E3. (AR 384.) M.O. was forced to take out a personal loan and use credit cards to complete the ADU conversion with a different contractor, which was finalized in May of 2020. (AR 639, 1314:4-9.) M.O. was ultimately forced to sell the property in July of 2020 to pay off the E3 loan and personal debts. (AR 652, 1066-1068, 1315:20-1316:6.)

In June 2019, M.O. filed a complaint with the Board. (AR150-153.) As part of the Board’s investigation, an industry expert inspected the property and determined that Petitioner never installed the new air conditioner, tankless water heater, or roofing. (AR 269-275, 1342:5-19.) Petitioner has nonetheless failed to reimburse the homeowners for the $8,900 in loan proceeds he received. (AR 383-384.) Petitioner also did not have workers compensation coverage at the time of the Arleta Avenue Project. (AR 133-134.)

On February 12, 2021, the Board filed a first amended accusation (“the accusation”) against Petitioner for the following 7 causes for discipline:

1. Failing to supervise construction activities, manage construction activities, make technical or administrative decisions, check jobs for proper workmanship, or provide direct supervision on the Arleta Avenue Project site, in violation of Business and Professions Code section 7068.1.

2. Abandoning and failing to complete the Arletta Avenue Project without legal excuse—subject to discipline under Business and Professions Code section 7107.

3. Aiding and abetting an unlicensed person, David Acosta, in evading the provisions of the Contractors State Law—subject to discipline under Business and Professions Code section 7114(a).

4. Failing to comply with Business and Professions Code section 7158(a) by filing a false completion certificate with Energy Efficient Equity to obtain funds prior to the completion of the work—subject to discipline under Business and Professions Code section 7115.

5. Committing willful and/or fraudulent acts by fraudulently taking $68,900 in loan money—subject to discipline under Business and Professions Code section 7116.

6. Contracting with an unlicensed contractor—subject to discipline under Business and Professions Code section 7118.

7. Failing to maintain workers’ compensation coverage on the Arleta Avenue Project—subject to discipline under Business and Professions Code section 7125.4(a).

An administrative hearing was held on the accusation before an administrative law judge (“ALJ”) on May 20, 21, and 25, 2021. On June 16, 2021, the ALJ issued a proposed decision which made detailed fact findings and found that the Board had established, by clear and convincing evidence, the fourth (filing a false completion certificate), fifth (willful and/or fraudulent act), and seventh (failure to maintain workers’ compensation coverage) causes for discipline in the accusation. However, the ALJ found that the Board did not establish the first, second, third, or sixth causes for discipline. (AR 52-57.)

The ALJ recommended that the Board revoke Petitioner’s contractor license and prohibit Petitioner from serving as an officer, director, associate, partner, manager, or qualifying individual of any licensee while his license is revoked. (AR 60-61.) The ALJ also ordered Petitioner, pursuant to Business and Professions Code section 125.3, subdivision (b), to pay $25,498.49 in investigation and enforcement costs incurred by the Board. (AR 51, 60.)

Before making his recommendation, the ALJ noted that the Board’s Disciplinary Guidelines call for discipline ranging from one to three years of probation to outright revocation for the causes for discipline established against Petitioner. (AR 58.) The Guidelines include several factors that should be considered when making a disciplinary determination, including the severity of the acts, the harm to the public, and any mitigation or rehabilitation shown by a contractor subject to discipline. (AR 58-59.) The ALJ found that Petitioner had engaged in serious conduct—fraud—and had failed to accept any responsibility for his actions. Moreover, the ALJ found that the homeowners were substantially injured by Petitioner’s actions, that Petitioner failed to show any effort to mitigate the homeowner’s injury, and that Petitioner presented no evidence of rehabilitation. (AR 59-60.) Due to these aggravating factors, outright revocation was recommended. (Ibid.)

On August 13, 2021, the Board adopted the ALJ’s proposed decision revoking Petitioner’s license. The Board’s decision became effective on September 13, 2021. (AR 26.) Petitioner submitted a petition for reconsideration, which was received by the Board on September 13, 2021. Because the petition for reconsideration was not received prior to the effective date of the Board’s decision, as required by Government Code section 11521, the Board denied the petition for reconsideration. (AR 27, 63.)

On August 30, 2021, Petitioner filed his verified petition for writ of administrative mandate. On September 9, 2021, the court denied Petitioner’s ex parte application for a stay of the administrative decision.

On March 17, 2022, the court granted Petitioner’s motion to file a first amended petition. That same day, Petitioner filed his first amended petition and memorandum in support. On October 31, 2022, Petitioner moved for judgment on the writ. The court has received the Board’s opposition, Petitioner’s reply, the administrative record, and the joint appendix.

The court also received Petitioner's objections to the record and Board’s opposition to Petitioner's objections. The court’s rulings on the objections are noted above.

Under CCP section 1094.5(b), the pertinent issues are whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the agency has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (CCP § 1094.5(b).)

Because Petitioners’ contractor license concerns a fundamental vested right, the court exercises its independent judgment on the record. (See Mickelson Concrete Co. v. Contractors' State License Bd. (1979) Cal.App.3d 631, 634 [finding trial court properly exercised its independent judgment when reviewing evidence presented at the Contractors State Licensing Board hearing].) Under the independent judgment test, “the trial court not only examines the administrative record for errors of law, but also exercises its independent judgment upon the evidence disclosed in a limited trial de novo.” (Bixby v. Pierno (1971) 4 Cal. 3d 130, 143.) The court must draw its own reasonable inferences from the evidence and make its own credibility determinations. (Morrison v. Housing Authority of the City of Los Angeles Board of Commissioners (2003) 107 Cal. App. 4th 860, 868.) However, “in exercising its independent judgment, a trial court must afford a strong presumption of correctness concerning the administrative findings, and the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.)

An agency is presumed to have regularly performed its official duties. (Evid. Code § 664.) Petitioner bears the burden of proof in this mandamus action. (See Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 32; Bixby v. Pierno (1971) 4 Cal. 3d 130, 143.)

Petitioner argues that the ALJ applied the wrong standard of proof to the causes for discipline asserted against Petitioner in the Board’s first amended accusation. Petitioner also argues that the Board violated his right to due process by not disclosing that E3 released their loan to M.O. and the associated lien on the Arleta Property. Finally, Petitioner argues the Board abused its discretion in determining the appropriate discipline.

In opposition, the Board argues that Petitioner relies on irrelevant evidence that was not presented at the administrative hearing and thus cannot be considered here. The Board also argues that it did not abuse its discretion in determining the appropriate discipline.

Petitioner replies by reiterating that the Board violated his right to due process and by reiterating that Board’s discipline is capricious and an abuse of discretion.

Petitioner argues that the ALJ did not apply the clear and convincing standard at Petitioner’s administrative hearing.

Indeed, “the proper standard of proof in an administrative hearing to revoke or suspend a . . . license should be clear and convincing proof to a reasonable certainty and not a mere preponderance of the evidence.” (Ettinger v. Board of Medical Quality Assurance (1982) 135 Cal. App.3d 853, 856.)

In his proposed decision, the ALJ explicitly stated he was using a clear and convincing standard to determine whether the Board had established the various causes for discipline in its first amended accusation. (AR 52-57.) For example, the ALJ found that the Board did not establish the third cause for discipline because it was not clearly and convincingly established that Petitioner knew Acosta was unlicensed. (AR 053.) However, the ALJ found that the Board clearly and convincingly established the fourth cause for discipline for submitting a false Certificate of Completion, the fifth cause for discipline for committing willful and/or fraudulent acts, and seventh cause for discipline for failing to maintain workers’ compensation insurance. (AR 54-57.) For the reasons stated, infra, the court agrees.

Petitioner does not dispute many of the ALJ’s factual findings underlying the Board’s decision. Rather, the gravamen of Petitioner’s argument is that M.O.’s complaints and the Board’s formal accusations are invalid because E3 wrote off M.O.’s loan and released the lien on the Arleta Property before the Board filed its accusation. According to Petitioner, the Board—in violation of Petitioner’s right to due process—knowingly misrepresented that M.O. paid off the E3 loan when in fact the Board knew that E3 wrote-off the loan.[1] In support of his argument, Petitioner offers a declaration from Laura Choi, Vice President of Operations for FortiFi/E3, which includes an exhibit documenting the release of the loan.[2] The declaration is dated May 28, 2021—three days after the administrative hearing concluded.

Petitioner argues that he became aware of the recorded release of E3’s loan to M.O. after the administrative hearing, and the ALJ’s decision not to consider the Choi declaration and attached exhibit demonstrating a recorded release of the E3 loan deprived him of due process. The Board argues that with reasonable diligence Petitioner could have discovered the recorded release prior to the close of the administrative hearing. Because it was not a part of the administrative record, the Board argues it should not be considered here. Alternatively, the Board argues that even if the court were to consider the Choi declaration, it does not discredit the ALJ’s findings.

“Where the court finds that there is relevant evidence that, in the exercise of reasonable diligence, could not have been produced or that was improperly excluded at the hearing before respondent, it may enter judgment as provided in subdivision (f) remanding the case to be reconsidered in the light of that evidence; or, in cases in which the court is authorized by law to exercise its independent judgment on the evidence, the court may admit the evidence at the hearing on the writ without remanding the case.” (CCP § 1094.5(e).)

As a threshold matter, the Choi declaration is already part of the administrative record. (AR70-72.) While the argument is not developed, Petitioner appears to argue the Board erred in not considering that declaration. However, as noted by Respondent, the Choi declaration was submitted after the evidence had been closed in the administrative hearing. The declaration of Laura Choi establishes that E3 released M.O.’s loan on August 18, 2020. (AR 72.) But Petitioner offers no evidence that the Board knowingly misrepresented this fact during the administrative hearing. Petitioner has not developed a persuasive argument the ALJ or the Board erred in not considering this evidence.

The release of the loan upon which the Choi declaration is based occurred 10 months prior to the administrative hearing. The Board has a colorable argument that with reasonable diligence, Petitioner could have presented this evidence in the administrative hearing. In any event, even if the Choi declaration and recorded loan release are considered, Petitioner does not show those documents provide a defense to the Board’s accusation.

For purposes of analysis, the court will consider the loan release and Choi declaration. Petitioner’s conclusion that E3’s release of M.O.’s loan invalidates the ALJ’s findings does not follow, as further discussed below.

The ALJ found by clear and convincing evidence that Petitioner submitted a Certificate of Completion to E3 before starting work on the Arleta Project. (AR 54-55.) Petitioner contends that he thought the Project was finished when he submitted the Certificate.

Business and Professions Code section 7158, subdivision (a), states: “Any person who shall accept or receive a completion certificate or other evidence that performance of a contract for a work of improvement, including, but not limited to, a home improvement, is complete or satisfactorily concluded, with knowledge that the document is false and that the performance is not substantially completed, and who shall utter, offer, or use the document in connection with the making or accepting of any assignment or negotiation of the right to receive any payment from the owner, under or in connection with a contract, or for the purpose of obtaining or granting any credit or loan on the security of the right to receive any payment shall be guilty of a misdemeanor…” Business and Professions Code section 7115 provides a cause for discipline, in part, when a licensed contractor fails in any material respect to comply with the provisions of the Contractors State License Law, or any rule or regulation adopted pursuant to it.

The evidence shows that Petitioner submitted a Certificate of Completion for the Arleta Project to E3 on December 12, 2018. (AR 351-353.) However, M.O. states in his declaration that work on the Project had not even started at that time. (AR 382.) Petitioner argues that M.O. is not credible because M.O. did not disclose to the Board that E3 paid off his loan, but multiple portions of the administrative record corroborate M.O.’s statements.

First, M.O. provided photos of the construction site as part of his complaint to the Board. Those photos are dated June 18, 2019—approximately six months after Petitioner submitted the Certificate of Completion for the Arleta Project to E3. (AR 254-262.) The photos are of the front, back, sides, and interior of the ADU, and an air conditioner unit or tankless water heater is not visible in any of them. (Ibid.) Viewed collectively and in context, the pictures depict an abandoned construction project. The photos corroborate M.O.’s timeline of events.

Second, after performing an investigation of the Project site, E3 wrote-off their loan to M.O. In her declaration, Laura Choi, Vice President of Operations for E3, states that E3 performed an investigation of the Arleta Property after receiving M.O.’s complaint. (AR 72.) Choi also confirms that E3 released their lien on the Property, effectively causing E3 to bear the entire cost of the loan. (Ibid.) Although Choi does not explicitly state this, it is reasonable to infer that E3 would not bear the cost of the loan if their investigation revealed that an air conditioner, tankless water heater, and roof had been installed.

Third, Petitioner contends he believed the Project was complete when he submitted the Certificate of Completion. In support, Petitioner offers photos of the Project site he allegedly received from Acosta on the same day he submitted the Certificate of Completion to E3. (AR 290.) The photos show an air conditioner, roofing materials, and a picture of an ADU with a roof. (AR 824-828.) However, included with the photos is a text message that reads “Arleta…getting ready.” (AR 824.) It’s unlikely Acosta would have sent Petitioner a text saying “getting ready” if the installation was complete. Moreover, the photos submitted by M.O. from June of 2019 contradict what Petitioner claims the photos from Acosta show. The photos Petitioner offers are of a finished ADU, yet six months later M.O. produced photos of a half-completed ADU.

Finally, Petitioner argues that M.O. signed the Certification of Completion that he sent to E3—proving that Petitioner had reason to believe the work was finished. (AR 352, 384.) Petitioner testified at the hearing that M.O. signed the Certificate. (AR 1422.) M.O. testified that he did not. (AR 1301.) The ALJ and Board found M.O.’s testimony more credible than Petitioner’s for numerous reasons, (AR40-43) including because M.O. had no motive to sign the certificate when the work had not been started. The loan proceeds were released to Petitioner, not M.O.

M.O.’s statements are also corroborated by photos and an independent investigation by E3. Petitioner, on the other hand, says he believed the installations were complete when he submitted the Certificate of Completion. His contentions are either unsubstantiated or contradicted by the record. The court finds the ALJ’s and Board’s determination of credibility is supported by the weight of the evidence.

Accordingly, the weight of the evidence supports the ALJ’s findings that Petitioner falsely submitted a Certificate of Completion to E3 before work on the Arleta Project was complete, in violation of Business and Professions Code section 7158.

The ALJ found by clear and convincing evidence that Petitioner committed willful and fraudulent acts when he willfully submitted a false Certificate of Completion to E3 and thereafter knowingly accepted the full loan proceeds from E3 before the project had been completed. The ALJ also found that the homeowners were substantially injured when Petitioner subsequently transferred most of the loan proceeds to Acosta before the Arleta Project was complete because Acosta abandoned the Project, and the homeowners were forced to take out another loan and incur other debts to pay for the Project’s completion. Petitioner contends that he believed work on the Project was complete when he submitted the Certificate of Completion and argues that the ALJ applied the wrong standard of review.

Business and Professions Code section 7116 states: “The doing of any wilful [sic] or fraudulent act by the licensee as a contractor in consequence of which another is substantially injured constitutes a cause for disciplinary action.”

For the reasons stated above, the record supports that Petitioner willfully submitted a fraudulent Certification of Completion to E3. On or about December 12, 2018—before any work had begun on the Arleta Avenue Project—E3 received a Certificate of Completion with the Petitioner’s electronic signature and the purported signatures of the homeowners. (AR 351-353, 382.) M.O. testified that neither he nor his mother ever signed the Certificate of Completion. (AR 1079:2-16, 1301:12-19, 1302:6-20.)

The record also indicates Petitioner had a strong motive to submit the Certification of Completion early. As a result of Petitioner’s submission, E3 released the full loan amount of $68,900 to Petitioner on December 14, 2018. (AR361.) Petitioner then transferred $60,000 to an account belonging to Acosta in three separate deposits in December of 2018 and January of 2019. (AR 356-358, 1240:6-1241:6.) However, Petitioner kept the remaining $8,900 for himself despite not working on the Project. (AR 291, 1322:24-1323:8, 1342:14-19.) In other words, the record supports that Petitioner willfully and fraudulently submitted a Certificate of Completion to E3 to obtain loan proceeds because he expected Acosta to finish the work later. The record also supports that, despite not working on the Project, Petitioner was provided a share of the loan proceeds because Acosta needed Petitioner’s contractor’s license to process the loan. (AR 1335-1336, 1339.) However, Acosta never finished the work, and the homeowners were substantially injured as a result. (AR 383-84.)

Accordingly, the weight of the evidence supports the ALJ’s findings that Petitioner willfully committed a fraudulent act which is subject to discipline under Business and Professions Code section 7116.

The ALJ found by clear and convincing evidence that Petitioner failed to maintain workers' compensation coverage at the time of the Arleta Project. (AR 56-57.) Petitioner argues that the Board did not clearly and convincingly establish this cause for discipline because he hired Red Vision to install the air conditioning, water heater, and roof, and Red Vision had current workers' compensation coverage when he subcontracted with them.

Business and Professions Code section 7125.4, subdivision (a), states: "The filing of the exemption certificate prescribed by this article that is false, or the employment of a person subject to coverage under the workers' compensation laws after the filing of an exemption certificate without first filing a Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in accordance with the provisions of this article, or the employment of a person subject to coverage under the workers' compensation laws without maintaining coverage for that person, constitutes cause for disciplinary action."

Petitioner’s contractor license indicates he did not have workers’ compensation coverage after August 2, 2019. (AR 133-134.) Petitioner’s argument that he subcontracted with Red Vision—who had workers’ compensation coverage—is not convincing. Petitioner offers evidence that Red Vision had coverage. (AR 814.) However, evidence shows that Petitioner and Red Vision did not have a contractual relationship on the Arleta Project. In Petitioner’s statement to the Board during the investigation, Petitioner never mentioned a subcontract with Red Vision—his statements only indicated a relationship with Acosta and CA ADU Center. (AR 289-292.) In addition, when Petitioner received the loan proceeds, all payments were made to Acosta and CA ADU Center. None were made to Red Vision. (AR 256-258.) Other than contending Red Vision’s policy covered the workers, Petitioner offers no evidence that coverage was provided for those who actually worked on the Arleta Project.

Accordingly, the weight of the evidence supports the ALJ’s findings that Petitioner failed to maintain workers' compensation coverage in violation of Business and Professions Code section 7125.4,

“The propriety of a penalty imposed by an administrative agency is a matter vested in the discretion of the agency, and its decision may not be disturbed unless there has been a manifest abuse of discretion.” (Williamson v. Board of Medical Quality Assurance (1990) 217 Cal.App.3d 1343, 1347.) If reasonable minds can differ with regard to the propriety of the disciplinary action, there is no abuse of discretion. (County of Los Angeles v. Civil Service Commission (1995) 39 Cal.App.4th 620, 634.) “The revocation or suspension of a license is not penal, but rather, the Legislature has provided for such to protect the life, health and welfare of the people at large ….” (Furnish v. Board of Medical Examiners (1957) 149 Cal.App.2d 326, 331.)

The Board must consider its disciplinary guidelines when deciding the appropriate disciplinary action to take. (Code of Regs., tit. 16, § 871.) For a violation of the causes for discipline established against Petitioner, the Board’s disciplinary guidelines recommend a minimum of one to three years of probation under various conditions, with a maximum discipline of outright revocation. That said, the recommended discipline for violating Business and Professions Code section 7116 (willful or fraudulent acts) includes a note that fraud is deemed to be “a serious offense” and that if the “injury is substantial, outright revocation is appropriate.” (AR 58.) In addition, the guidelines list factors to consider, when applicable, in determining the degree of discipline to impose. (AR 58-59.) Two of the factors to consider are whether Petitioner has attempted to mitigated damage caused and whether Petitioner has attempted to rehabilitate himself. (Ibid.)

Here, the injury is substantial. Because of Petitioner’s and Acosta’s fraud, M.O. and his mother were forced to sell the Arleta Property. (AR 384, 1066-1068.) Petitioner argues that M.O. was not injured because, after accounting for all debts, M.O. still had equity in the Arleta Property when it was sold. This, however, does not mean M.O. and his mother were not injured as homeowners. Against his wishes, M.O. was forced to sell the home he and his mother were living in. (AR 1315:20-1316:6.) Moreover, the amount of equity M.O. had in the Arleta Property was likely reduced by Petitioner’s fraud.

Petitioner also offers no evidence of mitigation or rehabilitation. The ALJ determined that Petitioner had accepted no responsibility for his actions, showed no remorse, and instead placed blame on others. (AR 59-60.) Petitioner continues to do so here. Rather than accept responsibility, Petitioner continues to assert unsubstantiated claims that M.O. committed loan fraud. Even if Petitioner’s speculations regarding the E3 loan were true, Petitioner has made no effort to repay E3 for the loan it had to write off. Petitioner has simply kept the $8,900 without providing any evidence that he completed work on the Arleta Project.

With respect to the ALJ’s recommendation that Petitioner pay $25,498.49 for the costs of the Board’s investigation and enforcement, Business and Professions Code section 125.3, subdivisions (a) and (d), read: “Except as otherwise provided by law, in any order issued in resolution of a disciplinary proceeding before any board within the department or before the Osteopathic Medical Board, upon request of the entity bringing the proceeding, the administrative law judge may direct a licensee found to have committed a violation or violations of the licensing act to pay a sum not to exceed the reasonable costs of the investigation and enforcement of the case…The administrative law judge shall make a proposed finding of the amount of reasonable costs of investigation and prosecution of the case when requested pursuant to subdivision (a).”

In his recommendation, the ALJ found that the Board’s Special Investigator spent 37.06 hours investigating Petitioner’s case at a rate of $58.27 for a total of $2,159.48. (AR 51.) In addition, the Attorney General’s office submitted detailed billing records demonstrating prosecution costs totaling $23,632.50. (AR 663-672.) Overall, the record shows that the Board incurred a total of $25,498.49 in reasonable fees and costs.

Accordingly, Petitioner has failed to show an abuse of discretion in the Board’s penalty determination.

[1] Petitioner also speculates that E3’s loan and lien release is part of larger conspiracy on the part of M.O. and Acosta to commit loan fraud. Even if Petitioner’s allegations were true, its unclear how they would delegitimize the Board’s accusations that Petitioner fraudulently filed a false Certification of Completion and failed to maintain workers’ compensation coverage.

[2] Throughout the Choi declaration and the administrative record at large, FortiFi and E3 are used interchangeably. FortiFi was formally known as E3. For simplicity, the court only refers to E3 here.