​FROM: Jeffrey F. Rosen, District Attorney   CONTACT PERSON:
Paul Colin, Deputy District Attorney
Real Estate Fraud Unit
(408) 792-2576   For release on August 29, 2011   REDWOOD CITY CONTRACTOR USING SHAM LICENSE SENTENCED TO TWO YEARS IN PRISON FOR EMBEZZLING $395,524.50 FROM LOS ALTOS HOME REMODEL PROJECT   On August 26, 2011, Michael George Schaeffer of Redwood City, who ran MGS Construction and founded the short-lived Green Building Exchange, was sentenced to prison for two years and ordered to pay restitution of $395,524.50. Schaeffer, based in Redwood City, defrauded a Los Altos resident who had been planning to retire and remodel her home using money she inherited from her father. Schaeffer, 52, was convicted of one felony count of Diverting Construction Funds, a violation of Penal Code section 484b, one misdemeanor count of Contracting without a License, in violation of Business and Professions Code section 7028, and one misdemeanor count of Accepting Payment before Completing Work, in violation of Business and Professions Code section 7159.5.   In November 2006, the victim contracted with Schaeffer, as MGS Construction, Inc., to remodel her residence. She found MGS to be highly recommended by the consumer survey service Diamond Certified. In June 2008 the project was abandoned unfinished. Although some work had been done, Schaeffer had funneled much of the money along with other client’s money to his start-up, the Green Building Exchange. GBE was promoted as a clearing house for environmentally progressive building products and services but never got past its initial start-up marketing phase. MGS Construction’s license was in fact that of a person who had no actual involvement in the company, as required by law, but allowed his license to be the front for Schaeffer’s operation. Schaeffer has filed for bankruptcy protection.   In June 2011, Schaeffer was convicted in San Mateo County for similar charges against two San Mateo County residents – one from Pacifica and one from Burlingame. Originally sentenced to probation and eighteen months in county jail, he was re-sentenced on August 23, to two years in prison to match the sentence in the Santa Clara County case.   The case was investigated by the California Department of Consumer Affairs, Contractors State Licensing Board. For tips about hiring and working with contractors check the CSLB web site at http://www.cslb.ca.gov/     ###  

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