A Restitution Hearing in Tercero Fraud Case


Witnesses Testify in Unlicensed Contractor Fraud Case 

by Sindy Lim

Woodland – The issue of defendant Earl James Thompson’s role in Russell/Thompson, Inc. and the 2010 UC Davis Tercero II student housing project drove the direct and cross-examinations in the restitution case.

In 2011, the California Department of Industrial Relations Division of Labor Standards Enforcement revealed Russell/Thompson, who performed the framing work for the Tercero II project, violated the law by failing to pay prevailing wages and overtime and “misclassifying workers as lower paying positions rather than the higher rate skilled positions they worked.”

While on paper, Valery Thompson, Mr. Thompson’s then-wife, and James Russell, his employee, ran Russell/Thompson, the prosecution argued Mr. Thompson – whose license was revoked due to previous fraudulent activity – served as the actual leader.

Moreover, the prosecution identified a violation excerpt in Russell/Thompson’s contracting license, which stated “no one that they were related to had ever had a contracting license before.” Since Mrs. Thompson was married to Mr. Thompson knowing he previously had a contracting license, the prosecution claimed this was perjury.

Although Mr. Thompson pleads no contest to all accounts of perjury, the defense hopes to use witness testimonies to persuade Judge David Rosenberg for a “lower amount of restitution on the grounds of unfounded evidence of Mr. Thompson conspiring as a ring leader of sorts.”

All three witnesses on the morning of July 17, 2019, however, described Mr. Thompson as the leader of Russell/Thompson.

During the direct examination by the prosecution, the first witness, a forklift operator for the project, described Mr. Thompson’s role as “the owner” who instructed the foreman. The second witness, the company’s foreman, also claimed Mr. Thompson was the owner who hired him.

During the cross-examination of the second witness by the defense, the witness revealed Brown Construction, the general contractor, “banished” Mr. Thompson in the middle of the project.

When the defense asked who the witness “dealt with” after Mr. Thompson left, he revealed he “still dealt with Mr. Thompson.” During redirect, the prosecution asked if Mr. Thompson acted in the same capacity after being “banished.” The witness said yes and revealed he went to Mr. Thompson’s apartment every day.

When the prosecution asked the first two witnesses if they knew James Russell, the first witness said he did not. The second witness understood Russell was part owner of the company but classified him as a construction employee. The witness did not see Russell doing “owner type things.”

Russell, a co-defendant and the People’s third witness, stated to the defense he never once read the contract between Russell/Thompson and Brown Construction. Additionally, he never hired an employee.

“I was just the guy with a bag of tools…I didn’t understand the depth of my responsibilities,” Russell said.

The prosecution asked how the idea of the Russell/Thompson company started. Russell stated Mr. Thompson suggested the idea, saying Mrs. Thompson would serve as president and handle the paperwork. Mr. Thompson would be in charge of hiring.

Along with questioning Mr. Thompson’s role in Russell/Thompson, the prosecution asked witnesses if they were aware of or heard other workers talking about being underpaid.

The first witness claimed he realized early on he was getting labor wage rather than the operator wage. He talked to Mr. Thompson who told the witness to talk to the foreman. The foreman, however, did not know anything.

A few days after the witness’s second inquiry about his wage, the foreman told the witness “work would be slow” the next week and to wait for a call to come back. The witness never received a call and lost his job.

The prosecution exhibited a letter the witness wrote in Nov. 2009 to the Labor Commission Board. The letter was in response to the Board’s request for more information after the witness’s initial complaint.

In the letter, the witness wrote that Mr. Thompson offered him $500 to “go away” in a private phone call. The witness had called multiple times to get his job back. He did not accept the money.

The prosecution asked if the witness were ever reimbursed for the difference between his wage and the prevailing wage. The witness stated the state gave reimbursement, but he has received nothing from Mr. Thompson.

The second witness stated he did not hear complaints about wages and believes workers must have been happy to have jobs during the recession.

The prosecution asked if the witness ever found out he was being paid under prevailing wage. The witness said he did not. The prosecution then asked if he were aware of any restitution he would like to request. When the witness said no again, the prosecution asked if there were a reason.

“I would just like to wipe my hands off the project,” the witness said.

Examinations by both the prosecution and the defense revealed Mr. Thompson’s leadership role during Russell/Thompson’s violation of labor codes.

The court adjourned for lunch at noon. After the break, the prosecution was to begin its cross-examination of its fourth witness and adjourn for the day. It will reconvene on July 18, 2019, and Mrs. Thompson, the co-defendant, will testify.

Final Witness Testimony in Tercero Hall Fraud Case

by Sindy Lim

“I don’t want to see my daughter’s father go to prison,” Valery Thompson, the People’s final witness and defendant Earl James Thompson’s ex-wife, said during the defense’s cross-examination.

Along with co-defendant James Russell, Mrs. Thompson served as owner of Russell/Thompson Inc. during the “catastrophic” 2010 Tercero II student housing project. While completing the project’s framing work, Russell/Thompson violated the law by failing to pay prevailing wages and overtime and “misclassifying workers as lower paying positions rather than the higher rate skilled positions they worked.” According to the Yolo County District Attorney’s Office 2015 filing, “the defendants conspired to steal $633,199.55 of wages from their employees.”

Mrs. Thompson’s testimony on the afternoon of  July 18, 2019 in Department 14 further elucidated Mr. Thompson’s leadership role in the corporation’s fraud.

During the prosecution’s direct examination, Mrs. Thompson revealed her “best recollection” was Mr. Thompson formed the idea of Russell/Thompson. When the prosecution asked what Mr. Thompson’s role was “intended to be,” she stated he was manager. He would have access to corporate bank accounts, sign documents, hire people, and supervise.

While Mrs. Thompson was part owner of the corporation, she revealed she was uninvolved in the bidding process for the Tercero II project. During the project, she came “on-site at UC Davis every month or two.” Most of the time, she stayed in Redding and worked from home. In contrast, Mr. Thompson “stayed overnight at Davis a lot.”

When the prosecution questioned who completed the payroll work, she revealed Mr. Thompson did most of it. The prosecution also asked “if there were ever a time during the project Mrs. Thompson thought things weren’t being done correctly.” She said she did when she saw “emails from Brown Construction about the misclassification of workers.” She brought it up to Mr. Thompson who assured her it was being taken care of.

The prosecution showed Mrs. Thompson a transcript of her interview with the DA’s  investigator in which she agreed Mr. Thompson was controlling of her involvement in Russell/Thompson.

“When I would question further about errors, he would say it’s being taken care of, don’t worry about it,” Mrs. Thompson said.

During cross-examination, Defense Attorney Rodney Beede questioned Mrs. Thompson’s role in giving Mr. Thompson authority in Russell/Thompson.

He exhibited a document in which Mrs. Thompson authorized Mr. Thompson to sign on behalf of the company in a corporate bank account. In response, Mrs. Thompson stated that “the bank required it.”

Regarding the prosecution’s question of who was in charge of payroll, Mr. Beede asked if Mrs. Thompson ever prepared “payroll reports for the Tercero project.” Mrs. Thompson recalled “filling them out, but never sending them in.”

During redirect, the prosecution asked who “created the payroll” during the project. Mrs. Thompson clarified Mr. Thompson did.

Near the end of his cross-examination, Mr. Beede asked, “If your testimony did not support the prosecution’s case, you would not have gotten the plea bargain, right?”

In exchange for testifying against her husband, the prosecution reduced Mrs. Thompson’s charge to a misdemeanor with no jail time and fined her a $10,000 fee she would pay over a ten-year period.

Mrs. Thompson responded that could be true.

Through Mr. Beede’s further questioning, Mrs. Thompson revealed Mr. Thompson was a good father and had not been violent or involved in criminal activity since the Tercero II project. Additionally, she believed Mr. Thompson was remorseful over what happened.

The prosecution asked, during redirect, how she knew Mr. Thompson was remorseful. She stated he had apologized to her. However,  she did not know if he had apologized to other workers.

The defense and the prosecution agreed to file briefings to Judge David Rosenberg no later than August 15, 2019. The trial will reconvene on August 23 at 1:30pm in Department 14 for brief oral arguments and the court’s decision.

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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