Construction Contractor Scams Residents of $740,000

A Redwood City man had been scamming Santa Clara County and San Mateo County residents by defaulting on construction projects.

A Redwood City man was sentenced last week to a two-year prison sentence after defrauding a Los Altos resident of nearly $400,000 for a sham construction contract. He was similarly convicted in San Mateo County in June for charges against Pacifica and Burlingame residents.

Michael George Schaeffer, 52, was convicted Friday of one felony count of diverting construction funds, one misdemeanor count of contracting without a license, one misdemeanor count of accepting payment before completing work and for being in violation of the Business and Professions Code.

“She was so happy the case was resolved,” Paul Colin, Santa Clara deputy district attorney in the real estate fraud unit, said of the victim. “Any fraud case is a violation of trust. You create a relationship with your contractor, and this is a violation you live with every day.”

The Los Altos resident contracted Schaeffer and his company, MGS Construction, to remodel her home in November 2006. She had planned to retire and was going to use the money she inherited from her father.

The woman said MGS construction had been recommended by a consumer survey service, Diamond Certified. In June 2008, the project was abandoned when it was only 50 percent finished. The roof still leaks, and the light fixtures and windows still don’t work, Colin said.

She has had to postpone her retirement.

Schaeffer was originally sentenced to probation and 18 months in county jail for his scams against the San Mateo County residents, but he was re-sentenced on Aug. 23, to two years in prison to match the sentence in the Santa Clara County case.

Schaeffer scammed the Pacifica resident of nearly $210,000. He completed the house demolition and gutted the property, but abandoned the project after eight days. In Burlingame, he worked on a bathroom project but nothing else, charging the resident $134,490. He has since received orders to pay restitution.

Schaeffer had funneled many of his clients’ money to his start-up, the Green Building Exchange. He promoted the company as a clearing house for environmentally progressive building products and services, but it never got past its initial start-up marketing phase. He then used the start-up to give MGS Construction an environmental license.

“This was a massive diversion to a new business venture, which went nowhere,” Colin said. “It was extravagant, and a pie-in-the-sky venture.”

Schaeffer relocated from the greater Fresno area, where he also had civil judgements and financial issues, Colin said.

He has also filed for bankruptcy protection.


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