California Diversion of Construction Funds – Penal Code 484b PC

January 27, 2023

Diversion of construction funds, also known as “construction fraud,” is a criminal offense defined under California  Penal Code 484b.[1] This statute makes it illegal for any person to intentionally misapply or divert construction funds that have been received for the purpose of construction, alteration, repair, or improvement of property.

The crime of diversion of construction funds is a serious offense that can result in significant penalties, including fines and imprisonment. In order to be convicted of this crime, the prosecution must prove that the defendant intentionally misapplied or diverted construction funds with the specific intent to defraud.

If the amount diverted is $2,350 or less, then the crime is a misdemeanor.[2] However, if the diverted amount exceeds $2,350, then the crime is classified as a “wobbler.” This means the prosecutor has discretion to charge the defendant with either a felony or misdemeanor.

A felony conviction for diverting construction funds under PC 484b carries a jail sentence of 16 months, 2, or 3 years.[3] A defendant may be fined up to $10,000. A misdemeanor conviction carries up to 1 year in the county jail.

There are a variety of ways that the diversion of construction funds can occur. One common example is when a contractor receives money from a client for a construction project, but instead of using the funds for the project, the contractor uses the money for personal expenses or other unrelated projects. This can also happen when a contractor takes money from a client and doesn’t perform any work at all.

Another example is when a contractor takes money from a client and doesn’t complete the work. In this case, the contractor may have taken the money and used it for something else, or the contractor may have started the work but didn’t finish it.

Additionally, construction fraud can happen when a contractor takes money from a client and then uses substandard materials or performs substandard work. This can happen if the contractor uses inferior materials, or if the contractor doesn’t follow building codes or other regulations.

It’s important to note that the diversion of construction funds is not only a criminal offense, but it’s also a civil offense. A person who has been defrauded by construction fraud can sue the contractor and recover damages.

In addition, when a person is convicted of diversion of construction funds, they may be barred from working in the construction industry. This means that they may not be able to get a contractor’s license or work as a subcontractor.

Contact Us for Help in Southern California

If you’ve been charged or are under investigation for diverting construction funds under PC 484b, then contact the Law Offices of John D. Rogers today. Call us to schedule a free confidential consultation with an experienced Orange County criminal defense attorney. Attorney John D. Rogers is a board-certified criminal law specialist by the State Bar of California. Give him a call to discuss your options and protect your rights.

Legal Footnotes

[1] Penal Code 484b – (“Any person who receives money for the purpose of obtaining or paying for services, labor, materials or equipment and willfully fails to apply such money for such purpose by either willfully failing to complete the improvements for which funds were provided or willfully failing to pay for services, labor, materials or equipment provided incident to such construction, and wrongfully diverts the funds to a use other than that for which the funds were received, shall be guilty of a public offense and shall be punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment in a county jail not exceeding one year, or by imprisonment pursuant to subdivision (h) of Section 1170, or by both that fine and that imprisonment if the amount diverted is in excess of two thousand three hundred fifty dollars ($2,350). If the amount diverted is less than or equal to two thousand three hundred fifty dollars ($2,350), the person shall be guilty of a misdemeanor.”)

[2] See same.

[3] See same.

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