Monica’s Victims

Monica Ung was a rising star on the East Bay political scene. She
was a player in Oakland’s tight-knit Chinatown community, and her
construction business, NBC General Contractors, was booming. In the
past half decade, she had scored dozens of multi-million-dollar public
works projects. But as she stood silently in front of an Alameda County
Superior Court judge on Monday, facing dozens of felony fraud charges,
it was clear that the forty-nine-year-old would no longer be rubbing
elbows with the East Bay’s political and business elite. After one of
her attorneys entered a plea of not guilty on her behalf, Ung meekly
said, “Yes,” when the judge asked her if she waived her right to a
speedy trial. She then scurried out a side door of the courthouse.

The District Attorney’s Office has charged Ung and two of her
assistants with stealing millions of dollars from their employees, many
of them Chinese immigrants who speak little English. The trio also is
accused of defrauding the state’s insurance fund and local taxpayers.
The total alleged fraud scheme has been estimated to be between $5
million and $20 million, and possibly could be more. One lawyer
involved in the case says Ung may have ripped off at least two-hundred
of her employees in the last few years by severely underpaying them and
then lying about it.

“If you look at the scope of this, it’s amazing,” said Victor Uno,
business manager for the International Brotherhood of Electrical
Workers Local 595, which helped expose Ung’s and NBC’s alleged fraud.
Uno, who also is the president of the Oakland Port Commission, has been
informing East Bay political leaders this summer about what NBC General
Contractors had been doing and convincing many of them to denounce the
company’s business practices. “As far as we’re concerned,” Uno
explained, “it’s a criminal enterprise.”

But the story of Monica Ung is much more than a case of a woman who
allegedly tried to defraud her employees and the taxpayers. It’s also
about public agencies that turned a blind eye to her elaborate scheme
when they were supposed to be safeguarding both the public’s money and
the workers who construct or remodel public buildings. In fact, the
City of Oakland still appears to be ignoring its responsibilities.

The city continues to employ Ung’s construction company and is
paying her millions of dollars in taxpayers’ funds to build a $14
million public library in East Oakland even though prosecutors are
trying to confiscate her assets and put her behind bars for up to forty
years. And because Oakland and other public agencies, including the
Peralta Community College District, Oakland Unified School District,
and Alameda Unified School District, have yet to conduct their own
thorough investigations into what Ung and NBC did and seek restitution
for exploited workers, they may ultimately be held liable under state
law.

Court records also show that over the past nine months Ung has
quietly waged a campaign against Le Cheval Restaurant and is attempting
to evict the East Bay institution from its longtime home in downtown
Oakland. Le Cheval is one of the most beloved eateries in the region
— it’s won this newspaper’s Best Of the East Bay award twenty-two
years running — and has long been a favorite haunt of Oakland
politicians and business leaders. Yet according to allegations made in
court documents, Ung and her husband, who own the building that houses
Le Cheval, have harbored a personal vendetta against the owners and
employees of the restaurant for several years and are determined to
evict the restaurant.

If Ung is successful in terminating Le Cheval’s lease, the
restaurant’s owners say they would have to lay off more than seventy
employees and close their business for several months as they search
for a new location. “The practical effect of such a closure would be
devastating to the restaurant and those who depend upon it for their
livelihood,” said Le Cheval general manager and co-owner Lan Tran in a
sworn statement to the court.

Ung, who lives in Alamo and owns Oakland property valued at several
million dollars, did not return phone calls seeking comment for this
story. She has hired a stable of Bay Area lawyers to preside over her
many legal battles. Her defense team is led by former San Francisco
Mayor and longtime state Assembly Speaker Willie Brown, who also did
not return a phone call seeking comment. Ung’s criminal defense
attorney, Fred Remer of Berkeley, also declined comment, saying that
his team was still trying to gather all of the facts in the case.

But as Ung marshals her legal defense, the involvement of
high-priced liberal lawyers such as Brown is angering the East Bay’s
labor community. They question why a longtime Democrat like Brown would
come to Ung’s defense and why he would choose to take lucrative legal
fees from her when she allegedly made a fortune, stealing money from
immigrant workers. “Willie Brown,” Uno said, “is probably being paid
with blood money.”

State prosecutors are now focusing on Monica Ung because of young
men like Ricky Lau. In the spring of 2007, Lau was looking for work
after returning from an extended trip to China, when he saw a job
posting by NBC General Contractors in a Chinese-language newspaper. The
30-year-old is a certified electrician and noticed that the job paid
only $25 an hour — less money than he was used to. But he needed
work and figured he would quickly earn a raise once his supervisors saw
him in action.

At that point, Lau didn’t know much about the concept of “prevailing
wage.” He had only worked for private contractors and had never before
been on a public works project, so he didn’t know that under state law
electricians and other skilled professionals were supposed to be paid
much more than $25 an hour when they worked on public buildings.
Originally, the concept was pushed by labor unions that wanted to
ensure that low-paying, non-union companies couldn’t underbid
well-paying, unionized ones and thus get all the public works
contracts. But it also was meant to help weed out substandard work and
make sure that that construction on public buildings was done by
skilled professionals, said Lance Kubo, the lead prosecutor in the case
against Ung. “It could have catastrophic consequences if the work on
public buildings is not done correctly,” Kubo explained.

Lau said he first noticed that something was hinky about his
paycheck and time cards after about six months on the job. He said that
his total pay on his checks was correct, but that his pay stubs said he
only worked 20 to 25 hours a week when he was actually working 50 to
60. The stubs also said he was making $60 an hour when he was actually
being paid $25. “When I asked about it, they told me to just make sure
that the amount on the paycheck is correct, and not to worry about
anything else,” he said.

Then in the spring of 2008, while working on an NBC construction job
at Laney College in Oakland, he said he saw a union rep from the
International Brotherhood of Electrical Workers. The rep, John Be Tao
Huang, already knew that NBC was not paying some of its workers the
prevailing wage and was trying to interview more of them. But NBC
officials were refusing him access to the worksite even though it was
public property. “When I got on the jobsite, the superintendent tried
to kick me out,” Huang said. “He tried to get physical with me because
I was going around with the wage sheet for how much the workers were
supposed to get paid, and they didn’t want the workers to know.”

Later, Lau decided to contact Huang, and learned that under state
law NBC should have been paying him $60 an hour — not $25.
Eventually, Uno contacted Oakland labor attorney Ellyn Moscowitz, who
launched her own investigation. And the union decided to alert the
state Department of Insurance, noting that NBC was not only seriously
underpaying its employees, but also likely engaging in worker’s
compensation fraud.

Department of Insurance investigator Gladys Rivera then began to
investigate NBC’s payroll records and uncovered Ung’s alleged fraud
scheme. According to Rivera’s sworn affidavit, the scam went like this:
NBC would report to public agencies, such as the City of Oakland or the
Oakland Unified School District, that it was paying workers the
prevailing wage — such as $50 to $60 an hour, when it was
actually paying $20 to $25 or less. At the same time, NBC would report
that the workers were only putting in 20 to 25 hours a week, when they
were actually working 50 to 60.

That way, neither the agencies nor the workers would get suspicious.
The agencies would see that the workers were being paid the prevailing
wage, and the workers, like Lau, would see that they’re total pay was
correct. For example, if Lau worked 60 hours in one week, his pay would
be $1,500 (60 hours times $25 an hour). In turn, NBC would submit a
separate set of books to the public agency, saying that he only worked
25 hours at $60 an hour — which also works out to $1,500.

Rivera alleged that Ung and two of her assistants, Joey Ruan and Tin
Wai Wu, misrepresented NBC’s payroll in this way for more than seventy
employees on at least twenty-seven different public works projects in
the Bay Area between 2003 to 2007. Rivera also said in her affidavit
that NBC repeatedly forced workers to put in twelve-hour days, and work
six days a week without getting overtime in violation of state law.
Because she is a state insurance investigator, Rivera focused her
examination on California’s worker’s compensation fund and said NBC
defrauded it by no less than $1.45 million. But she also said in her
affidavit that a cursory audit of nineteen employee payroll records at
NBC found that Ung had underpaid those workers by at least $3.6
million.

Rivera’s investigation ultimately became the basis of the
forty-eight felony criminal charges filed against Ung and her two
assistants by the Alameda County District Attorney’s Office. County
prosecutors also are attempting to seize Ung’s two Oakland properties
and her bank accounts to ensure that at least some of her alleged
victims are eventually repaid. Along with the Le Cheval building, she
owns a building on 9th Avenue. She rents a home in Alamo and is free on
bail after posting a $535,000 bond, presumably by putting up one or
both of her properties as collateral.

Ung also is facing a class-action lawsuit filed by Oakland labor
attorney Moscowitz in which Lau is the lead plaintiff. Moscowitz and
her team have conducted their own investigation, and have collected the
payroll records of twenty-eight former NBC employees. They estimate
that Ung’s alleged fraud in the past few years extended to about two
hundred workers. Moscowitz estimates that Ung may owe $10 million to
$20 million in back wages. State and local governments also have lost
out on millions in payroll taxes.

Moscowitz also is going after contractor J.H. Fitzmaurice, which
employed NBC as a subcontractor on some of its public works jobs,
alleging that the company should have known what Ung was up to. So far,
Moscowitz said Fitzmaurice has been cooperative and wants to settle the
case.

Moscowitz also shared some of Lau’s payroll records with this
reporter and his time cards clearly showed that on weeks when he was
actually putting in fifty to seventy hours, NBC reported to public
agencies that he had worked less than twenty. “What’s also upsetting
about this is that she was preying on her own — immigrant Asian
workers,” Moscowitz said. “Many of them don’t speak any English, and
they didn’t have a clue what their legal rights are. And this woman was
exploiting them to the nth degree.”

Monica Ung’s alleged fraud gave her a significant advantage over her
competitors. It allowed her to underbid them on public contracts,
because her costs were considerably lower than theirs since she wasn’t
paying the prevailing wage. Moscowitz said that when she began telling
other East Bay union contractors that prosecutors wanted to throw Ung
in prison, none of them shed any tears. “They were so happy that NBC
finally got caught,” she said. “They couldn’t figure out how NBC was
bidding so low.”

Public agencies that did business with Ung apparently didn’t know
how she was doing it either. It turns out that all they had to do was
talk to Moscowitz, the electrical workers’ union, the state Department
of Insurance, or the county DA. And because they didn’t and still have
not, it could come back to haunt them.

State labor law says that any entity, including a public agency,
that “knows or should know” a contractor is defrauding workers must
conduct an investigation and fix the problem or face legal liability.
The labor code defines “should know” loosely (Moscowitz is suing
Fitzmaurice under the code). And now that Ung has been charged in
criminal court, it will be tough for public agencies to contend they
still don’t know what NBC was doing. Nonetheless, it appears that the
agencies have only conducted superficial inquiries so far.

For example, when asked why the City of Oakland was still employing
and paying NBC to build the 81st Avenue library in East Oakland, Alex
Nguyen of the City Attorney’s Office said that city officials had found
no evidence that NBC had engaged in fraud on the contract. However, the
city’s investigation apparently only included the examination of
payroll records that NBC submitted to the city and didn’t involve
talking with former company employees who are suing NBC, or with the
electrical worker’s union, or with prosecutors, or with the state
Department of Insurance.

As a result, the city appears to not know whether NBC’s payroll
records were fraudulent. Moreover, Moscowitz said in her investigation
that she has yet to find an instance where NBC defrauded some agencies
and not others, or defrauded some employees and not others. It was the
company’s “pattern and practice” to not pay the prevailing wage on
public contracts and then to submit falsified records to the public
agencies, saying that it did, she said. Lau also said he was paid $25
an hour on all the public projects he worked on and never once received
the prevailing wage. “If you just look at the certified payroll
records, you can’t tell if anything is wrong,” Moscowitz said.

Bill Withrow, president of the Peralta Community College District
board of directors, which employed NBC on construction contracts at
Laney College and at City College of Alameda, also said his agency’s
investigation uncovered no evidence that NBC had engaged in fraud on
those projects. But when asked whether the inquiry included anything
more than checking the payroll records that NBC submitted, Withrow
referred questions to Jake Sloan, an independent consultant who
conducted the examination, but he did not return a phone call seeking
comment. Withrow said that the district originally withheld its final
payment to NBC, but after Sloan’s investigation, they decided to pay
Ung everything she claimed she was owed.

But the conclusions of Sloan’s investigation were flatly
contradicted by Rivera, the insurance department investigator. She said
in her sworn affidavit that Ung had defrauded workers while employed by
Peralta. The college district’s decision to pay Ung also angered
Moscowitz and the electrical workers’ union, because Moscowitz had
asked the district to withhold payment of $782,000 to NBC because that
was the amount of alleged fraud she had discovered involving the
company’s work at Laney and the College of Alameda. Moscowitz also said
that neither Sloan nor anyone else from district contacted her to
verify what she had uncovered.

In addition, Uno said Peralta had ignored their pleas to stop doing
business with Ung last year. In fact, after the union told the board
what it had found, Ung was an honored guest at a gala hosted by the
Peralta Foundation. The emcee of the event was Willie Brown.

As for Oakland Unified, spokesman Troy Flint said that district had
no reason to investigate NBC or Ung because it “no longer does business
with them.” However, under state law the district may be still be
liable, because Rivera singled out Oakland Unified in her affidavit,
saying Ung had committed fraud while working for the district. The
district employed NBC on construction contracts at Skyline High School
and Piedmont Avenue Elementary School, according to records gathered by
Moscowitz.

As for Alameda Unified, Kurt Viera, an independent consultant who
managed NBC on its contracts for the district and conducted a review of
its payroll practices, acknowledged that he only looked at the records
supplied by Ung’s company. The district hired NBC for about $4.5
million of contracting work at Edison, Otis, and Donald Lum elementary
schools.

NBC also was employed by Alameda County; the cities of El Cerrito,
Walnut Creek, San Francisco, and Daly City; and the school districts of
Fremont, Mount Diablo, San Francisco, and Reed Union (Marin
County).

Richard Alarcon, the former Democratic state senator from Los
Angeles who wrote the 2003 California labor law that holds public
agencies responsible for their contractors, said that this case is
exactly what he had in mind when he wrote the bill. “The intent of the
bill,” explained Alarcon, who is now a Los Angeles city councilman, “is
to make employers, in this case public agencies, pay close attention to
what their contractors are doing and to ensure a high-level of due
diligence.”

But at this point, Moscowitz said NBC’s former employees have no
plans to sue any of the public agencies. “We’ve been hoping they would
do the right thing,” she said. Still, she would not rule out future
litigation, especially if Ung burns all her cash on high-priced
lawyers.

The owners of Le Cheval have been reluctant to go public with their
story about what Monica Ung is trying to do to them for fear that
customers will stop dining at the restaurant if they think they’re
being evicted. They’re especially worried that people will think they
may be a bad tenant. Rumors have been swirling for months in Oakland’s
Chinatown community about the possible eviction. Court documents,
however, make it clear that Ung appears to have no good reason for
evicting Le Cheval, and she and her husband, Dennis Chow, appear to be
unreasonable landlords.

Le Cheval moved into Ung’s building at the corner of Clay and 10th
streets in downtown Oakland in late 1993. The restaurant’s sole owner
at the time, Tuyet Thi Bui, signed a fifteen-year lease with Ung that
included three five-year options. In 2003, Bui added co-owners to the
business. Then, late last year, Le Cheval’s ownership group sent a
letter to one of Ung’s attorneys, expressing its wish to exercise its
first five-year option. But Ung and Chow refused, alleging that Le
Cheval had defaulted on its lease, even though the restaurant’s owners
say they have never been late on a rent payment in fifteen years.

In late December, Minh Tran, one of Le Cheval’s co-owners, noticed
workers measuring the restaurant’s front windows. In a sworn
declaration, he said one of the workers told him he was working for
Chow and that they were measuring the windows because they planned to
board up the restaurant on January 1 after Le Cheval’s lease expired.
Minh Tran also said that a subcontractor for Direct TV told him that
while he was doing an installation for Le Cheval’s televisions, Chow
said he wanted the restaurant to leave as soon as possible because he
“hated those people.”

So on December 29, Le Cheval’s owners sued Ung and Chow to stop them
from evicting the restaurant. In court documents, they also provided
convincing evidence that Ung and Chow’s claims that they defaulted on
the lease were bogus, and that the couple had been harassing the
restaurant’s employees and owners for years with a series of petty
complaints. “It’s just been hell,” Minh Tran told the Express.
Chow has “been harassing us nearly every day, for nitpicky things. Just
the most inane complaints ever.”

For example, Ung demanded in 2001 that Le Cheval replace a broken
door handle that wasn’t even on the restaurant’s property. Ung claimed
that restaurant employees had broken it, although she had no evidence,
according to a sworn statement by the restaurant’s general manager and
co-owner Lan Tran. Later it turned out that the door handle was
probably broken by homeless people who had been living in the basement
of the building and were vandalizing it. In fact, public records show
that the city had fined Ung for the homeless problem in her building.
Nonetheless, Ung’s attorney cited the broken door handle as an instance
of default under the lease.

Ung and Chow also complained that in 2003, when Le Cheval employees
had tried to perform routine maintenance on its hood motor for the
kitchen. Chow refused them access to the top of the building, so an
employee decided to use an extension ladder to get to the roof, Lan
Tran said in her statement. But then Chow stopped the worker and
demanded that the restaurant hire a licensed contractor and erect
scaffolding, saying the ladder was unsafe, Lan Tran added.

That same year, Chow also became angry after Le Cheval employees
repaired loose stripping on some stairs by nailing it back into place,
Lan Tran said in her statement. The restaurant’s managers were
concerned that the loose stripping was dangerous for employees who use
the stairs to get supplies from a storeroom. But Chow was upset because
he wanted the stripping repaired by a licensed contractor, Lan Tran
said.

Chow did not respond to a hand-delivered note requesting comment,
and he and Ung’s attorney in the case, Timothy McInerney, did not
return a phone call seeking comment.

For the past several months, Ung and Chow have been trying to get Le
Cheval’s suit thrown out of court, so that they can evict the
restaurant, but they have been unsuccessful. And although they have Ung
and Chow as landlords, Le Cheval’s owners clearly want to stay. “Le
Cheval’s location and reputation in the community are extremely
important to its success,” Minh Tran explained in his statement, adding
that if the restaurant were forced to leave downtown Oakland, it would
lose its customer base. “This could effectively destroy the
restaurant,” he said.

Outside the Hayward Hall of Justice on Monday, labor leaders and
some politicians held a rally to condemn Monica Ung and NBC’s business
practices. Among the featured guests were Oakland City Councilwoman Pat
Kernighan and Oakland school board President Noel Gallo. Neither,
however, mentioned that their public agencies had paid Ung millions of
dollars in recent years and had yet to conduct a thorough investigation
of her alleged fraud, despite the 48 felony charges lodged against
her.

Inside the courthouse, after Ung’s lawyer entered her not guilty
plea, Alameda County Superior Court Judge Gary Picetti scheduled her
next court appearance for October 30. Clearly, Ung and her defense team
are in no hurry to go to trial. And why should they be? As long as
she’s out on bond, she can continue to operate NBC General Contractors
and collect millions from the City of Oakland and other public
agencies.

But all of that could come to an end soon — and not because of
anything that the city is doing. The office of Attorney General Jerry
Brown has begun a legal effort to rescind NBC’s contractor’s license.
If that were to happen before NBC completes the 81st Avenue library,
then Oakland would be required under law to terminate Ung’s
contract.

Victor Uno of the electrical workers’ union said the East Bay labor
community wants the city to end its relationship with NBC but is not
interested in killing the library project. “That library is very
important to the East Oakland community,” he said. He added that
organized labor is willing to help the city in any way it can to make
sure that the library is completed — by a law-abiding contractor,
that is.