Crooked Contractor Caught in Affordable Housing Wage Theft Case

A drywall contractor on two major affordable housing projects in San Diego County has been caught cheating its workers, and the U.S. Department of Labor just made sure they’ll pay for it. Escondido-based Innovative Wall Systems, Inc., doing business as Alta Drywall, has agreed to pay $790,000 in back wages, liquidated damages, and civil penalties after investigators uncovered systematic wage theft affecting 580 workers for one of the region’s largest and most well-known affordable housing developers.

Exploitation

According to court records cited by La Prensa San Diego, the violations occurred on the Columba Apartments in Chula Vista’s Millenia development and the Mt. Etna Street Apartments in San Diego, both built by Emmerson Construction, a subsidiary of Chelsea Investment Corporation. A consent judgment filed September 12, 2025, found that Alta Drywall failed to pay proper overtime or minimum wage, with some employees logging 10-hour days, six days a week, for as little as $400. “They gave me the same pay no matter how long I worked,” one worker told La Prensa San Diego. “Most weeks, I never got a day off.” Another said, “They paid by the square foot. It didn’t matter how many hours we worked. Just the footage.” Both employees were among those named in the Department of Labor’s findings.

Our Tax Dollars

Union leaders say the case pulls back the curtain on a deeper problem. These publicly funded housing projects rarely use Union contractors, creating an environment where wage theft and payroll fraud can thrive and workers have no voice. “Developers have sold affordable housing as the moral high ground, but behind that label they use nonunion contractors who operate in the dark,” said Jorge Viramontes, a representative with the Western States Carpenters. “Because many of these jobs have no labor standards and the aren’t signatory, no one is tracking hours, benefits, or safety. It’s a perfect setup for wage theft, payroll fraud, and abuse.”

He continued, “Now we’re seeing what happens when the Department of Labor starts looking closely. This isn’t a mistake; this is what’s really going on. And I’m certain we’ll be seeing many more of these busts down the road.”

Jesse Garcia, a Carpenters Local 619 organizer, agrees that the lack of oversight in affordable housing projects has become a magnet for corruption. “Affordable housing should mean affordable for residents, not for crooked contractors,” Garcia said. “When there’s no union agreement or labor standards, there’s no accountability — and that’s when the bad actors thrive.”

Follow the Money

As La Prensa San Diego reported, both projects were developed under Chelsea Investment Corporation, one of the state’s most politically connected affordable housing developers. Chelsea and its executives have contributed to several San Diego political campaigns, including those of Mayor Todd Gloria and the Measure C campaign that cleared the way for the Midway Rising development, a project expected to deliver more than 4,000 housing units, including 2,000 designated affordable.

Alta Drywall isn’t new to big contracts. The company has performed work for some of the country’s most recognized names in housing including Brookfield Residential, Lennar Homes, Pacific Coast Communities, Pardee Homes, and Shea Homes.

When asked about Alta Drywall’s violations, Chelsea issued a brief written response: “Chelsea Investment Corporation works with hundreds of subcontractors, both large and small. All subcontractors must be licensed, bonded, insured, and in good standing. We have high standards for all subcontractors, and if they are found to not meet our standards, they are not qualified to work with us.”

Accountability

Labor advocates say this settlement sends a message that being part of the “affordable housing” sector does not give contractors a free pass. “For a long time, these jobs have existed in a gray zone, publicly funded but privately policed,” Garcia said. “That loophole is closing.” Garcia added, “Wage theft doesn’t care what kind of project it’s on. It’s theft, plain and simple. The difference now is that the feds are  paying attention, and that’s bad news for contractors who’ve been operating in the shadows.”

The Bottom Line

$790,000 federal judgement

The $790,000 judgment against Alta Drywall is more than restitution; it’s a signal that enforcement is catching up with a sector long considered untouchable. These projects may be built with public dollars, but when they rely on non-signatory contractors, transparency disappears, and criminality moves in. “They can call it affordable housing all they want,” Garcia said. “But if the workers building it are illegally paid peanuts and can’t afford to live in it, that’s not affordable. That’s exploitation.”

Source: La Prensa San Diego, “SD Drywaller Underpaid 580 Workers on Affordable Projects,” Arturo Castañares, Oct. 3, 2025.