I'm not in California, but just my 2 cents.
Sounds like way too many people know about this job already. So if you were thinking of still doing this job, you think none of the city inspectors know about it? If you do get the job, just like Dunbar said, & I have done this before too, the contractors that bid on, or didn't want the job, are likely to call bldg. officials too.
Who wants to do a job, having to look over your shoulder all the time, wondering if this will be the day you get caught. Isn't this why we all wanted are licenses & insurances in the 1st place. Most all the customers I come across, that are willing to pay a descent wage, actually want you to make money, want the job done right, so there are no issues in the present or future, & have the $$$$ to pay,(especially on this size of a job), insist on pulling permits.
Good luck with your decision Adam, cuz I can tell by all your posts your a top quality plumbing contractor. It's too bad, with this economy, that guys like you even gotta think about doing a sizable job, for a customer that don't want permits pulled. again