120 volt sub panel off a 240 main??

Hello guys,
20 yrs in the business and this is the first time I have seen this following condition. A standard 100 amp main service panel feeds a 60 amp fuse sub distribution panel located next to it. The feed cable has the grounding conductor cut off, the red conductor was double tapped under the main service panels main breaker lug and was then connected to both main bus bars in the fused panel. The black conductor was attached to the main service panels grounding then onto the neutral bar in the sub panel. So now they figured they need some type of ground so a 12 gauge conductor was connected to ground in the main service panel and to the sub panel case. And of course all the circuit wires entering the sub panel were grounded by bending the grounds back under the romex connectors. So this makes the sub panel 120 volt only, and very hazardous in my opinion. In this same house two standard electrical receptacles were wired as 240 volt receptacles and the present homeowner was wondering why every time an appliance was plugged in to one of these receptacles it blew up. Just wanted to pass this on as a type of therapy for me, my head is still spinning. The things that can be missed in this business can be so hazardous for our clients. This house was previously inspected a few years back and these conditions were just labeled " old school but OK ".

From an NEC perspective a 120 volt subpanel is permitted but there are a limited number of ways that this can be connected and the method that you’ve mentioned isn’t one of them. Do you have any photo’s, sometimes when answering these type of questions they can provide a different perspective.

Given the subpanel and recpetacle issues it sounds like a complete evaluation by a competent electrician is needed.