Surety Bond Fraud Carries Hefty Penalties
Recently, a Florida man was sentenced to nearly five years in prison, and will have to pay restitution totaling $1.9 million, for issuing fraudulent surety bonds. Eric Campbell carried out a multi-million dollar scheme to defraud individuals, businesses, and state and local governments involved in construction projects. Through several different corporations, Campbell sold surety bonds to governments to ensure that construction projects that they had contracted for would be carried out in a timely fashion.
Surety Bonds and Public Construction Projects
For most public construction projects, there are three types of surety bonds that are commonly required by the government: bid bonds, which ensure that a contractor will carry out the contract if awarded it; performance bonds, which guarantee that the contractor will complete its work for the agreed-upon price; and payment bonds, which obligate the contractor and the surety company to pay laborers and suppliers for their roles in carrying out the contract.
The federal government, along with many state and local governments, often require surety bonds to be issued before awarding construction contracts. Campbell deceived construction business owners and government agencies, fraudulently claiming to have the authority to issue surety bonds. He lied about being affiliated with the Federal Insurance Company and Pacific Indemnity Company, two large surety companies that are closely tied to Chubb, the surety insurance industry giant.
Campbell printed fraudulent surety bonds and forged Chubb group officials’ signatures, then embossed them using a counterfeit seal to give them an official look. In total, he and his companies issued bonds worth over $100 million. He collected premium payments of more than $2.2 million throughout the course of several years, after underwriting contracts that construction companies defaulted on, and calling in their debts at the higher rates required by a surety bond. Beyond causing substantial financial losses, the scheme resulted in serious delays in many state and local governments’ construction projects. It also allowed unqualified construction contractors to receive contracts, compromising the whole bidding process.
Surety Bond Fraud
The prevalence of surety bond fraud, like many other white collar crimes, is on the rise. Most commonly, these types of cases are investigated by the FBI and the IRS, and prosecuted under federal wire fraud laws, found in Title 18 United States Code Section 1343. Essentially, wire fraud is any scheme to defraud that involves transmittal in interstate or foreign commerce. Convictions can carry sentences of up to 20 years in prison, and huge fines on top of restitution to repay the alleged victims of the fraudulent scheme.
If charges for wire fraud have been filed against you, whether for alleged surety fraud or any other reason, it is important to speak with a lawyer immediately, before answering any questions from an investigator. Federal prosecutors can and will use any tiny piece of inconsistent information when building a case against you.
Jeffrey S. Weiner, P.A. has successfully represented people charged with wire fraud for decades. Our team of dedicated attorneys are very familiar with the process of aggressively defending against allegations of fraud, and we are committed to ensuring that our clients are properly represented, with a minimum of publicity. Contact our South Florida office today for an appointment and get your defense on track.