Fraudulent Bonding Companies Increase?

Watch Out For Fraudulent Bonding Companies During These Tough Times

When the economy gets tough and construction company profits wane, surety companies tighten up their requirements. Contractors may find their bonding line of credit is reduced or gone entirely. As more contractors seek bonding credit, there can be an increase in the number of fraudulent bonding companies. This seems to happen in every economic downturn.

According to the New Orleans Times-Picayune, a Baton Rouge judge has ordered Infinity Surety of Louisiana Inc of Metairie, LA. and company principal George D. Black to stop doing business. The Louisiana Department of Insurance accused it of selling bogus construction bonds for public works projects worth hundreds of millions of dollars. Insurance Commissioner Jim Donelon said that Infinity Surety wasn't licensed to operate as an insurance company when it sold bonds to contractors bidding on government projects. Donelon said damage from Infinity Surety's actions is widespread. "They have been peddling their wares all over the state”, he said.

Infinity Surety provided the bond on a $51.4 million project by the Louisiana Department of Education for L.B. Landry High School in New Orleans on a bid submitted by Home Solutions Restoration of Louisiana Inc. and JRDKS Construction. The company also provided bonds on Home Solutions bids on a $5.4 million public works project for Davant Consolidated Building and a $6.9 million project for the Port Sulphur Consolidated Community Center, both in Plaquemines Parish.

Several construction companies also charge that Infinity's actions caused them to lose out on jobs when the bond insurance proved to be worthless. A joint bid by Benetech LLC and JRDKS Construction to rebuild the cabins at Bayou Segnette State Park in Westwego was rejected, the companies said, because Infinity didn't meet bond requirements. A lawsuit filed by the bidders says that at least 15 other public works projects are affected.

If you have doubts about the viability of a bonding company, give us a call and we will check it out for you. Also if you are offered a bonding line of credit that seems too good to be true, you might be right! Watch out and be careful!