Tuesday, November 12, 2013

Forged Chubb Performance Bonds Costing Contractors Millions

                  Chubb Group has been notifying obliges in nine states that performance and payment bonds supporting contracts of 22 construction companies and bearing the Chubb surety seal and purported signatures are forgeries. The 22 contractors presenting these bonds were bilked out of over $3 million in bond premiums over the last year and a half by the forgers, who, among other things, misspelled the name of one of the Chubb executives whose forged signature appears on the bonds. The contractors purchasing the forged bonds have been required to pay another premium and purchase a valid replacement bond in order to continue with work on the projects affected.
                    At least two forgers acting as individual sureties have been identified as the source of the forged Chubb bonds, and Chubb has successfully obtained summary judgment for fraud and racketeering against the two forgers in the U. S. District Court for the Northern District of Florida, in Pensacola. It remains to be seen, however, whether Chubb and its lawyers can ever track down and actually collect from the forgers.
                    It seems several of the victims of this bond forgery scheme are minority owned or woman owned contractors. Earlier performance bond forgery schemes resulting in criminal conviction of the forgers have bilked construction companies out of as much as $22.5 million in fraudulent bond premiums over a three year crime spree. That particular forger was eventually caught and sentenced to ten years in federal prison.

                    If your construction business works even occasionally on bonded projects, make sure you do your due diligence and follow the advice of Surety and Fidelity Association of America Corporate Counsel Robert Duke: “The thing that can be done, and we preach, is to create awareness among obligees that it’s a five minute phone call to verify the authorization of a bond and avoid any of this.”
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