Surety Fraud

by Gary Brouwer – Surety Manager, Cavignac & Associates
Over the past year, we’ve seen an increase in reports of small businesses and financially-stressed enterprises unknowingly being duped into obtaining and accepting fraudulent bonds. Earlier this year, Chubb Surety discovered evidence of a number of forged bonds. Apparently the alleged forgers had websites where they posed as individual sureties, then proceeded to spread fake Chubb bonds across the country. The contractor paid for them, but they were of no value to the intended beneficiary.  More than 20 contractors were defrauded.The irony is that the law that allows for individual sureties ended up helping criminals steal from the very companies that individual sureties were supposed to benefit.

How can you protect yourself? If you are the recipient of a bond from a subcontractor, call to verify the bond’s authenticity by calling the surety company.  If you procured the bond for your company, before writing a check, verify the bond by calling the bond company. We would be glad to assist you with this.For more information, click on the links below:

ENR Magazine: When Surety Fraud Goes Unpunished, Small Contractors Suffer

ENR Magazine: New Forged Chubb Bonds Discovered, With Mounting Losses