These days you have to be careful when selecting a company for all types of services, including surety bonds. There are companies out there illegally issuing bonds which can cost hard earned money and threaten the livelihood of your business; this is exactly what happened to a contractor in Virginia.
The Virginia State Corporation Commission Bureau of Insurance shut down a Virginia insurance agent and two companies while fining them a total of $280,000 for the fraudulent vending of surety bonds for public construction projects. President of Genesis Business Group Inc., Don Delwyn Tuzo was fined $115,000 including an additional $50,000 fine for another company of his named Genesis Capital; Virginia law authorizes regulators to enforce a fine of $5,000 for each offense. Genesis Business Group Inc. was acting as an insurance broker licensed to sell surety bonds while Tuzo’s other company, Genesis Capital, was acting as the surety issuing the bonds. Authorities stated that Genesis Capital provided bogus and deceptive information relating to the assets supposedly supporting the bonds. According to Tuzo, the illegal bonds were backed by land assets.
At a hearing in October, Larry Beadles testified that in 2009 Tuzo contacted B&R Construction Management Inc. offering to provide surety bonds for its state and local construction projects. Beadles said there were a total of five projects Tuzo sold bonds for.
The projects included:
• A $1,102,000 performance and payment bond to Portsmouth Redevelopment & Housing Authority for B&R’s work involving the Jeffry Wilson Housing Project.
• A $713,486 performance and payment bond to the City of Portsmouth in connection with B&R’s demolition of Hunt Mapp/Willett Hall for the City of Portsmouth, Va.
• A bid bond of $200,000, and performance and payment bonds of $373,000 for B&R’s construction of a K-9 facility for Virginia Beach, Va.
• A bid bond for $50,000, and performance and payment bonds for $732,616 in connection with B&R’s construction of a visitor center for the Virginia Department of Conservation and Recreation.
• A bid bond for $25,000 for B&R’s bid for the Jarmin Road/Crossways Boulevard site construction project in Chesapeake, Va.
This encounter with Genesis Business Group Inc. and Genesis Capital demonstrates how important it is to carefully look in to the surety company issuing your bond. Unfortunately B&R most likely won’t get the money back that has been lost with these bad bonds simply because there doesn’t seem to be any resources to support the bonds. Not only does the contractor lose money, they may also lose the job for which they had the bonds for in the first place. One of the main things you should research when considering a company is the surety’s financial strength since they will be the ones backing the bond. You can get a good idea of a company’s financial condition by looking at their rating from a nationally recognized rating service such as A.M. Best. Another important list to view is the Circular 570 Treasurer Listing which is the Department of the Treasury’s listing of approved sureties. This can provide some piece of mind that a company you are considering is qualified to issue or sell bonds.
Many companies are available when it comes to providing surety bonds. It’s important to weed out any potential frauds because it can cost not only money but the welfare of your business. Do the necessary research and you will be that much closer to obtaining a legitimate bond.