By: Lindsay Simmons
On May 26, 2015, Abel Carreon entered a guilty plea to one count of mail fraud and one count of aggravated identity theft in connection with a scheme involving surety bonds and government contracts, the Department of Justice just announced. Court documents state that between 2005 and 2011 Carreon defrauded the United States and government contractors, through his company Tripartite Escrow Corporation, by offering bonding services such as bid bonds (to secure a bid on a government contract) and performance and payment bonds (to insure the work on a government contract).
As our readers know, surety bonds are required for many government contracts – to make certain that if a contractor defaults, the government is compensated for any financial loss. The federal government does not accept just any bonding company. To qualify, a bonding company must pledge acceptable assets with a value equal to or exceeding the amount of each bond, and submit an affidavit disclosing the identity of the surety and verifying the existence and acceptability of the assets.
According to his plea agreement, Carreon submitted bid packages containing false statements and fraudulent documents. He did it all: pledged common stock that did not exist, was substantially less than represented, or was pledged across multiple bonds without full disclosure. He also forged notary stamps and signatures on the bond documents.
After the bonds were accepted by the government and work began under the contract, the government made payments to the contractors, including premiums for Carreon’s fraudulent, worthless bonds – to the tune of approximately $1,253,000.
Carreon faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for mail fraud and a mandatory consecutive sentence of two years in prison for identity theft.
“This investigation should serve as a warning for those intent on defrauding the U.S. military and American public that the Defense Criminal Investigative Service (DCIS) and our law enforcement partners will pursue these crimes relentlessly,” said the DCIS Special Agent in Charge.
Beware who you use to fulfill your bond requirements. Like every other entity or person with whom you work to fulfill your government obligations, the bonding company must be a responsible subcontractor or supplier.
Lindsay Simmons is responsible for the contents for this Short Take.
© Jackson Kelly PLLC 2015