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Montana State Auditor Shuts Down Fake
Surety Bond Scam
New Mexico Man and Companies
fined nearly $500,000 Ordered to stop selling fake surety
bonds in Montana and other states
5/1/07, MONTANA – Montana State
Auditor John Morrison has issued a final agency decision that
includes a permanent Cease and Desist Order against Shonto
Surety, Inc., Individual Surety, LTD., and Robert Joe Hanson
for perpetrating a scam that sold fake contractor bonds to
Montana contractors.
Corporate surety bonds are insurance
products that guarantee funds to complete a job when a contractor
defaults. Phony surety bond scams are often perpetrated against
contractors who win bids to do construction work for local,
state, and federal agencies, almost all of which routinely
require bonds before work can begin.
“Just like counterfeit money, phony surety
bonds or fake insurance may appear to be legitimate, but it
is actually illegal and worthless,” said Morrison. “If
you buy phony coverage, you’ll pay premiums, but it
won’t be worth the paper it’s written on.”
Hanson, 49, of Albuquerque, New Mexico uses
the company names of Shonto Surety, Inc. and Individual Surety,
LTD. to sell his bogus surety bonds. Cease and Desist orders
have also been issued in California, Washington, Nevada, Florida,
Georgia, Texas, Idaho and Oklahoma against Hanson and Individual
Surety, LTD. In addition to issuing a permanent Cease and
Desist Order against Hanson, Morrison ordered Hanson and his
companies to pay a total of $490,000 in fines for violating
Montana law.
In his February 22nd Order, the Commissioner
issued findings that Hanson acted as an unlicensed insurance
producer and sold fraudulent surety insurance in the form
of bid bonds to small contractors in Montana. Additionally,
the Commissioner found Hanson and his companies misrepresented
their product and made false statements, resulting in a violation
of Montana’s insurance laws. Each of these violations
along with Hanson’s failure to appear for the hearing
of this case caused the issuance of the permanent Cease and
Desist Order and the large fines assessed to Hanson and his
companies.
“Fake insurance schemes and phony surety
bond scams are easy to avoid,” said Morrison. “Simply
call my office to check the registration of both the insurance
product and the person or company offering it. If there is
no registration with my office, that’s a red flag that
the product or the agent is illegal.”
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