A federal grand jury in Baltimore has indicted two officers of a Jacksonville, Fla., company on criminal charges tied to a surety bonding scheme they allegedly operated in Bethesda in the late 1980s.
An eight-count indictment, made public this week in U.S. District Court, charges Sammy Claude "Ted" West, chairman of United Funding and Investment Corp., and Larry J. Wright, the company's former president, with conspiracy and multiple false-statement counts.
The indictment charges that West and Wright conspired to broker false affidavits from bogus performance-bond insurers, called "individual sureties," to a variety of federal agencies.
West and Wright also filed numerous false statements with the ** government agencies as part of the scheme, which was created to enable small businesses to get lucrative contracts and subcontracts on government construction jobs, the indictment says.
The alleged offenses occurred while United Funding and Investment operated in Bethesda from 1986 to 1988, according to the indictment.
In all, prosecutors said, United Funding and Investment provided payment and performance bonds to 15 government agencies on 46 contracts valued at $22.8 million.
Agencies allegedly victimized by the scam included the Army, Air Force, Veterans Administration, National
Park Service, Smithsonian Institution and the National Aeronautics and Space Administration.
United Funding and Investment received more than $1.1 million in brokerage fees during the life of the alleged scheme, %o prosecutors said.
The company later moved to Washington and eventually to Jacksonville, where it still is in business.
Prosecutor Susan M. Ringler said she believes the company no longer provides bonding for government contracts, and Wright has left the company.
The indictment says West and Wright raked off a percentage of each government contract as payment for arranging what turned out to be bogus bonding coverage by individuals who had nowhere near the financial resources to cover defaults on the contracts they insured.
They also created a sham company, City Trust and Mortgage, in Nashville, Tenn., and used a CTM official to notarize bogus affidavits submitted by individual sureties to guarantee contract bonds on the government jobs, the indictment says.
The brokers paid the individual sureties a small percentage of the brokerage fees for submitting affidavits that allegedly said the sureties had assets worth more than the dollar values of the construction contracts.
West and Wright are the first corporate officers to be charged in the Baltimore portion of a nationwide investigation of government contract sureties.
Seven people who allegedly acted as individual sureties for United Funding and Investment and another company, United Capital Exchange Inc., of Silver Spring, were indicted on federal charges in Baltimore earlier this year. Four of them have pleaded guilty.