March 1, 2007                                                         Contact:Lucas Hamilton

MORRISON SHUTS DOWN FAKE SURETY BOND SCAM


      New Mexico Man and Companies fined nearly $500,000; Ordered to stop selling fake surety bonds in Montana
       
      Montana State Auditor John Morrison issued a final agency decision that included 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.”