Back in February of 2013 I wrote a blog questioning the value of a surety bond that was backed by nothing more than coal waste. Click hear to read the blog post The bonds were being provided by a “individual surety” versus the standard, “corporate surety” with the bonds of the latter being provided by large insurance companies. Individual surety bonds, which have been plagued by fraud over the years, were created by federal regulations so that small contractors have an alternative to the harder-to-qualify-for corporate surety bonds. Those bonds are generally offered by insurance companies that must comply with state and federal regulations and which list their surety businesses with the U.S. Treasury Dept.
As reported by ENR.com, Edmund C. Scarborough, the most public individual surety in the U.S., the one who once claimed that his guarantees were backed by solid assets comprised of valuable coal waste, filed for federal bankruptcy in Tampa July 17, Scarborough and his wife, Yvonne, filed for protection from their creditors.
Chances are the real losers in this debacle are the taxpayers as the performance and payment bonds issued to protect the taxpayers are seemingly worthless. At Surety1, we only represent A rated carriers that are listed with the U.S. Treasury Dept.