“The Montana Commissioner of Securities and Insurance has added $155,000 to the tally of fines racked up by an individual surety provider accused of violating insurance statutes in eight states.
Montana had previously fined Dennis Lyon $645,561 for supplying bid bonds and a performance bond without a license and with unverifiable backing assets, in 2004 and 2010. The state issued a permanent cease-and-desist order against Lyon in 2007. Similar orders prohibiting Lyon from selling bonds also exist in Texas, Oklahoma, Florida, Nevada, Washington, Maryland, and Georgia.
Individual surety bond fraud on federal contracts has recently regained the attention of the U.S. Congress, where the House of Representatives last May passed the Security in Bonding Act of 2012. Known as H.R. 3534, the act proposes to set tighter standards for the types of assets that may be used to back an individual surety bond. Action in the Senate could occur in the spring or summer.
For contractors seeking a surety bond, Hamilton recommends calling a state department of insurance to verify that the person selling the product is licensed.”
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