Louisiana accuses company of selling bogus bonds

AP News
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Posted: Dec 24, 2009 9:47 AM

Louisiana insurance regulators are suing a company accused of selling worthless construction bonds for bids on hundreds of millions of dollars in government projects, Insurance Commissioner Jim Donelon said.

Infinity Surety of Louisiana Inc. wasn't licensed to operate as an insurance company when it sold bonds to contractors bidding on public works projects, Donelon said Wednesday.

A lawsuit filed last week by the state insurance department said Infinity Surety sold bogus bonds for bids on a $34 million airport expansion project in Monroe, a $51 million project at a high school in New Orleans, a $6.9 million project for a community center in Plaquemines Parish and other projects.

"They have been peddling their wares all over the state," Donelon said.

Donelon's office asked a judge to bar Infinity Surety and its owner, George D. Black, from operating an insurance business in the state. A hearing on that request is set for Jan. 4.

Neither Infinity Surety nor Black had a telephone number listed.

Donelon said his office is investigating whether any companies that purchased bonds from Infinity Surety were involved in the alleged scheme. He said his office also notified federal prosecutors about the allegations.

"We believe that there's an investigation," he said. "We have certainly provided information to them."