Florida Man and Three Others Sentenced for Millions in Fake Construction Bonds – Insurance Journal

A federal judge in Miami sentenced four men to at least two years in prison each for a scheme that sold worthless construction bonds for major building projects in 2015.

Working under the name of Hampton Investment Fund, CHM Secure Trust and several other firms, the men hawked performance bonds and payment bonds to large construction firms in New York and New Jersey, according to the U.S. Attorney’s office for South Florida.

It turned out that the millions of dollars in bonds were fake and their backing, in the form of billions of dollars in “gold certificates” deposited into bank accounts, was worthless, too, prosecutors said.

The preyed-upon construction firms paid more than $1.2 million in fees for the surety bonds, according to the indictment.

The defendants were from around the country, but the apparent mastermind behind the scheme was from Florida. Alexander Robert Xavier, 57, of Boca Raton, Florida, was sentenced to six years in prison. Xavier already is in federal prison serving a 12-year sentence after being convicted of selling worthless performance bonds to the U.S. Department of Labor and the Army in 2008, court records show.

Timothy Castracane, also known as “Guy,” age 51, of Saratoga Springs, New York, received 46 months. Henry John Hattendorf, 73, of Las Vegas, was sentenced to two years. Robert Michael Wann, 64, of Rancho Mirage, California, was sent to prison for 54 months.

Juan A. Gonzalez u s atty
U.S. Attorney Juan Antonio Gonzalez

The bulletin from U.S. Attorney Tony Gonzalez, posted Thursday, did not say how the scheme was discovered. But it noted that investigators from the U.S. Environmental Protection Agency, the Department of Veterans Affairs, the Transportation Department, the Internal Revenue Service and the Port Authority of New York and New Jersey were all involved in the case.

The victim construction firms were identified in the indictment only by the initials KVM, JHR and AMC. Some of the construction work was for major public projects, including the Goethals Bridge Road on Staten Island, New York, according to the indictment.

Early in the process, the defendants hired a New York attorney, identified only as “T.B.” in the court records. At some point in 2015, the lawyer resigned as trustee and attorney, telling Xavier that the gold certificates were worthless. Still, the schemers continued to mislead the construction firms and collect fees through the end of the year, court papers indicate.

In addition to incarceration, the men will be asked to pay restitution and interest and will have to forfeit more than $1.2 million in property, the court’s sentencing order shows. Upon release, they will be under probation for three years.

Topics Florida Construction