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Man who sold millions in bogus bonds and ignored state orders pleads guilty

Target 12

CONCORD, N.H. (WPRI) — An unlicensed insurance agent who for years ignored cease and desist orders aimed at his company that was said to be based in Rhode Island, has pleaded guilty to federal charges.

Leo Rush, 76, of Pelham, New Hampshire, entered a plea Thursday in New Hampshire federal court to mail fraud connected to Newport Insurance – a company Rush’s website claimed was headquartered in the Alice Building on Westminster Street in Providence.

Rush was arrested last summer and at the time pleaded not guilty to five counts of mail fraud and five counts of wire fraud.

In 2017, Target 12 reported the Department of Business Regulation (DBR) had “often frustrating” contact with Rush as far back as 2007 when the first of several cease and desist orders was issued to one of his companies. Connecticut and Florida insurance regulators also ordered Rush to stop selling bonds.

According to investigators, that Westminster location was a “false address,” and Rush was actually working out of his home when he sold $23 million in fraudulent performance bonds to businesses in several states.

Rush’s victims paid him over $633,000 for the bonds that were sold from 2012 to 2019, according to the New Hampshire U.S. Attorney’s office. 

Performance bonds are required to be purchased by contractors to cover the cost of municipal projects if they are not completed, but theoretically no one would know the bonds were bogus unless the project failed.

Coventry developer John Gauvin found out one of Rush’s bonds was “not worth the paper it was written on” when he looked into his former contractor’s bond after he was hired for a Plainfield, Conn. housing-development project.

New Hampshire U.S. Attorney Scott W. Murray said Rush used a “deceitful scheme” and exposed the victims “to the risk of major financial loss in the event they needed to file a claim against his fraudulent surety bonds.”

Rush is scheduled to be sentenced in December.

Send tips to Target 12 Investigator Walt Buteau at wbuteau@wpri.com and follow him on Twitter @wbuteau.

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