Target 12

Warrant alleges RI-based company made big profits from 'fake bonds'

CONCORD, N.H. (WPRI) — A warrant executed to search the home of a man who claimed to operate an insurance agency out of Providence alleges he made more than $1 million in one year selling "fake bonds" to companies around the country.

Coventry Developer John Gauvin told Target 12 last year that he warned insurance officials in a number of states several times about Leo Rush after an issue with a construction bond in 2012.

Construction bonds are requirements for municipal and state-funded projects, to cover the cost of mistakes or if a project is not completed. 

If a project is completed without any issues, no one would know a bond was bogus unless the government checked on the document.

In 2012, Gauvin discovered a construction bond bought from one of Rush's companies by an excavation contractor hired to clear Gauvin's Connecticut land turned out to be, in Gauvin's words, "not worth the paper it was written on."

"I'm happy someone is finally investigating [Rush]," Gauvin said, adding that the "fake bond" has delayed his project, and cost him a lot of money and time. 

Gauvin has sued the town involved for not checking on the legitimacy of the bond. 

Rush, who is not charged with a crime, declined comment when reached by Target 12, referring us to his lawyer, who has not returned our call.

In the past, Rush has insisted his bonds are legitimate. 

He is well known to regulators in Rhode Island. who have issued cease and desist orders against his companies more than once. 

For years, Rush listed a Westminster Street address on his website as the location for his company, but the New Hampshire search warrant affidavit indicates the landlord for that building said Rush was never a tenant there.

The warrant, executed by the New Hampshire Insurance Department, indicates in a little over a year's time around 2007, Rush's company allegedly made more than $1 million selling what investigators call "fake bonds." 

The warrant also states Rush's company recently sold insurance to businesses in Southern New England and across the country.

According to the document, over the course of about a year, ending last September, Rush deposited approximately $230,000 in sales of what investigators allege were "fake surety bonds."

"I was shocked to see how much money he made," Gauvin said. "I'm totally blown away that so many towns and cities never checked on these bonds."

Insurance officials have told Target 12 municipalities and state agencies are expected to check the legitimacy of the bonds. 

The warrant returned a number of items from Rush's home, including a computer and "paper records."  

Send your story ideas to Target 12 Investigator Walt at wbuteau@wpri.com and follow him on Twitter @wbuteau.


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