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It took a joint effort by the Maryland Insurance
Administration, the Maryland State Police and the Office of the Attorney general, but they got their man in front of a judge – and sentenced to 15 years imprisonment.
Daryl M. Flood of Mitchellville was sentenced after being convicted of forgery, theft and income tax violations. Flood was the president of IRQCC Masonry Contracting Company and Masonry Material Services, Inc., Prince George’s County-based construction firms.
While operated by Flood, these firms had been awarded subcontracts worth more than $3 million for masonry work to be performed on publicly financed projects at Aberdeen Proving Grounds, Baltimore-Washington International Airport, public schools in Prince George’s and Montgomery Counties, and at a housing project in Tyson’s Corner, Virginia. All of these contracts required Flood to provide surety bonds to insure against defaults in performance, or in the payment of workers and material suppliers. On six separate occasions, the payment and performance bonds produced by Flood were counterfeit.
When initially awarded the subcontracts, Flood submitted construction bonds purportedly issued by the “Western Surety Company, Inc.” of Berkeley, California. In fact, there was no such company. The California address and telephone numbers on the bonds were actually phone or mail forwarding and telephone answering services hired by Flood. To avoid detection, Flood arranged that all mail, telephone calls and faxes directed to “Western Surety Company, Inc.” in California would be immediately redirected to Flood’s home in Mitchellville. To add credibility to his operation, Flood created a phantom bond broker, Delaware Indemnity Corp., employing a Wilmington mail forwarding and telephone answering service to make it seem like a legitimate business entity.
Using fictitious corporate documents and notary public seals to make the bonds appear authentic, Flood convinced several different Maryland construction firms that his jobs were being insured by the real Western Surety Company, a well-known South Dakota surety. As Flood was entitled to reimbursement for any bond premiums he actually paid, he printed phony invoices on behalf of the bond broker, and presented them to the general contractors for payment. In this manner, Flood was able to secure payment of more than $150,000 for the bogus bonds.
Flood was discovered only after several general contractors tried to collect on the bonds when Flood’s companies failed to complete some of their contracts. In the end, the contractors suffered losses of more than $500,000 that would have been covered by insurance, had Flood’s bonds been genuine.
Flood was also convicted of using a fake income tax return and fake financial statements, compiled by the fictitious accounting firm of “Gilbert, Sullivan & Stone,” to obtain a $540,000 home mortgage loan from a District of Columbia bank. Flood defaulted on the mortgage and his house was sold at foreclosure, resulting in a $156,000 loss to the bank. In addition, Flood was found to have failed to pay over to the State more than $87,000 in income and other taxes that he withheld from employee paychecks.
Chief Judge Robert Woods of the Circuit Court for Prince George’s County, sentenced Flood to 15 years imprisonment for the construction bond scam, 15 years for the mortgage fraud, and another 5 years for the tax offense. Judge Woods suspended all but 9 years of Flood’s prison term, and will allow Flood to serve his time on all charges concurrently. Flood was also ordered to pay $398,262.01 in restitution to his victims. Flood will serve his sentence after he completes a 30 month prison term recently imposed by a federal judge in Delaware for mail fraud.
When imposing sentence, Judge Woods likened Flood’s misdeeds to “a corporate mugging.” The judge noted that the extent of Flood’s planning and sophistication indicated that Flood was extraordinarily intelligent and industrious. Judge Woods added, however, that Flood’s fraudulent bond scheme put the owners and employees of other companies at great risk, “which was no different than putting a shotgun to their heads.” The Judge stated that it was necessary to send a message to others that there are consequences just as severe for white collar crime, as there are for street crime.
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