Man who sold millions of fake bonds and ignored state orders pleads guilty
CONCORD, NH (WPRI) – An unlicensed insurance agent who for years ignored cease and desist orders against his allegedly Rhode Island-based company, has pleaded guilty to federal charges.
Leo Rush, 76, of Pelham, New Hampshire, pleaded in New Hampshire federal court Thursday to mail fraud related to Newport Insurance – a company website according to Rush was based at the Alice Building on Westminster Street in Providence .
Rush was arrested last summer and pleaded not guilty to five counts of mail fraud and five counts of wire fraud.
In 2017, Target 12 reported that the Department of Business Regulation (DBR) had “often frustrated” contact with Rush as early as 2007, when the first of several prohibition orders was issued to one of its companies. Connecticut and Florida insurance regulators have also ordered Rush to stop selling the bonds.
Investigators said this Westminster location was a “bogus address” and Rush was actually working from his home when he sold $ 23 million in fraudulent performance bonds to businesses in multiple states.
Rush victims paid him more than $ 633,000 for bonds sold from 2012 to 2019, according to the New Hampshire prosecutor’s office.
Performance bonds should be purchased by contractors to cover the cost of municipal projects if they are not completed, but in theory no one would know that the bonds were forged unless the project failed.
Coventry promoter John Gauvin discovered that one of Rush’s obligations “was not worth the paper it was written on” when he considered his former contractor’s bond after being hired for a development project housing in Plainfield, Connecticut.
New Hampshire US Attorney Scott W. Murray said Rush used a “deceptive ploy” and exposed victims “to the risk of major financial loss in the event that they need to file a claim against his bogus bonds.”
Rush is expected to be sentenced in December.