Diamond Indemnity has been involved in several legal cases.
Johnson, Polec and Diamond Indemnity Trust are defendants in an ongoing lawsuit in federal district court in Detroit by Polec’s former employer, Zervos Inc., alleging that Zervos subsidiary Monthco Premium Finance provided financing for a contractor to pay the premium to Diamond for a surety bond and that, when the bond was rejected, Monthco did not receive a full refund.
The court is currently considering cross-motions for summary judgment in that case.
Polec and Johnson also are involved in one of the biggest surety controversies in New York City.
Diamond Indemnity provided bonds, by way of Polec’s Krisilis, to American Architectural Inc., a contractor currently undergoing bankruptcy proceedings that had been working on 13 projects in June 2012.
Six of those projects were bonded by Diamond Indemnity, including projects in the World Trade Center Path station and the One57 residential tower in midtown Manhattan. The bond values for all six projects is approximately $23 million, and representatives for American Architectural Inc. claim in filings that their company paid around $850,000 in premiums to Krisilis.
Johnson says the claims were denied because the contractor made major misrepresentations in its bond application, including underestimating the company’s unpaid tax burden. Aside from legal disagreements regarding document discovery that resulted in Johnson and Polec being held in contempt of court, Johnson says Diamond Indemnity is no longer involved in the bankruptcy proceedings.
As part of the bankruptcy, Johnson was deposed by American Architectural's legal counsel. In the deposition, he claimed to be a newcomer to the surety business and said that his signature had been forged or used without permission on several Diamond Indemnity documents.
When challenged by American Architectural's attorney to verify assets of different kinds backing Diamond Indemnity's bonds, Johnson insisted that he believed all the funds backing the bonds were in place but referred many answers to Diamond Indemnity's key player, a man in West Palm Beach, Fla., he identified in the deposition as Melde Rutledge. Johnson said Rutledge and Polec made key decisions about the bonds.
There are other apparent ties between Johnson, Polec and Rutledge. For example, Aim Direct Insurance's website refers to Aimpoint Re and to its "contract surety program." The website domain registration for Aimpoint Re is recorded with Melde Rutledge's name.
Neither JLM, Polec nor Johnson have been accused of a crime, and none is known to be the subject of an investigation. But Rutledge has been associated with questionable surety and insurance practices in different countries for more than a decade, according to Insurance Security Services, an insurance consultantcy based in West Sussex, England.
Meanwhile, contractors who have lost money on fake Chubb bonds still are wondering if they will ever get their money back.
