subscribe to ENR magazine subscribe
contact us
careers industry jobs
events events
Dodge Data & Analytics
ENR Logo
Web access will be provided
as part of your subscription.

Judge Orders IBCS and Scarborough to Return Surety Premium

Text size: A A
----- Advertising -----

Citing Virginia's false advertising law, a federal judge has ordered IBCS, the big individual surety operated by Edmund G. Scarborough, to return a $138,000 bond premium to a contractor.

The judge last month granted the motion for summary judgment against Charlottesville-based IBCS, Scarborough and former IBCS employee Steven Golia.

Plaintiff American Demolition and Nuclear Decommissioning filed a lawsuit in federal district court in Charlottesville in December 2011. ADND stated that it was led to believe by IBCS marketing materials and assurances from Scarborough and Golia that the bonds provided by IBCS would be good enough to be accepted under Federal Acquisition Regulations and that if they were rejected, IBCS would issue a refund for the bond premiums.

ADND sought the bonds for a $3.9-million tower implosion and debris removal contract in December 2009 after submitting the winning bid to project owner Savannah River Nuclear Solutions LLC. The work was to be performed at the Savannah River nuclear cleanup site in South Carolina.

After paying the premium to IBCS and receiving payment and performance bonds, ADND alleges, Savannah River Nuclear Solutions rejected the bonds because it said they failed to comply with federal regulations.

ADND claims that IBCS subsequently submitted alternate bonds from Linda Garrahan as individual surety through First Fidelity Lending Corp. and that her bonds were purportedly backed by real estate in Lincoln County, Nev., valued at $1.6 billion. According to ADND's complaint, the new bonds were also rejected by the project contracting officer “because Linda Garrahan did not hold proper title to the real estate for bond backing.”

In a February 2014 affidavit, Scarborough claims that the replacement bonds were acquired through Garrahan's Quantum Partners Inc., and that ADND's premium funds were paid to Quantum for the new bonds.

Since then, the complaint claims, Scarborough and Golia eventually informed ADND, which is based in Grand Island, N.Y., that IBCS could not supply a bond that would meet the project owner's standards. ADND found an alternate source for bonds.

Rather than issue a refund as requested by the plaintiff, the defendants allegedly applied a credit to ADND's account for future bond payments.

Neither Scarborough nor Golia could be reached for comment.

In a separate lawsuit filed in April by Golia against Scarborough, Golia alleges that, throughout his employment, his subsequent independent contract, and after his termination in December 2013, Scarborough failed to pay him a contractually obligated bonus and commissions adding up to $130,000.


----- Advertising -----
  Blogs: ENR Staff   Blogs: Other Voices  
Critical Path: ENR's editors and bloggers deliver their insights, opinions, cool-headed analysis and hot-headed rantings
Project Leads/Pulse

Gives readers a glimpse of who is planning and constructing some of the largest projects throughout the U.S. Much information for pulse is derived from McGraw-Hill Construction Dodge.

For more information on a project in Pulse that has a DR#, or for general information on Dodge products and services, please visit our Website at

Information is provided on construction projects in following stages in each issue of ENR: Planning, Contracts/Bids/Proposals and Bid/Proposal Dates.

View all Project Leads/Pulse »

 Reader Comments:

Sign in to Comment

To write a comment about this story, please sign in. If this is your first time commenting on this site, you will be required to fill out a brief registration form. Your public username will be the beginning of the email address that you enter into the form (everything before the @ symbol). Other than that, none of the information that you enter will be publically displayed.

We welcome comments from all points of view. Off-topic or abusive comments, however, will be removed at the editors’ discretion.