Photo by Jeffrey Cox/ENR
Diamond Indemnity provided a surety bond to a subcontractor on a renovation and expansion project in 2012 at the New-York Historical Society.

Former business partners of Melde Rutledge, the elusive source of surety bonds linked with his partners to controversial practices, claim that their association with him ended in the summer of 2012. At that time, they claim, Rutledge allegedly engaged in fraudulent bonding activity and forged the signature on bond documents of Diamond Indemnity Trust principal Darius X. Johnson.

Rutledge, believed to be a resident of West Palm Peach, Fla., and his attorney could not be reached for comment.

Johnson and his companies, Diamond Indemnity Trust and Aim Direct Insurance Trust, are connecting points in a network of sureties and insurance professionals involved in questionable surety bonding practices in the past two years.

Diamond Indemnity notably declined to provide assistance to New York subcontractor American Architectural Inc. to prevent its failure on six New York City contracts bonded through the surety. American Architectural Inc. filed for bankruptcy in late 2012 while working on projects involving the World Trade Center and the New York Historical Society.

Rutledge's connection to Diamond Indemnity is not immediately apparent from the company's public materials, but his name, or names he uses, have been known to insurance fraud investigators for many years. Rutledge has been known to go by Melde Rutledge, Mel D. Rutledge, or Mel deRutledge in various business dealings.

He apparently served two jail sentences in Washington, D.C., in the 1980s for fraud related crimes. And the Indianapolis Star reported in 1988 that prosecutors or police had begun to investigate a "Melde Rutledge, Jr." for alleged misuse of student-aid funds when Rutledge "tried to set up a chain of trade and technical schools."

In a response to ENR's questions on the connections between his surety operations and distributors of fake Chubb bonds, Johnson provided details on doing business with Rutledge, who Johnson had said in a sworn statement was the leader of various surety related companies where Johnson was employed. In his new account, Johnson says Rutledge consulted for Diamond Indemnity Trust and managed the assets it used to write bonds. Rutledge appointed Johnson as general counsel for Diamond Indemnity in 2010 and then promoted him to principal some thereafter.

Adjusted Learning Curve

 “Over time my learning curve adjusted, the more questions I asked the more concerned I was becoming,” writes Johnson in a statement emailed by his Philadelphia-based attorney, Jeffrey Servin. “There was no singular event; there was a slow unraveling of who Rutledge actually was. I received word that [Mel] Rutledge was forging my name and writing bonds as well as other documents. I also received a detailed spreadsheet of the bonds that he executed and sold. The funds were routed to his account.” Johnson does not identify which bond transactions Rutledge executed or how much they were worth.

After learning about this activity, Johnson says he sent a letter to his business associates disavowing Rutledge’s involvement in Diamond Indemnity Trust in May 2012. Johnson did not send the letter to Rutledge because Rutledge still acted as custodian for the assets backing Diamond Indemnity’s bonds, including those involved in the June 2012 bankruptcy of New York subcontractor American Architectural Inc.

Johnson writes, “We spoke several times with each conversation ending with Rutledge providing the assets. He never did.”

Rutledge’s name appears in domain name registries with domain names associated with Aim Direct and associated Bermuda-based company Aimpoint Re, two other companies involving the same people. Johnson states that Rutledge was not supposed to be involved in this new bonding platform, but that “just as we were going to launch in the U.S., Rutledge secured the domain and incorporated Aimpoint Re in Delaware.”

Around the same time, according to Johnson, Rutledge sent him documents with a request that Johnson transfer his interests in Aimpoint Re to a third party. “He said the only way that he would provide me the assets for the [American Architectural bankruptcy] is if I sign that document.  If not I was going to jail,” writes Johnson. Johnson and Servin issued cease and desist orders against Rutledge in September and December of 2012 to prevent him from using the Aimpoint Re trademark and domain name.

In Johnson’s August 2012 deposition during court proceedings for the American Architectural bankruptcy, he made no mention of the disavowal letter or Rutledge’s alleged behavior. The reason, writes Johnson: “I needed him to provide the assets. He was squeezing me.”

Servin further clarified that Larry Polec, who referred contractor Dallas Collins to third party JLM Risk Management that relayed a fraudulent bond, received a referral fee of $1300 from JLM. Polec previously stated that he received no compensation for the bond.

In an email clarification, Polec writes that the referral fee did not come from the premium Collins transferred to JLM.