At the time of the Chapter 11 filing in federal bankruptcy court in Philadelphia, the company’s dozen projects included six for which it had obtained surety bonds from Diamond Indemnity. The six bonded projects included some of the most prestigious in New York City that started work in 2010 and 2011 and included the Path train station at the World Trade Center, a 90-story residential tower on 57^th Street and the renovation of part of the New York Historical Society.

As those projects began to ramp up, American Architectural’s finances were beginning to show signs of stress.

In a recent phone interview, Johnson said Diamond Indemnity finally decided not to fund American Architectural's operations on a key project because American Architectural had misrepresented its financial condition, especially about federal taxes owed. Melching agrees that American Architectural owed back taxes due to errors by its prior accountants.

The deceptions by Diamond Indemnity, said Melching, were the main reason the company was forced to file for bankruptcy protection. With some help from its surety, the company could have pulled through. "We were duped," said Melching. "We had done $800 million worth of work over 35 years. We had paid for hundreds of millions of dollars of bonds. Now Diamond Indemnity has put us out of business."

Whether or not that's true, surety guarantees generally don’t release a surety from the obligation to finish a contractor's bonded projects and require the surety to seek recovery from the contractor, or principal, says an official of the Surety & Fidelity Association of America. It has been campaigning against what it considers abuses by individual sureties for many years.

The subtleties of surety may not have been clear to Johnson in his first year or so with Diamond Indemnity.

A large man with an office in Atlanta, Ga., Johnson had worked at a personal injury law firm and in the entertainment industry before switching to surety. In 2010, he testified, Johnson was hired by "Melde" Rutledge as general counsel to Diamond Indemnity, AF Global Bonding and other similarly name firms. Later Johnson became president.

During legal maneuvering last summer over the bankruptcy, an attorney for American Architectural took a deposition from Johnson. In it Johnson confessed to knowing little about the surety industry at the time of his hiring and in the months that followed.

At one point in his deposition Johnson stated that the obligation in a subcontractor’s bond was to the subcontractor principal, not the general contractor obligee, as is the custom.

At another time during the deposition, American Architectural’s attorney showed Johnson the documents issued to Lend Lease and the owner of the One57 tower in Manhattan for American Architectural’s bond. The document cited was a “Confirmed, Irrevocable, Letter of Credit."

The attorney points out that the document starts with a letter from the “Law Offices of D. Xavier Johnson.” Johnson had formally had an office in Brooklyn.

'None of These Signatures Look Like Mine'

Johnson answers, “To be quite honest, none of these signatures look like mine." In the next breath he says, "It looks like my signature, but I didn’t put it there.”

Although the various companies where he worked were involved with letters of credit as security for their guarantees, Johnson during the deposition claimed one of the letters of credit involved was “the first time I ever saw a letter of credit in my life.”

When questioned about the key decisions made about the funds backing the guarantees made by Diamond Indemnity Trust, he referred those questions to Melde Rutledge and gave the court and Melching’s attorney a West Palm Beach Florida address and a cell phone number for Rutledge.

Other key decisions about the bonds and the clients were made by Lawrence Polec, a Chicago-based broker and individual surety, Johnson testified, and others.

The premiums American Architectural paid for the bonds, $850,000, were paid to Krisilis, a company run by Polec.

During his deposition testimony about the American Architectural bankruptcy and bonds, Johnson talked of attending meetings in New York City with officials of Tishman, Lead Lease and others. His position at the time was that he was "defending the bonds."

"Well, I mean, well, regarding the millions of dollars that is supposed to be in the escrow, the signatures on the documents and that's why we're here. Let's cut to the chase," he said. "That's why we are here defending the bonds. There is an accusation made at the Lend Lease meeting that it was fraud, and so on and so forth. So I'm here. I'm not going anywhere, and I'm pretty confident in the assets that's backing the bonds."

Among other things Johnson promised was that he would would meet with Mr. Polec and another Diamond Indemnity official to move the claims process forward.

When it came to verifying that assets were in place to back the guarantees, Johnson regularly referred the issue to Melde Rutledge.

“Can you tell me what your firm did to segregate a value of $7.1 million” for the bond for the Lend Lease project?, asked American Architectural’s lawyer.

 Answered Johnson: “That would be a question for Melde Rutledge.”

This story was updated Aug. 1 , Aug. 5 and Aug. 12 to reflect new information about Melde Rutledge, Diamond Idemnity and American Architectural Inc.