SACRAMENTO, CA - A Roseville contractor awarded two city of Sacramento contracts worth $3.465 million in federal stimulus funds to retrofit water meters has pleaded guilty to two counts of submitting false contractor bonds.
According to the U.S. Attorney's Office, Eastern District of California, Peter Scott created false surety bond documentation and submitted it as part of his bid applications for the contracts. The bonds were for $5 million and purportedly issued by Merchants Bonding Company.
U.S. Attorney's Office spokeswoman Lauren Horwood said Scott admitted in a plea agreement with prosecutors that he used an old Merchants Bonding bond form, it had incorrect and/or was missing pertinent information, and that he had made up a fictional attorney whose signature was on the bonds.
The fraud did not come to light until January 2010, several months after Scott's company, Advantage Demolition and Engineering (ADE), was awarded the two contracts. City of Sacramento inspectors found problems with ADE's work on the meter retrofitting. It was then learned the surety bonds accompanying the ADE bids were bogus.
The city halted work on the two meter retrofit projects awarded to ADE.
A grand jury indicted Scott and co-defendant Robert Scott (relation, if any, not made known) on 13 fraud and conspiracy counts in July, 2010.
Charges are pending against Robert Scott, Horwood said.
Peter Scott faces a sentence of up to five years in prison for each of the the charges, a $250,000 fine, and three years of supervised release. His sentencing is scheduled for Dec. 13.