Contractor Gerard Roy consistently had good references and the lowest bid.
It won him construction contracts for coveted public projects, from a Scott County regional park to part of the Metro Transit Green Line.
But last month Roy, 53, was charged in Scott County with five counts of forgery for allegedly fabricating surety bonds — documents ensuring that a contractor will complete a job and pay subcontractors and suppliers. It’s the latest chapter in a history of criminal activity, short-lived business ventures and financial failures stretching back more than 20 years.
Roy admits that he fabricated bonds. He did it, he said, to get job contracts and provide work for people he met in prison.
“Due to my criminal record, I can’t get performance and payment bonds,” he said. “So I created my own.”
It worked until a subcontractor who hadn’t been paid for work at Cleary Lake Regional Park tried to make a claim against one of the bonds. Investigations are underway, but in the meantime, there are unfinished projects and people waiting to be paid.
Roy’s current company, RSI Associates Inc., declared Chapter 11 bankruptcy Feb. 19, revealing estimated debts of as much as $1 million owed to more than 30 creditors. They include companies such as Cemstone and Ryan Electric, along with a smattering of government bodies and agencies: the city of Hastings, Scott County, the Minnesota Valley Transit Authority and Metro Transit.
The bankruptcy was dismissed March 10, following a request to either convert the case to a Chapter 7 bankruptcy or dismiss it altogether.
In Hastings, RSI was working on a riverfront revitalization project when city staff got a tip that they should check the bonds. The city hires contractors for a wide range of projects, but hadn’t run into bond troubles before, said City Administrator Melanie Mesko Lee.
“If you looked at the bond documents that were provided, they looked absolutely legitimate,” she said. “They had the raised seal, they had the notary — on its surface, it all looked just what we’d expect a legitimate bond document to look like.”
Attorney Matthew Fling confirmed that he is representing Roy in the criminal case, but declined to comment further.
Roy could face decades in prison and tens of thousands of dollars in fines if convicted.
Roy’s Prior Lake office and home are one and the same, located on a quiet street of modest houses on Spring Lake.
A search by investigators last month turned up evidence that Roy was forging bonds, including a stamp and seal for Western Surety Co. and notaries’ signature stamps.
Roy said he knew fabricating bonds was illegal, but felt it was worth the risk.
“At the zenith, we had half a dozen guys fresh out of prison, all at various levels of parole, that I was managing,” he said. “If anything good comes out of it, at least for a year I employed all those guys with families, and that’s about it.”
A search of Roy’s criminal record in Minnesota turns up more than 30 cases — ranging from drug possession to assault — in a dozen counties.
In 2012, Roy lost his residential building contractor license and had to pay a $5,000 fine after failing to disclose his criminal history on a Minnesota Department of Labor and Industry application.
Over time, he’s had multiple businesses with different partners. The company that lost its license in 2012 was called Omni Construction Co. Other names have included Olympic Construction Services Inc., Omni-Midwest Inc. and Olympic Roofing and Construction Co. According to a 2014 lawsuit, Roy at one point did business through three companies at once, using them to convert and hide assets while withdrawing about $400,000 over a 10-month period.
Now there’s RSI, which lists Roy’s girlfriend as its CEO.
“What I suspect he’s been doing is he gets somebody else to front for him so that it’s not obvious that this is Gerard Roy that’s operating the company,” said Charlie Durenberger, director of licensing and enforcement at the Department of Labor and Industry. “We may revoke a guy’s license and then he’ll have his wife turn around and start a company.”
Roy said including other people’s names on his business filings isn’t an attempt to hide anything.
“It’s just that, as a felon, I’m not going to put my name out there because nothing’s going to go well for me,” he said. “Like it isn’t going well right now.”
Still, Roy’s work hasn’t always caused problems. Bruce Paulson, a senior project manager architect at Stantec Engineering, worked with Omni Construction on municipal projects in New Hope and Harris and served as a reference for the Hastings project. There were never issues with the company or with Roy, he said, and all of his references checked out.
“We had no reason to not accept his bid,” Paulson said.
The domino effect
RSI has often been the lowest bidder on a given project. A bid for work at Scott County’s Cleary Lake Regional Park — still unfinished — came in more than $90,000 less than the next-lowest bid.
Because Roy worked on public projects, many of his subcontractors were women and minority-owned businesses. Some are still waiting to be paid.
“It’s difficult for small businesses to have the time even to investigate all of these companies that they’re bidding to,” said Barb Lau, executive director for the Association of Women Contractors.
Roy said that because his bids were low, he had to pay subcontractors with the profits from his next project.
“We were starting to rob Peter to pay Paul, and it worked fine as long as you have jobs in front,” he said.
The Hastings project has been halted, as has an MVTA project — work at the Burnsville Transit Station — that never began.
A Metro Transit project that RSI worked on — the Fred T. Heywood Office Building — has left subcontractors unpaid. Bonds may have been fabricated for that project, according to a Feb. 12 letter to the Met Council from Western Surety Co.
Western Surety spokeswoman Sarah Pang said the possible fraud came to the company’s attention when someone tried to claim their bonds and discovered they weren’t real.
In Hastings, the possible fraud spurred city staff to verify bonds for all ongoing projects, Mesko Lee said.
“That will just become part of the checklist going forward,” she said. “And I imagine others will learn from our experience and perhaps do that as well.”