Federal authorities have joined local agencies to investigate a Twin Cities contractor believed to have forged construction bonds to win contracts with state and local governments.
The alleged scam by Gerard Roy of RSI Associates in Prior Lake cost the public, and some of his subcontractors, hundreds of thousands of dollars, a search warrant affidavit claims.
Two state court cases have triggered a broader investigation that now involves the Minnesota Department of Commerce, the Internal Revenue Service and U.S. Postal Service. Search warrants issued for Roy’s Burnsville home on Aug. 12 allege wire fraud, money laundering, bankruptcy fraud and tax fraud by Roy, a construction general contractor.
In March, Roy was charged in Scott County on five counts of forging bonds. He pleaded guilty to two charges at a July hearing and is awaiting an Oct. 30 sentencing. Roy will face similar forgery charges at a Hennepin County hearing in December.
“He’s fooled a lot of people for a long time,” said Ron Hocevar, Scott County attorney. “Our primary concern right now is holding him accountable for what he did here in Scott County. He’s looking at a restitution of a substantial amount, up to about $200,000, but that is still being nailed down.”
Roy’s attorney, Matthew Fling, says his client has not yet been charged in federal courts. The U.S. attorney’s office declined to comment.
Construction bonds are insurance for projects in case the contractor does not complete it or fails to pay the subcontractors. Without these bonds, a company cannot bid on construction projects. The Scott County case began last January when one of Roy’s subcontractors on the Cleary Lake Visitor Center project called the bond company over failed payments by RSI Associates.
The bond company, CNA Insurance, determined RSI Associates had falsified a signature using a deceased person’s name. CNA alerted the subcontractor as well as law enforcement agents, alleging that Roy, operating under different business names, had submitted fraudulent bond documents to at least four other projects before 2012. Those included the City of Minneapolis, Minnesota State Colleges and Universities, Washington County Housing and Redevelopment Authority and Three Rivers Park District.
CNA later found five more projects on which Roy was the general contractor — having allegedly won the contracts using fake bonds. These included the city of Hastings’ Riverfront Renaissance, the Metropolitan Council’s Green Line operations and management facility and its Heywood office building, the Minnesota Valley Transit Authority’s Burnsville station and Eagan High School’s bleachers. The bond amounts ranged from just over $103,000 to nearly $860,000 each.
Investigators contacted the project managers, who all verified RSI as the general contractor. The projects were in various stages of completion and with different outstanding payments.