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Feds investigate surety company 4-28-07

ALBUQUERQUE (AP) - An Albuquerque-based business accused by the state Insurance Fraud Bureau of illegally selling insurance surety bonds in New Mexico is now being investigated by federal authorities.

Agents with the U.S. Department of Interior inspector general's office searched the offices of Southwest Bonding Inc. on Friday, but agency spokesman Roy Kime said the inquiry was separate from the state's ongoing criminal investigation.

Documents citing the reason for the search and the items found were sealed, the Albuquerque Journal reported Saturday in a copyright story.

Asked whether the inspector general's office was conducting a criminal investigation, Kime said: “You never know what they (search warrant) lead to. It could lead to criminal activities.”

Kime said federal agents are focusing on contracts for projects on tribal lands, but that may broaden depending on what the search turns up.

The federal investigation began more than a year ago, but Kime wouldn't say what spurred it.

The state search on April 10 stemmed from allegations that the firm was committing insurance fraud and selling surety bonds without a license.

Contractors purchase such bonds to assure those seeking their services that they are legitimate businesses and provide reliable services.

The principals of Southwest Bonding and its affiliate companies - brothers Dan and Dennis Lyon - have previously denied any wrongdoing, and no criminal or civil charges have been filed.

Dan Lyon, company president, didn't return a phone message Friday.

The Journal reported that Dennis Lyon, under the name of Robert Joe Hanson, has been named in “cease and desist” orders filed in several other states after his companies allegedly sold insurance in the form of surety bonds without a proper license.

The New Mexico Department of Insurance denied Southwest Bonding a license to sell insurance last year, partly because of the actions taken by regulators in other states.

Company officials have said they continued to sell surety bonds on projects they say are exempt from state regulation.
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