A Granite Bay man was sentenced Tuesday in Federal court to five years on probation, including three months of home detention, for using bogus bond documents to win nearly $3.5 million in stimulus-funded contracts from the city of Sacramento.
Peter Michael Scott was president of Advantage Demolition and Engineering, a firm that was awarded two contracts in 2009 to install about 3,300 water meters. The contracts were part of a 21,000-water-meter project financed with $22 million in stimulus funds the city obtained from the U.S. Environmental Protection Agency.
Successful bidders were required to submit "performance" and "payment" bonds, which are insurance to cover any deficiencies in performance by the bidder or any failures by the bidder to pay subcontractors.
Scott, a 48-year-old former prison guard, submitted what are represented to be $5 million in surety bonds issued by Merchants Bonding Co. The documents had raised seals and signatures ostensibly of a notary public and an attorney for Merchants.
Scott pleaded guilty in September, admitting the notary's signature is a forgery, the attorney is a fictitious character and the form on which the bonds are printed was not in use by Merchants at the time. He further admitted purchasing a cellphone and identifying its number as the attorney's.
"As a result of his committing this crime, Mr. Scott has lost everything," defense attorney Bruce Locke wrote in a sentencing memorandum. "He has lost his contractor's license and he has lost his business."
His company began work on the retrofit project in November 2009. Early the following January, city inspectors were aware of problems with the work. On January 7, 2010, the city determined the surety bonds were fake and issued a stop-work order. At that point, the city had paid the company $65,000.
A May 30 hearing is set to determine the amount of restitution Scott owes the city.
Locke argues in the sentencing memorandum that the city owed his client enough money at the time he was terminated so that, "by retaining that money and using (it) in the completion of the contract, the city did not suffer any loss."
Locke does acknowledge that "the falsification of the insurance bond could have resulted in a loss to the city, and Mr. Scott recognizes that he could have caused harm by his criminal activity."
Still facing charges as an alleged co-conspirator in the counterfeit-bond scam is Scott's nephew, Robert "Robbie" Scott Jr. He is due back in court April 10 for a status conference.