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Atlanta lawyer arrested in multi-million dollar WTC insurance fraud scheme

Expected To Be Brought to B’klyn for Prosecution

February 12, 2015 Brooklyn Daily Eagle
Loretta Lynch, Eagle file photo

The Brooklyn Daily Eagle has learned that Atlanta-based attorney Darius X. Johnson has been arrested on a criminal complaint alleging wire fraud and money laundering in connection with his sale of phony insurance bonds for construction of the World Trade Center PATH transportation hub (WTC Hub). His initial appearance was Wednesday in the Atlanta federal courthouse. The government has said it plans to seek removal of Johnson’s case to the Eastern District of New York for prosecution.

According to the federal complaint, between September 2010 and June 2013, the defendant took part in a scheme to steal money by selling fake insurance bonds to contractors working on large construction projects in New York and elsewhere. Specifically, Johnson, an attorney, sold fraudulent bonds provided by a company called Diamond Indemnity Trust, to a construction subcontractor which had a $6.2 million subcontract to supply and install glasswork at the WTC Hub. 

To prove that the bonds were backed by assets that could be used if the subcontractor defaulted on the project, Johnson, 48, is said to have provided, among other things, a phony letter of credit falsely indicating more than $6 million was held in Johnson’s attorney/client trust account in Brooklyn.

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In 2011, after the subcontractor paid the fraudulent bonds, Johnson, it is alleged, used multiple transactions and bank accounts to wire a substantial portion of the premium payment to himself and a co-conspirator. 

In 2012, when the subcontractor filed for bankruptcy and defaulted on the WTC Hub project, Johnson and Diamond Indemnity Trust failed to honor the bonds, the government asserts. As a result, the WTC Hub general contractor was forced to pay an additional amount of approximately $2 million to complete the job.

“As alleged, Johnson used deception to personally benefit from the reconstruction of the World Trade Center site while adding significant cost to the project and jeopardizing its timely completion,” stated Loretta Lynch, U.S. attorney for the Eastern District.

 

 


-Information from the Office of the U.S. Attorney Eastern District


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