“Computer System And Network For Eliminating Fraud In The Issuance Of Surety Bonds” in Patent Application Approval Process (USPTO 20240087070): Patent Application

2024 APR 03 (NewsRx) -- By a News Reporter-Staff News Editor at Technology Business Daily -- A patent application by the inventors Sforzo, Joseph (Plainview, Ny, Us); Sforzo, Jr., Joseph M. (Plainview, Ny, Us), filed on October 4, 2023, was made available online on March 14, 2024, according to news reporting originating from Washington, D.C., by NewsRx correspondents.

This patent application has not been assigned to a company or institution.

The following quote was obtained by the news editors from the background information supplied by the inventors: “The term “surety bond” generally means a bond issued by an insurance company or other company. A surety bond is essentially a contract between three parties-an oblige who seeks to contract with someone for performance of a job or other act (i.e., the person or business entity that requires the purchase of a bond to ensure compliant performance), the principal who contracts to perform the task or other act (i.e., the person that purchases the bond), and the surety (i.e., the insurance company that sells/issues the bond for an amount that guarantees compliant performance).

“The surety legally binds itself to an obligee for an amount of money guaranteed to the obligee for the faithful performance of a contract or other act required of the principal (see FIG. 1). The bonds issued by a surety can include bid bonds, contract bonds, court and subdivision bonds, performance bonds, customs bonds, notary bonds, liquor license bonds, license and permit bonds, small business administration bonds, bail bonds, supersedeas bonds or other bonds required in litigation, etc.

“In a very common scenario, when a contractor, builder, supplier, etc. wishes to bid on some aspect of a construction project or submit a bid in connection with a governmental purchase of equipment or supplies, the entity requesting bids typically requires that for a bidder to be considered, a bid bond must be submitted along with the bid.

“Many municipalities have their own particular bid form, and others use a format that is approved by the American Institute of Architects. In the typical bid bond the principal is the contractor/builder who is submitting the bid. The surety is typically an insurance or bonding company who pursuant to the bond is “held and firmly bound” to the entity seeking the bid for a predetermined sum, usually some percentage of the bid amount. In the event the bid is accepted, the bond becomes effective and protects the entity awarding the contract by assuring the entity of faithful performance of the contract, as well as prompt payment of labor and materials furnished in performing the contract. The bond also protects the bid seeking entity from the failure of the winning bidder to enter into the contract being awarded, by paying the difference between the winning bid and the amount that the entity would have to pay to another party to complete the project because of the default. For the non-winning bidders their bond terminates and only the winning bidder’s bond has any effect.

“Each bidder submits a bid bond with its bid in the appropriate form decided upon by the entity seeking the bids. In the event the wrong form of bid bond is used, the party submitting the bid bond runs the risk that the entity soliciting the bonds will reject the bid out of hand even if the person submitting the bond was the lowest bidder. Many agencies soliciting bids are reluctant to accept a bid with an improper bid bond form because there is a risk that the losing bidders who submitted the proper form may challenge the agency if it awards the bid based on an improper bid form.

“When a contractor is submitting a bid, much of the contractor’s effort is spent calculating and adjusting various aspects of the bid to make sure the contractor has a bid that he/she considers to be the best for the particular job. Since much of the pre-bid effort is spent calculating and recalculating material and/or labor costs, frequently a bid bond is not sought by the contractor until just before the bidding deadline. In addition, many contractors are bidding on a plurality of jobs at the same time. Furthermore, for many projects there are a great number of contractors bidding on the same project. As a result a great deal of effort has to be done in a short period of time to prepare and to evaluate multiple bonds.

“Surety companies typically rely on local agents to receive the bond request and process the necessary paper work to complete the bid bond. For certain bond requests where the amount of the bond request is low the agent may have authority to issue a bond without approval from the surety company. For other requests the surety company must approve the bond requests. Once the bond request is approved, the agent must prepare the actual bond which must be signed by the agent on behalf of the surety company. In order to save time in the process many surety companies provide their agents with executed powers of attorney for them to retain at their offices until needed. While this procedure saves considerable time in the procedure of issuing bonds, there is also the risk that an agent could issue a bond inappropriately to an unsatisfactory party. While the procedure described above is for bid bonds, the steps and procedures for issuing other types of bonds is nonetheless very similar.

“As a result of the time deadlines with respect to the current procedures for issuing bonds, there is a need for improved methods and apparatus for obtaining and issuing bonds that provides greater safeguards and security against fraud.

“Surety bond fraud, i.e., issuance of fake surety bonds, are promulgated by fake surety companies, rogue bond agents, and unscrupulous contractors (unscrupulous principals). A fake surety bond can cripple a construction site when the bond is needed to fulfill an unmet obligation. Although it is often suggested that the ethical contractor seek to verify the legitimacy of the surety bond, such as by checking for the corporate seal, even such seals have been known to be forged to create a fake bond.

“The apparatus and method disclosed herein overcomes these and other issues relating to the prevention of fraudulent surety bonds being submitted to and accepted by an oblige.”

In addition to the background information obtained for this patent application, NewsRx journalists also obtained the inventors’ summary information for this patent application: “The patent or application file contains at least one drawing executed in color. Copies of this patent or patent application publication with color drawing(s) will be provided by the Office upon request and payment of the necessary fee.

“This Summary is provided to introduce a selection of concepts in a simplified form that are further described below in the Detailed Description. This Summary is not intended to identify key features or essential features of the claimed subject matter, nor is it intended to be used to limit the scope of the claimed subject matter.

“This Summary is provided to introduce a selection of concepts in a simplified form that are further described below in the Detailed Description. This Summary is not intended to identify key features or essential features of the claimed subject matter, nor is it intended to be used to limit the scope of the claimed subject matter.

“The invention is directed to a computer-implemented network, a method, and a system for issuing and transmitting surety bonds, including but not limited to bid bonds, contract bonds, court and subdivision bonds, performance bonds, customs bonds, notary bonds, liquor license bonds, license and permit bonds, small business administration bonds, bail bonds, supersedeas bonds or other bonds required in litigation, etc.

“The present invention also has applicability in the field of insurance and other businesses including but not limited to binding certificates of insurance and policy endorsements. The invention relates generally to computerized systems and more particularly to a computer system network for issuances of bonds through a communications linkage for communicating and processing the bond details necessary for the issuance of a surety bond in a timely and efficient manner. The invention also relates to a system for the collection, processing, and dissemination of bond related information generated from the application process.

“The present invention is a computerized system for automated execution of bonds through an Internet or Intranet website or other communications linkage for communicating and processing information. In addition, the present invention permits designated persons to view approved bonds from remote locations as a security feature. In order to log onto the system a user account and/or password are inputted.”

The claims supplied by the inventors are:

“1. A computer implemented system configured for issuance of a surety bond and corresponding power of attorney to eliminate fraud with multiple layers of security, said computer-implemented system comprising: a server, said server configured to communicate with a plurality of client devices; one or more client devices for each of: one or more surety companies, one or more agents, one or more contractors, and one or more obligees; each of said client devices configured to communicate with said server; wherein said server is configured to provide said client devices of the one or more surety companies with a surety company user interface screen configured to grant a power of attorney to authorize an agent to issue surety bonds on behalf of the surety company; wherein said server is configured to provide said client devices of the one or more agents with an agent user interface screen: said agent user interface screen comprising: one or more boxes configured for entry into, or selection therein, of: bid-specific information, and a digital signature of the agent; wherein said server is configured to provide said client devices of the one or more contractors with a contractor user interface screen configured for entry of a digital signature of the contractor onto the draft of the bond; wherein said server is configured to generate and to display a unique alpha and/or numeric identifier on both the executed bond and the associated power of attorney, to create a digital stapler to prevent subsequent fraudulent use of the power of attorney independent of the executed bond; and wherein said server is configured to provide said client devices of the obligee with an obligee user interface screen configured to provide access to view the executed bond.

“2. The computer implemented system according to claim 1, wherein said multiple layers of security of said computer implemented system further comprises: said server configured to send an email notification of execution of the bond to the surety company; and a seal of authenticity on the executed bond configured to provide an audit trail of the executed bond, said audit trail comprising: one or more hyperlinks being configured, when toggled, to respectively display one or more of: a time-date stamp of the digital signature of the agent; a time-date stamp of the digital signature of the contractor, an IP Address of the client device used by the agent to make the digital signature of the agent; and an IP Address of the client device used by the contractor to make the digital signature of the contractor.

“3. The computer implemented system according to claim 1, wherein said one or more boxes configured for entry into, or selection therein, of the bid-specific information comprises: an information box configured for selection of a contractor requiring a bond for a project; an information box configured for selection of a power of attorney granted by a surety company to the agent; an information box configured for selection of an obligee soliciting bids for the project; a list box configured for selection of a bond type; and one or more information boxes configured for entry into, or selection therein, of one or more of: a bid date for the project; a bid security percentage; and a description of the project.

“4. The computer implemented system according to claim 3, wherein said multiple layers of security of said computer implemented system further comprises: said server configured to send an email notification of execution of the bond to the surety company; and a seal of authenticity on the executed bond configured to provide an audit trail of the executed bond, said audit trail comprising: one or more hyperlinks being configured, when toggled, to respectively display one or more of: a time-date stamp of the digital signature of the agent; a time-date stamp of the digital signature of the contractor, an IP Address of the client device used by the agent to make the digital signature of the agent; and an IP Address of the client device used by the contractor to make the digital signature of the contractor.

“5. The computer implemented system according to claim 4, wherein said surety company user interface screen is further configured to permit creation of a customized power of attorney.

“6. The computer implemented system according to claim 5, wherein the surety company user interface screen is configured to create a customized power of attorney template, being configured to permit the agent to: upload a PDF of a generic power of attorney form as a starting template; name the power of attorney template; enter a description for the power of attorney template; and add a plurality of text fields at respective desired locations of the PDF starting template, to customize a size of each of the plurality of text fields; and to enter a placeholder name for each of the plurality of text fields.

“7. The computer implemented system according to claim 6, wherein said added plurality of text fields comprises: a text field and a respective placeholder name for each of: a number of the bond to be issued, a date of execution of the bond to be issued, a name of the agent selling the bond to be issued, and a maximum amount for which the agent is permitted to sell bonds.

“8. The computer implemented system according to claim 7, wherein said surety company user interface screen comprises: one or more radio buttons configured to alter a power of attorney assigned to one of its agents, being configured to do one or more of: revoke a power of attorney for one of its agents; inactivate, temporarily, a power of attorney for one of its agents; edit a power of attorney for one of its agents; and grant a new power of attorney to one or more agents.

“9. The computer implemented system according to claim 8, wherein said agent user interface screen is configured to permit the agent to do one or more of: view each power of attorney and maximum bond amount granted to the agent; view all bonds issued by the agent; and view all frequently used contractors.

“10. The computer implemented system according to claim 9, wherein said surety company user interface screen comprises: a dropdown list to permit the surety company to do one or more of: view all bonds issued bonds by its agents; and view each power of attorney granted to its agents.

“11. The computer implemented system according to claim 10, wherein said agent user interface screen is configured to provide: a contractor authorization screen to add information of a new contractor into a database, to permit the agent to sell a bond to the new contractor, said information comprising: a contractor name; and a contractor tax ID.

“12. The computer implemented system according to claim 11, wherein said agent user interface screen is configured to permit the agent to do one or more of: view of all contractors in said database; and view all contractors previously issued a bond by the agent.

“13. The computer implemented system according to claim 12, wherein the contractor user interface screen is further configured to permit the contractor to view all bonds singed by the contractor.

“14. The computer implemented system according to claim 13, wherein said server is configured to display the unique and random alpha and/or numeric identifier on the executed bond in a red color.

“15. The computer implemented system according to claim 14, wherein said one or more hyperlinks of said seal of authenticity is configured to communicate with a ratings agency, to retrieve and display a rating of the surety company.

“16. The computer implemented system according to claim 15, wherein said server is configured to send an email notification to the contractor when the draft bond is ready for a contractor signature.

“17. The computer implemented system according to claim 16, wherein said server is configured to send an email notification to the surety company when the bond is executed.”

URL and more information on this patent application, see: Sforzo, Joseph; Sforzo, Jr., Joseph M. Computer System And Network For Eliminating Fraud In The Issuance Of Surety Bonds. U.S. Patent Application Number 20240087070, filed October 4, 2023 and posted March 14, 2024. Patent URL (for desktop use only): https://ppubs.uspto.gov/pubwebapp/external.html?q=(20240087070)&db=US-PGPUB&type=ids

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