Garrahan, Spillman Ordered to Pay $4.4M in Fraud Scheme

Two Delray Beach residents have been slapped with a $4.4 million restitution order for their role in a sprawling federal fraud scheme involving phony insurance bonds tied to government contracts. Brian J. Garrahan, 42, and Kelly A. Spillman, 35, admitted to conspiring to defraud federal agencies and contractors by issuing fraudulent surety bonds, a scam that spanned nearly five years and ensnared over a dozen government entities.

The U.S. District Court for the Southern District of Florida ordered the pair to pay $4,414,847.19 in restitution to 14 federal agencies and two federal contracting companies. Among the victims: the U.S. Army, Department of Energy, Environmental Protection Agency, Department of Housing and Urban Development, Department of State, Department of Veterans Affairs, and General Services Administration. The bonds were presented as legitimate financial backing for major government contracts, but the collateral claims were entirely fabricated.

Garrahan and Spillman previously pled guilty to one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 371. On September 16, 2016, U.S. District Judge Kenneth A. Marra sentenced Garrahan to 30 months in prison, followed by two years of supervised release, and ordered forfeiture of over $1 million. Spillman received time served, two years of supervised release with 12 months of home detention, and forfeiture of approximately $130,000.

The fraudulent bonds were individual surety bonds, typically signed by Garrahan, a relative, and co-conspirator Alex Xavier, who had prior experience with government bonding. These bonds required collateral—land, cash, or cash equivalents—but Garrahan and Spillman knowingly used false ownership documents and fictitious financial records to back them. The scheme generated payments from more than 100 government contractors across over ten federal agencies.

From June 2008 through June 2013, the defendants and their co-conspirators issued bonds for contracts that often expanded through modifications—each new phase opening the door to more fraudulent bonds. The restitution and forfeiture orders are joint and several among Garrahan, Spillman, and Xavier, who has also pled guilty and was scheduled for sentencing on November 4, 2016.

The investigation was a multi-agency crackdown, led by the EPA’s Office of Inspector General and the U.S. Department of Veterans Affairs-OIG. Supporting agencies included the U.S. Army Criminal Investigation Command, Department of Defense-OIG, Department of Energy-OIG, GSA-OIG, HUD-OIG, and State Department-OIG. Assistant U.S. Attorney Ana Maria Martinez prosecuted the case. Court records are available via the Southern District of Florida’s public docket system.