An insurance agent and two companies are accused of selling surety insurance in Virginia without being licensed, according to state records.

The Virginia State Corporation Commission Bureau of Insurance issued a show cause order against Don Delwyn Tuzo of Newport News, Va., and two companies with the same address for which he is a registered agent. A hearing on the case has been scheduled for Oct. 26 and 27 in Richmond, Va.

One of the companies, Genesis Business Group Inc., a surety bond producer, formed in 2002 and was terminated in 2008 for failing to pay annual dues. The other company, Genesis Capital Corp., which issued bonds as a surety insurer, was formed in 2003 and terminated this year for failing to pay annual dues, according to bureau records.

Tuzo and the companies could face fines and a permanent injunction prohibiting them from conducting insurance business in the state.

Beginning with contacts in 2006, Tuzo offered last year to sell surety bonds for state and municipal construction projects to B&R Construction Management Inc. Tuzo and Genesis Group solicited, negotiated and sold the bonds to B&R, records indicate.

Tuzo signed the bonds sold to B&R as an agent of Genesis Capital, officials allege, even though the company had never been licensed in Virginia.

As part of the bonds, Tuzo allegedly falsely represented to B&R and to obliges that Genesis Capital was authorized to transact business in Virginia as a surety insurer and that the bonds were backed by land assets even though it does not appear that Genesis Capital has any financial reserves or other tangible assets, records show.

On March 3, 20009, Tuzo and Genesis Capital issued to B&R performance and payment bonds for $1,102,000 to insurer and protect the Portsmouth Redevelopment & Housing Authority’s work on the demolition of the Jeffry Wilson Housing Project, records indicate. Tuzo charged B&R $33,060 in premiums for the bonds, investigators say.

In August 2009, a subcontractor on the project sued Genesis Capital as the surety insurer after B&R refused to pay an invoice for $199,680. The case is pending.

On June 9, 2009, Tuzo sold and Genesis Capital issued to B&R performance and payment bonds totaling $713,486 to insurer and protect the City of Portsmouth for work to demolish the Hunt Mapp/Willett Hall. Tuzo charged $21,404 in premiums for the bonds.

The documents for the bonds state that the “[s]urety named on this Bond shall be one who is licensed to conduct business in the Commonwealth of Virginia” and “named in the current list of Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies’ under Circular 570 of the United States Treasury Department.”

Tuzo signed the pages with the notices, even though Genesis Capital was not licensed to issue surety bonds and was not named in Circular 570, records show.

On Aug. 12, 2009, Tuzo sold a $200,000 bid bond to the City of Virginia Beach for the construction of a K-9 facility. He did not charge any premium on the bid bond, officials say.

On Aug. 31, 2009, Tuzo issued to B&R performance and payment bonds for $373,000 to cover the Virginia Beach K-9 facility on the same day B&R signed a contract with Virginia Beach to construct the facility, records show. Tuzo charged B&R $11,190 in premium for those bonds.

On Sept. 16, 2009, Tuzo sold and Genesis Capital issued to B&R a bid bond for $50,000 for construction of a visitor center at First Landing State Park through the Virginia Department of Conservation and Recreation. He did not charge for that bond.

On Oct. 9, B&R signed a contract to build the visitor center and Tuzo and Genesis Capital issued a $732,616 in bonds to protect the DCR, records show.

After awarding the job to B&R, DCR replaced the company with another contract or demanded payment of $36,630 from Genesis Capital as the surety insurer under the bid bond provisions. DCR’s notices to Genesis Capital and Tuzo were returned as undeliverable, officials say.

On Nov. 3, 2009, Tuzo and Genesis Capital issued to B&R a bid bond for $25,000 for a City of Chesapeake Crossways Boulevard-Jarmin Road site construction, records show. He charged $750 in premium for the bid bond.