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Press Release

Owner And Manager Of Disaster Restoration, Inc. Sentenced To Prison For Conspiracy And Mail Fraud

For Immediate Release
U.S. Attorney's Office, District of Colorado

DENVER – The owner/operator of Disaster Restoration, Inc., Michael Arthur Griggs, age 58, of Lafayette, Colorado, was sentenced today by Chief U.S. District Court Judge Marcia S. Krieger to serve 50 months in federal prison today for conspiracy and mail fraud, the U.S. Attorney’s Office and the U.S. Postal Inspection Service announced.  Following his prison sentence, Chief Judge Krieger sentenced Griggs to serve 3 years on supervised release.  He was also ordered to pay a $500,000 fine, and $477,643.49 in restitution.  He was ordered to report to a facility designated by the Bureau of Prisons within 15 days of designation.

A co-defendant, Charles Sharp, age 52, of Broomfield, Colorado, the chief operating officer/general manager, was sentenced by Chief Judge Krieger on March 11, 2013, to serve 36 months in prison, followed by 3 years of supervised release.  He was also ordered to pay restitution totaling $477,643.49 joint and several with Griggs.  In August of 2012, a jury found Griggs guilty of one count of conspiracy and 13 counts of mail fraud.  The jury also found Sharp guilty of one count of conspiracy and 9 counts of mail fraud.

Disaster Restoration, Inc., (DRI), was a Colorado corporation located in Denver, Colorado.  DRI engaged in the repair, restoration, and reconstruction of commercial and residential real estate properties that have been damaged by fire, water, and other disasters.  DRI acted as a general contractor, which regularly hired and paid subcontractors to restore damaged properties and then submitted the cost of the repairs made by these subcontractors to insurance companies for payment.

At trial the government proved that beginning in or about the Fall of 2003, and continuing until approximately early 2007, the defendants knowingly agreed and conspired with each other to commit mail fraud.  Further, every Tuesday, DRI would hold an internal meeting where they often discussed how to instruct many of the subcontractors working for DRI to inflate their original bid proposals by 20% to 30%.  DRI employees regularly instructed subcontractors to provide DRI with two different documents reflecting their bids, one inflated and one non-inflated, for the same work they would perform for DRI.  The inflated price was to be submitted to the insurance company for payment while DRI would pay the subcontractor based on the lower original price.  DRI pocketed the difference between the inflated price paid by the insurance company and the lower price paid out to the subcontractor thereby increasing, often substantially, DRI’s profit margin on DRI’s restoration projects.

The insurance companies relied on these false and inflated subcontractor prices when they made payments for the restoration projects performed and supervised by DRI.  Most of these insurance payments were sent through the United States Postal System.  DRI would, in turn, issue checks payable to the subcontractors and mail them as well.

“Insurance fraud results in higher premiums for everyone,” said U.S. Attorney John Walsh.  “I would like to recognize the hard work of the prosecutors from the U.S. Attorney’s Office, for obtaining a conviction in this case.  I would also like to thank the Postal Inspectors who worked so diligently preparing this case for prosecution.”

“Insurance fraud, like many financial crimes, erodes the integrity of our Insurance Industry, and threatens the financial health of our communities,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division.  “It is critical we make every effort to protect the public from insurance fraud and its impact on our consumers by ensuring the integrity of the U.S. Mail.”

The case was investigated by the U.S. Postal Inspection Service and was prosecuted by Assistant U.S. Attorney Pegeen Rhyne.


Updated June 22, 2015