About Us

Michael A. Jones Individual Surety is a minority owned; independent, individual surety sanctioned under FAR 28.203. MAJIS was founded on the principle of assisting minority, women, and small businesses find bonding capacity to participate in government (federal, state, and local) bidding opportunities.

MAJIS secures each requested surety with our affiliated Trust held cash on a assets dollar for dollar basis, as represented by the trust’s Irrevocable Trust Receipt (ITR). Each issued ITR is a 100% set-aside amount that is unencumbered and remains in place as an unencumbered asset until formal release of the bond, by the obligee, and meets as an equivalent T-Listed A rated surety as defined by FAR 28.203.1 for Individual Sureties. Following a 12- year career in the NFL, Mr. Jones began working in the construction industry and recognized the need for dependable, reliable bonding options for small businesses, women owned, minority owned and other business enterprises working to grow into larger government projects.

The Surety Industry

MAJIS manages this risk and, more specifically, transfers the risk of failure from private or public project owners (“Owners”) to insurance companies and other individuals and entities, the surety industry arose. Sureties, by means of surety bonds, offer assurance to an Owner that a contractor can complete the contract on time, within budget, and according to specifications, and that it will meet its financial obligations to its workers, subcontractors and suppliers. Sureties also provide financial and technical assistance to contractors, so Owners get what they contracted for – a completed project – and, in doing so, the sureties reduce their own risk exposure. Surety bonds have been used in commerce for centuries, dating back to the Roman Empire around 150 A.D. In 1880, the first corporate surety company established in the United States, United States Fidelity and Casualty Company of New York. To protect taxpayers from contractor failures, Congress passed the Heard Act in 1894. This Act required surety bonds on all federally funded construction projects. Its successor, the Miller Act, passed in 1935, requires performance bonds for public work contracts in excess of $100,000. (40 U.S.C. § 270a et. seq.)

The Miller Act is the current federal law mandating surety bonds on federal public works. Under this act, contractors on certain Federal construction projects are required to obtain bid, payment, and performance bonds.

The Need for Individual Sureties

Individual sureties facilitate a bond market for small, minority, women-owned and start-up contractors. The commercial bond market for small, minority, women-owned and start-up contractors is not only already extremely limited but, in fact, is essentially non-existent. Since Calendar Year 2000, even before September 11, 2001, the surety industry has changed significantly. Five of the top ten surety companies have disappeared, capacity has shrunk among others and re-underwriting has multiplied. According to The Surety Source, a contributing factor to the current lack of bond availability is the demise of many bonding companies over the past several years. The following companies have ceased all bond operations: Mountbatten Surety; Capitol Indemnity; Universal Bonding; Kemper Ins. Co.; Frontier Ins. Co.; Gulf Ins. Co.; Amwest Ins. Co.; Harleysville; Crum & Foster; and XL Insurance. All construction companies, but especially minority, women and small start-up and those without extremely healthy balance sheets, have experienced challenges finding bonding.

Understanding the Process

Trust assets are deposited into an escrow account with a state, federal or country financial institution selected by the Trust where the financial institution may be an agent on the escrow account. The Trust receives a request for an ITR from its surety MAJIS. The trust underwriter then reviews and approves the request. The Trust then creates an ITR which is submitted to the surety for the Obligee, or directly to the Obligee, along with a copy to the Grantor along with a “Joint Pledge Request” for approval. Once the Trust and the Grantor have signed the Joint Pledge Request (JPR), the JPR is sent to the escrow agent to be executed.

  • The ITR is evidence that the assets exist, and that they are being held in trust.
  • The assets supporting the ITRs are in an irrevocable trust to prevent the holding bank from ever having access to the assets.
  • Likewise, the Trust may not invade the corpus of the trust except to satisfy ITR obligations on identified condition as set forth in the ITR.
  • The ITR is not negotiable during the term of the ITR. This is because it has been pledged as backing to the Obligee.
  • Neither does the Trust have access to or the authority to sell the ITR or the underlying assets, just as any other trustee has a fiduciary duty not to invade the corpus of the trust.
  • The ITR does have a cash value – that being the value of the assets held in trust and, when not pledged as backing for an ITR, is a highly liquid investment/asset.

Irrevocable Trust Receipt

A trust receipt can be defined and used in various ways depending on the industry involved and the transaction for which the instrument is used. The trust receipt is a flexible, widely recognized and utilized financial instrument in the financial world. The trust receipt instrument is used by commercial banks and other financial institutions worldwide. It also is accepted and even required for certain transactions by the United States and state and local governments. The US Federal Government recognizes the trust receipt as “property,” “property interests,” and “assets”. In Addition, the trust receipt is recognized as giving rise to a valid security interest under Article 9, of the Uniform Commercial Code (UCC), that recognizes these instruments as giving rise to valid security interests. The trust receipt also conforms to recognized protocols for credit and related financial documents. The Pacific Stock Exchange Rule 8.200 states that a Trust Issued Receipt is a security that is issued by a trust (“Trust”) which holds specific securities deposited with the Trust. MAJIS’s affiliated Trust’s trust receipts are Irrevocable Trust Receipts (ITRs) and are issued against “cash assets” held in “either FDIC banks or top-rated international banks”. Our affiliate Trust receipt are held at Deutsche Bank. The Individual Surety in the 21st Century.

Construction is an $845 Billion industry representing 10% of the U.S. Gross Domestic Product. It is vitally important to the U.S. economy. To keep this sector of the economy running, and to protect itself against the risk of failed contractors and construction projects, the construction industry relies on the surety industry. The risk of failure from the project owners (whether private or public) is transferred to bonding surety companies or individual sureties by means of a centuries old instrument known as a surety bond. In 1935, the Federal Government passed the Miller Act, requiring bid, payment and performance bonds for most Government construction projects. Almost all 50 states (and most local jurisdictions) have enacted similar legislation requiring surety bonds on public construction projects, and these are generally referred to “Little Miller Acts.” Thus, surety bonds are required on most public (and private) construction projects. Minorities in the Construction Industry According to publicly available statistics after 2007, construction represents almost 10% of the U.S. Gross Domestic Product. Construction is an $845 billion industry and represents the second largest economic sector in terms of revenue and employment. It comprises nearly 650,000 construction companies and 5.7 million workers. To have projects completed on time and on budget are two goals of any project team. However, construction is a risky business. The failure rate for construction companies has been estimated to be more than 28%. In the seven-year period from 1990 to 1997, more than 80,000 contractors failed on construction projects in the United States. That left a trail of unfinished private and public construction projects with liabilities exceeding $21.8 billion. How are these failures managed in the construction industry? How does the construction industry avoid the huge impact of these failures? The answer lies in the individual surety bond industry