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SALT LAKE CITY-Three men are facing criminal charges in an alleged scheme to sell more than $10 million in bogus surety bonds to private contractors doing work for the federal government.

A federal grand jury has indicted Glen Roger Thompson of Englewood, Colo., Peter J. Buffo of Salt Lake City and Dennis Walsh of Los Angeles, charging that they conspired to sell phony sureties secured by fraudulent real estate holdings.

A fourth defendant, Steven Jones of Los Angeles, pleaded guilty to a conspiracy charge in the alleged scheme earlier this year, according to Joel E. Leising, an attorney with the fraud section of the U.S. Department of Justice in Washington.

According to the indictment, Messrs. Thompson, Buffo and Walsh conspired between 1991 and 1993 to sell individual and corporate sureties through Denver-based Wilshire Surety Syndicate Inc. and a successor company, Fedsure U.S. Inc., both controlled by Mr. Thompson.

Wilshire and Fedsure both claimed in unaudited financial statements to have $279 million in assets, though both firms used bogus assets to inflate their net worth and facilitate the sale of corporate sureties, prosecutors charge.

The indictment did not specify how much in actual assets the firms allegedly had.

The three men also conspired to forge deeds and other documents showing Mr. Thompson to be the owner of large tracts of property in Glenview, Ill., and Los Angeles, the indictment charges.

Mr. Jones and Mr. Walsh, both real estate appraisers, then allegedly prepared fraudulent appraisals inflating the value of the properties. The Los Angeles property, for example, was assessed for tax purposes at $700,000 but was appraised by Mr. Walsh at $98.5 million, prosecutors charge.

Mr. Thompson then used the phony real estate holdings as collateral to back individual surety bonds for contractors doing work for the U.S. Army, Navy, Air Force, the General Services Administration and the Department of Veterans Affairs, the indictment says.

From September 1991 to March 1992, the defendants deposited more than $300,000 in surety fees and premiums into a Wilshire bank account in Denver, prosecutors allege.

Messrs. Thompson, Buffo and Walsh have pleaded not guilty to conspiracy and fraud charges, and have been released on bond.

If convicted, the three men face statutory jail sentences ranging from five to 20 years on the various charges.

None of the defendants or their lawyers could be reached for comment.