Bail Insurance Companies Sued Under Rico

From the United States District Court in Montana on Wednesday: "Allegheny and Fidelity created the environment that bred these acts by providing First Call [the bail agents] with a form contract which authorized this conduct and by requiring First Call to bear the financial risk of forfeiture."

Bail agents, you may not know this, but virtually all insurance companies bear financial risk. Some of them pay out on 98-99% of claims. They make their money on what they call the "float," which is the time between when a premium is paid and a payout is made. They take that money, invest it, and make their profits. As the court noted, however, bail insurance companies don't do it this way. In fact, one bail insurance guy bragged a while back that his company had never paid out on a single claim in 107 years of being in business. Who pays? Well, you know the answer to that. You do, defendants do, their families do. Everyone pays but the bail insurance companies. They've set this whole thing up to make money for nothing over the course of decades. They tried to keep it all secret through their work with ALEC, but we exposed that and now the whole world is taking a hard look at bail insurance that doesn't really insure anything.  

In fact, I used to liken the bail insurance companies to the Mafia, with bail agents just dropping bags of money off onto their porches every week. I suppose that's why Rico seems so appropriate to me.

I've long since stopped looking at bail insurance company websites because I realized they only tell you about the stuff that makes them look good. Overall, though, money bail - and bail insurance companies -- are not doing well, and I've yet to see any decent plan from them for the future. All I do now is help states draft provisions to (1) eliminate money, (2) create viable preventive detention and then help people sue the states when they don't do those two things correctly. That's what's happening all over America, and ABC's insistence that somehow everyone is deciding to go back to the old days of high, arbitrary amounts of money is just dumb.

ABC's Personal Attacks

This last week two people on two different statewide commissions created to make recommendations on bail directed me to blogs and posts by people in the bail insurance industry (well, one was both a bondsman and an insurance guy, but you get the gist) attacking me personally. Those commission people told me about those posts not because they believed them and wanted clarification, but because they thought they were pretty horrible and couldn't believe they were written. Nice going, guys. You're upsetting the very people you don't want to upset. When they see you go after me, their first thought is that they could easily be next.

Indeed, this is the third time in as many weeks that I've seen ABC attack me by name. I've been doing this for over 12 years, and I've only named a guy once. That was a mistake, and I wrote about it later by way of apology.

I do mention the insurance companies by company name because they're the root of the problem facing the industry. But I don't go around naming various presidents, vice presidents, or lobbyists by name. Nevertheless, their response to bail reform is to go after individual people, like me, Justice Daniels, Justice Cantil-Sakauye, Alec K, and others personally, when they could easily simply write about "activists," "bail reformers," "judges," or any of a hundred other terms to describe what is going on. They don't know the substance and so they go after people.

If you're a bail agent, just take a minute to think about where that has gotten you all as an industry. Across the country, judges and others have decided that they simply don't care if money is left in the system or not. They're just not going to use commercial sureties anymore. That's entirely due to ABC and its burn everything and everyone strategy.

New Pretrial Group in Michigan

The Governor of Michigan Gretchen Witmer just created a task force on jail and pretrial incarceration. You can read about it here.

Just look at the group of folks surrounding her: Chief Justice McCormack, Speaker of the House Chatfield, Senate Majority Leader Shirkey, Michigan Sheriffs Association Director Koops, and Michigan Association of Counties Executive Director Currie.

In other states, ABC's message has been for those states to keep the status quo. In short, money bail works. In this article, the Governor stated that "the status quo is not working for victims, the accused, and those convicted of crimes."

ABC Must Be Winnng . . . Right?

Not long ago I read an ABC post declaring a "Fourth Generation of Bail Reform," apparently marked by states coming to their senses to go back to using money. The inference, of course, is that ABC and the insurance companies are winning at this thing called bail reform.

But the other day I scrolled down the ABC Facebook feed and saw "Vote No in Oklahoma," "Vote No in North Carolina," "Oppose Bill in Colorado," "New York's New System is Bad," and "Oppose Bill in Nevada."

Oh, and those are just the ones at the top, and it doesn't look much like winning to me.

The irony is that the bail insurance companies brought all this on themselves. Starting many years ago, ABC chose to fight literally every reform initiative and ignore states when those states said they wanted to change. I should look to see whether these insurance companies are publicly held. If they are, it would at least make some sense that they would fight everything because they have a fiduciary duty to make money for shareholders. But even if, that's a pretty short-sighted strategy.

Fighting everything is why, even though money and bail agents are still lawful in NJ, the judges just don't use them anymore. It's why California is getting rid of them. Sure, ABC will fight that, but even if it wins California will just pass something that keeps money and dodges the industry. That's the inevitable result of, for example, publicly insulting the Chief Justice of the California Supreme Court. Yeah, ABC did that.

ABC and the insurance companies have made it clear that they intend to fight to the end. In doing so, they'll end up taking down the entire industry with them.

Winning? Nope.

A Fourth Generation? No, generations of reform take decades, and this one's just getting started.

Tenth Circuit Slams Bail Industry

I just read the 10th Circuit Court of Appeals' (where I used to work, above) opinion in Collins v. Daniels, in which the bail industry, some NM legislators, and one former arrestee, whom they claimed could have been released more quickly on a money bond, sued a bunch of judges in New Mexico. The overall thrust of the suit was based on a belief that the New Mexico bail rules and use of the Arnold pretrial assessment instrument violated the constitution. In short, the appeals court affirmed the district court's ruling against the bail industry mostly on jurisdictional grounds (lack of standing, mootness, etc.,) and immunity, but the case reminds me of a couple of big points.

The first point is that the case highlights the reason why this suit happened in the first place. Remember that bail reform in New Mexico started with a single opinion from the state supreme court writing about how judges were routinely violating the current law as written through the use of money bonds. This caused a stir, and led to both a constitutional change and new court rules. At the time, ABC slipped in and tried to de-rail the constitutional amendment, likely thinking that it could make up any lost ground by lobbying the legislature later on statutory changes.

The only problem? Well, as I've written before, ABC didn't realize that NM was a "court rules" state, which meant all of the bail rules could be changed without the legislature. When it finally figured that out, ABC made a few feeble attempts to raise a stink -- like some sort of legislative resolution and having the Governor try to derail bail reform in Utah -- but in NM, the damage was already done. This suit, then, was just the last ditch effort by the bail industry in NM to try to fix what ABC had broken.

The second point is that the case highlights what I have seen as a trend in the bail industry to take anything -- and I mean anything, including a potentially legitimate case -- and try to make it political for use in the rest of the state or even the country. In this particular case, the bail industry hired lawyers who, following the strategy of ABC and others, systematically screwed up the suit by adding various plaintiffs who lacked standing, all while not adequately researching actual precedent. In the end, the district court awarded what it called "Rule 11 Sanctions." Now, if you're an attorney in the federal courts, you don't want those sort of sanctions because they mean that your filing was baseless and/or frivolous. And take it from me, a guy who used to have to decide these things, the federal courts don't sanction people very often.

So, if ABC even tells you about this case (which I doubt), see if they mention what the court said at the end of the opinion: "This case is a prime example of the waste and distraction that result when attorneys disregard Rule 11's certifications."

For all you bail agents in other states, do remember this particular case when ABC arrives to help.

Bail Industry Loses a Big One

Using the bail insurance playbook of legal arguments, the bail industry in California lost a big case the other day in San Francisco.

You may remember this case. When it was brought claiming constitutional violations through the use of money, all the defendants agreed and refused to fight it. But the bail industry didn't agree, and so the judge allowed the CBAA to intervene so it could provide its best arguments and experts. Unfortunately, it looks like the arguments and experts were provided by ABC and the insurance lawyers.

ABC has already downplayed the opinion, and said the industry will ultimately win, but they've been saying this a while now. I don't blame ABC for using two what we call "interloc" appeals to make you think everything is going your way. It's true that in two opinions we had some bad language. My side was worried about that language, too, but I'm not. I used to write court opinions, including quick ones in fast appeals that didn't have the benefit of thorough briefing and record, and I'm seeing a trend. Anytime a judge spends time on these cases, it always goes against money as a detention mechanism. I've seen this now for a while. When people don't know much about bail you see one kind of opinion, and when they do know about bail you see another kind. Buffin was the kind of opinion you get when someone learns about bail.  

Plus, these cases are not the only things exerting pressure to change. In fact, if a jurisdiction simply decided to do release and detention on purpose, it would cause a chain reaction of things to happen that would end up with the elimination of money. And guess what? That's what's happening all over America. If you don't understand what I'm talking about, then ABC has been leaving you all out of the discussion.

By the way, bail agents, in this opinion you can see -- once again -- a court publicly trash the bail industry's expert witness by calling his testimony and research flawed. This guy has been a friend to ABC for a long time, so I get whey they like him and want to give him a bunch of money. But he's really hurting your cause.

These Will Be Easy To Refute

I just read ABC's comments to the Uniform Law Commission, and boy they're a big mess. It appears ABC still doesn't understand what preventive detention or the word "bail" mean. Refuting them will be a bit of a breeze and likely (once again) embarrassing for the industry.

It reminds me of footnote 20 in the Harris County order, in which the judge said, essentially, "Boy, ABC, you don't even know what the word bail means, do you?" That's pretty sad.

Bail agents, these arguments are killing you.

Expect More of This, Bail Agents

Here is a link to a story talking about a big antitrust lawsuit against bail bond companies in California.

I guess I don't have to tell you that having something like this hanging over your head doesn't really bode well for any sort of referendum vote.

Note that one of the most damaging statements in the story came straight from the mouth of a bail insurance guy. We actually used other statements from that very same bail insurance company to fight a group called ALEC, which had to come out from under the shadows due to pressure. For whatever reason, ABC and its members sure do like to make damaging statements on the record.

Lots of stuff the bail insurance companies have done over the decades probably seemed like good things at the time, but it's all coming back on them now. Staying away from public safety, arguing there's no presumption of innocence, setting up barriers to keep from paying forfeited amounts, avoiding any decent self-regulation, fighting any attempt at reform, claiming that their subjective notions of risk trump anything remotely objective, and, now apparently, promoting price fixing.

You're only going to see more of this sort of thing. It's baked in.

Fifth Circuit Grants Motion to Dismiss Appeal in Harris County

Yesterday the Fifth Circuit Court of Appeals granted the motion of recently elected Harris County judges to dismiss their appeal of the preliminary injunction won by bail reformers last summer. You can read about it here.

As you recall, that's the earth shattering injunction that -- theoretically -- could change bail practices across the nation simply because Harris County practices look identical to those in virtually all American counties. I've been teaching on the injunction since it came out, and it's reasoning is nearly perfect.

This all means massive changes to misdemeanor bail in Harris County, but the same arguments apply to felonies, and it's just a matter of time before people understand that.

One outgoing judge quoted in the article said, "I remain convinced that fighting against bail reform was a mistake." Not to belabor the point, but isn't this pretty much what I've been writing on this blog for the past 5 years?

Indeed, this particular fight was apparently a nine million dollar mistake.

The article also mentions that the county fired their big shot lawyers. You remember them? They're the ones that the insurance companies said were going to stop bail reform altogether.

Again I call your attention to ABC's declaration recently that the Third Generation of Bail Reform has "imploded." This is about as far from implosion as you can get.

I'll conclude with something I wrote in my very first document about bail -- bail reform is inevitable. And yes, accordingly, it's a mistake to fight it. I think the insurance companies know that (although it's hard to tell what they actually know about bail), but they continue to fight perhaps because they understand the future of release and detention in America has no room for them. Theoretically, at least, there is (or maybe was) room for bail agents, but it looks like all of the fighting is really beginning to backfire on the entire industry.

Winter is coming.