Wednesday, January 27, 2010

How the bail bonds industry is scamming us

‘We [bail bondsmen are] tenacious; we do our job," Spath says. "People should not just be released from jail and get a free ride. I mean, this is the way the system's got to work."

http://www.npr.org/templates/story/story.php?storyId=122725771&ps=rs

In addition to overcrowding in state or federal prisons, county jails are also bursting at the seams due to many petty-theft offenders (shoplifting and bureaucratic violations, not GTA or anything violent) stuck there due to our idiotic bail system. 0.5M Americans have paid their pennance and are still behind bars only because they can't afford their bail payments, sometimes as low as $50. That is 2/3 of the total jail population. But the legal system mandates that authorities keep them there, even at great expense to taxpayers (>$1k to house each person per month, which adds up to $9B nationally per year in a recession). Some counties are spending 1/4 of their budgets on jails. Apart from the wasted taxes, imagine the lost economic productivity and human costs from all these incarcerated people. Now that surplus inmates are even forced to live in storage closets (many US jails were built during John Dillinger times), governments are responding to the crisis, not by reforming the bail process, but by building new costly mega jails.

I am no expert, but it seems defendants are required to post bail before their release from jail as collateral to guarantee they will show up to court later (and then maybe get reimbursed). Historically, those released on their own recognizance usually don't flee and do appear at trial. It is not legally required, but bail bondsmen often push their services on people as bail intermediaries. Like shady mortgage brokers, they are mostly useless middle-men who somehow have justified their parasitic cut to the powers that be. If you thought Blackwater was bad in Iraq, commercial bail bondsmen are often lowlifes with less than 20 hours of official training (some states don't even require bondsmen be certified). Only Illinois, Kentucky, Oregon, Wisconsin (fairly progressive states) prohibit for-profit commercial bondsmen, and their court systems provide the service instead.

Why prohibit commercial bondsmen? Because it's an outright scam. Inmates typically pay a nonrefundable fee (10% of bail amount + possible extra penalties) to bondsmen to win their release. If the person pays the bail back and shows up for trial, everything is rosy and the bond agency makes easy money as a loan shark. If the person flees, rarely are they caught by the bondsmen's bounty hunters (contrary to that stupid reality TV show). They are mostly caught by county sheriffs enforcing the warrant and working on the taxpayer dime. Bond companies are only required to pay back 5% of the bail to the courts if a customer flees, and many are way behind on their repayments (bondsmen owe CA $150M in back fees as one example). They're supposed to pay the full bail amount as punishment for letting their guy slip away, but it isn't enforced. So even Las Vegas would be jealous of a virtually risk-free business where a 10% fee is collected up front and at worst they have to give back half of it to the court under rare circumstances, and much later on. What is their overhead for this "vital" service - a few minimum-wage paper-pushers? Find desperate people, and you'll find vultures preying on them.

As an alternative, there is pretrial release, where prescreened poor people don't post bail but wear an ankle transponder so they can be tracked as they maintain their jobs and take care of their families. Escapes are rare as well, and tracking costs 3-5% the price of keeping that person behind bars. These programs were set up by county officials who benefit from the bondsmen lobby's campaign funding and favors, so the marginalized programs often remain local, understaffed, underfunded, and unable to meet the demand for the service from qualifying inmates. Of course the other option is to post bail with your own cash (like Madoff did). But many lower-income uneducated people aren't aware of this, and the courts don't bother to inform them, so the bond sharks step in.

In one Florida county (Broward), pretrial reduced their unconstitutionally overcrowded jail population to a manageable level, and saved the county $20M in one year. Defendants were showing up to court as they should. Everyone was happy but the bondsmen. So they hired a lobbyist and invested $23k to sway the county commissioners and mayor. Later the commission inexplicably called a surprise session to scrutinize what seemed to be a very successful program. They sharply narrowed the eligibility criteria for pretrial, and cut funding just 2 years after they voted to double it. Other bondsmen took notice and are trying similar strategies in their counties. They claim that they are patriots who want to keep Americans secure and save us money, just like Blackwater said. Yes, I'm so glad that the guy who forgot to renew his car registration is locked up so he doesn't terrorize my family, and he only regains freedom by paying blood ransom to the bondsmen.

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