Posted July 25, 2011 at 12:00 AM by Michael J. Whitlock, MCBA
Vice President under Faxing Bonds, and Meeting Recaps
There is a character in the book, The Girl with the Dragon Tattoo, who dons a t-shirt with the slogan ARMAGEDDON WAS YESTERDAY – TODAY WE HAVE A SERIOUS PROBLEM. I laughed out loud knowing how germane this was to the state of the commercial bail industry.
I vividly recall participating in a panel discussion at the 2006 PBUS Winter Conference, it was the year Dog and Beth Chapman made their first appearance. During this discussion I spoke about the expanding use of deposit bail and its threat to the commercial bail industry.
Dave Stuckman of Kansas receives certfificate for sponsorship.
It was my opinion then as now deposit bail is a greater threat to the commercial bail industry than taxpayer funded pretrial service agencies. Why? Because where public funded pretrial release requires funding for staffing and significant overhead, deposit bail requires only a receipt book and someone to collect the cash.
Deposit bail relies largely on 1) smoke and mirror tactics, a bond reported to be set at $100,000 is actually a $10,000 cash bond with 90% unsecured; 2) uninformed taxpayers, people tend to believe what public officials tell them because they’re unfamiliar with the process; and 3) hollow justifications, a defendant is more likely to appear in court if they know they will get their bail deposit returned.
Since that 2006 meeting in Las Vegas, we have seen an expansion of the use of deposit bail in Indiana, Ohio, South Carolina, Washington and many other states. The commercial bail industry had to mount huge efforts to defeat deposit bail legislation in Colorado and Texas. Both battles were won but only after spending a significant amount of money and investing a considerable amount time.
Counties who have switched to deposit bail immediately lose all perspective after seeing the revenue stream of cash bail. Deposit bail is like a drug to these counties, once the court begins using, we quickly see the effects of abuse. Public officials start to dismiss the failure to appear rate as a nonissue, ‘these absconders will be picked up on a traffic stop’, ignore mounting unresolved cases, ‘we don’t have the staff anyway to handle all these cases’ and promote the new revenue, ‘how can the taxpayers not be happy about all the money deposit bail is raising for the county?’
What they don’t want to talk about is the huge increase of failure to appear warrants, the disenfranchisement of victims of crime and significant expense associated with a defendant’s failure to appear and the cost of county staffers preparing for these hearings.
The use of deposit bail continues to be a threat to public safety and commercial bail and must be derailed. As the t-shirt says, ARMAGEDDON WAS YESTERDAY – TODAY WE HAVE A SERIOUS PROBLEM.
Meeting Pictures (click here)
Posted June 15, 2009 at 12:00 AM by Michael J. Whitlock under Bail Bond Insurance, Faxing Bonds, and Surety Bail Bonds
We text, we Tweet, we email, we bank online, so why not fax bonds to the jail? The ability to fax a bail bond to a jail can be convenient for both the bail agent and the jail staff. Doing so could save hundreds of hours avoiding long lines and a lot of money on gas and parking fees from making fewer trips to the jail. There is also the added benefit of expediting offenders through the system, which has had some impact on jail crowding. However, faxing bonds without proper controls in place against fraud can be a nightmare for consumers, courts and surety companies.
Who’s Faxing Who?
The bail industry has seen little progress with the acceptance of faxed bonds by the jails. I’m sure it does occur in remote areas like Wyoming, Montana and the odd jail. In those cases a bond is faxed in advance to obtain the release of a defendant from jail followed by mailing the original bond (and power) to the court the next business day. For the past several years at least three markets have allowed for the faxing of bonds. Dallas County, Texas has a sound procedure in placed followed by Tarrant County which is less so. Then there is Utah which allows faxing but with almost no security controls.
In the case of Dallas County, the current procedure allows a licensed bail agent to post a bond via fax for a $10, per bond, cost reimbursement fee to the Dallas County Sheriff’s Office. To qualify, the bail bond agent must first obtain written consent from their corporate surety to the Dallas County Sheriff’s Office before bonds can be faxed. An escrow account is created to cover the $10 fee and the posting fee ($15 for the first bond with a maximum of $30 per defendant). As a means of control, the Dallas County Sheriff’s Office, on a monthly basis, will provide each surety company with a copy of each faxed bond posted by their agent(s) during the preceding month. By receiving copies of all bonds posted, each surety company can then reconcile the documentation received from the sheriff’s office with the bonds reported by their agents to ensure bond amounts match and powers are not being used more than once and executed powers are not being submitted as void.
Tarrant County, Texas allows for the faxing of bonds though there are no controls in place other than sending from a specific fax number on file with the Tarrant County Sheriff’s Office for each bonding company. Texas bail bonds statute requires each court notify the surety companies designated agent for service of process of all bond forfeitures. This requirement provides at least some means of catching an agent who may be duplicating powers.
Both Dallas and Tarrant Counties require bonds to be faxed directly to the county sheriff’s office for processing. In the case of Utah, our third market, bonds are faxed to several jails across several counties. The only control in place for faxing bonds in Utah is that the bond is faxed from an approved fax number. State law allows for the court to send notice directly to the bail agent eliminating the one life preserver offered in Tarrant County. The Utah system clearly has insufficient controls in place to prevent fraud.
The primary concern with faxing a bond is the potential for a numbered power of attorney to be used more than once with the intent to cheat the surety company out of premium on the duplicated bonds.
Last Fall American Surety Company discovered, almost by accident, one of its agents in Utah had been duplicating powers over a period of 18 months using the existing faxed bond procedure. The result was this agent was able to systematically and fraudulently avoid paying premium to American Surety to the tune of several thousand dollars. How he did it was fairly simple. One or more copies would be made of the original power of attorney before the agent would post multiple bonds at different jails obtaining the release of several defendants with the same power of attorney. Utah has no meaningful procedure in place to prevent this type of fraud. It was for this reason American Surety Company requested and was granted time by the Utah Bail Bond Surety Oversight Board to address the lack of controls in the existing faxed bond process at their May meeting.
The Bail Bond Surety Oversight Board was created by Utah Statute 31A-35-201 and operates within the Utah Department of Insurance. The Board is comprised of representatives from four licensed bail bond surety companies (Utah statute provides that a personal surety bail agent is also defined as a surety company), two members of the general public, an attorney and a nonvoting member from the insurance department staff. Board members serve four year terms and are limited to two terms.
Our goal, at this meeting, was to bring awareness to the BBSOB on the failings of the existing procedure for faxing bonds and request changes be made to prevent fraud from occurring, not only upon the surety but the State of Utah and the consumer. At present the only procedure in place is one that requires the bail agent to fax their bond from an approved fax number. That’s it. The bail agent is not required to mail the original bond to the jail or court and the jail does not provide a copy of the power to the surety company for reconciliation purposes. Nor does the jail require written authorization from the bail agent’s surety company to fax bonds. The jail simply does not have the ability to determine whether or not a power has been duplicated.
The Board members listened politely and asked questions, though it was quickly clear they were not willing to recommend implementing new controls for fear the jail may resist and possibly decide to abandon the faxed bond process. It appears convenience, not caution, will continue to carry the day in Utah.
I’m in favor of convenience as much as the next guy. You know how you now have to enter your zip code when you use your credit card at the gas pump? Well, someone along the way decided that this control was needed to prevent the fraudulent use of someone’s credit card. Faxing bonds is no less subject to fraud. This process can work if the proper controls are put in place to ensure the parties involved in the process, consumers, courts, surety companies, etc., are not being defrauded by an unscrupulous bail agent. I’m hopeful markets like Tarrant County, Texas and Utah will give further consideration to implementing basic controls to ensure a more secured process that is also convenient to the parties involved. Let us continue to make improvements within the bail industry that are both thoughtful and productive.