Fact or Fiction:  Bail bondsmen wear leather, carry guns, and chase down bad guys.

Fiction:   Bail bondsmen are everyday people, who are licensed by the California Department of Insurance and are able to assist a defendant get out of jail before their court date. There are fathers, daughters, wives, sons, and even soccer moms that are bail bondsmen.

They are not Dog-The-Bounty-Hunter-incarnates behind a desk. Plus, Dog the Bounty Hunter isn’t even a good mental representation of what your average bail bondsman looks like because he isn’t a bail bondsman; he’s a bounty hunter. Instead, he provides the service of tracking down defendants who have “failed to appear” in court, aka decided to skip town.

When a defendant skips bail, the bail bondsman assumes responsibility returning the defendant to court within a six-month time period or pay the defendant’s full bail amount to the court.

So with bail ranging from $10,000 to in excess of a million dollars, you can see why the bail company would have a vested interest in having that person returned to custody.

On February 3^rd, Johnson was taken into arrested by the California Department of Insurance and taken to the Lynwood Jail, Los Angeles County’s women’s jail.  If convicted, is facing a maximum sentence of three years in prison.

Apparently, Ms. Johnson was allowed to post bail and was released. Johnson’s arraignment is scheduled for March 4th at the courthouse in downtown Los Angeles.

State Insurance Commissioner, Dave Jones said, “A bail bond agent who steals from clients in order to use these funds personally is committing a breach of fiduciary duty. Individuals who perpetrate such acts will be prosecuted to the fullest extent of the law.”

According to the Department of Insurance, Johnson executed 13 American Surety Co. bail bonds in Los Angeles County between February and April of 2009.

Johnson is being accused of collecting, from 12 of the 13 defendants that she supplied bail for, approximately $34,000 in gross premiums and also failed to remit $5,070 in net premiums. According to Jones, Johnson has kept those funds for her own personal use.

This investigation has also lead to revealing that Johnson also failed to return to court for another 11 bail bonds that totaled to $250,000 with a $3,250 premium.  Those bail bonds have not been located and Johnson has not accounted for them.

Jones said, “Based on past experience, bail bonds that have not been returned by bail agents could have been executed to release suspects from jail and issued to courts without reporting to the surety company, exposing the surety company to losses equal to the bond value, as well a loss of premium.”

Last May is when investigators first learned of the scheme. Johnson met with investigators the following month and surrendered her bail license. Johnson’s case is being prosecuted by the Public Integrity Division of the L.A. County District Attorney’s Office.

Besides the fact that he’s been operating as a bondsman without a license, this “bogus bail bondsman” is allegedly a criminal himself; having previously been charged with numerous felonies which include, altering or falsifying government documents.  (A bail bondsman in California must be licensed by the California Department of Insurance. Additionally, convicted felons are not eligible to be bail bondsmen.)

Malone perpetrated this right in the jail, directly under the watch of the Sacramento County Sheriff’s Department. With regards to allowing Malone to advertise along side other bail bondsmen inside the jail, Sacramento Sheriff’s Captain Scott Jones stated, “Well, I think we were unwitting participants in it… I think if we’re getting paid and we’re providing a paid service, then we assume some of the duty for that.”  He also allegedly stated that the department doesn’t make a dime off of the ads. Captain Jones was in command during the time Malone’s ads were posted.

We have warned the public about the bail scams in the past. Fortunately, this guy is finally out of business. But according to court documents, several unfortunate prior clients turned victims, have lost out on thousands of dollars.

How Credit Card Bail Works

The Ventura jail phone has a toll free 800 phone number posted near the phone.  An inmate or family member can call this phone number to bail out of jail.   Here is how it works:  Let’s say you have a bail for $20,000.    This credit card bail system allows the inmate to have the full bail charged (plus a 7% processing fee for Ventura County) to a credit card.  For example, on a $20,000 bail bond, an inmate would be charged a total of $21,400 for release from jail.  Once the defendant has appeared in court, they would be refunded $20,000.  The net effect of this transaction is that the inmate would be charged 7% to be bailed out of jail.   Who gets to keep the 7%?  It seems that the county takes a cut and the “third party” unlicensed processing entity makes a nice profit.

Ventura County is not the only county in California that enables inmates to bail out using a credit card.  In fact, several states now utilize some form of this process.  Over the past several years, credit card bail seems to be spreading like wildfire.

Why is this bad for California?

1. No accountability.  What happens when the defendant “fails to appear” on a credit card bail?  What incentive does the County or State have to find the defendant?  None.  When a bail bondsman is utilized, the bondsman has the financial incentive to locate the defendant.  The bail agent is in a much better position to ensure justice and public safety. 
2. What happens when the cardholder decides to dispute the charges?  It’s not very difficult to dispute charges on a credit card.  Often, it only takes a phone call to the credit card company.  Now the County is saddled with a disputed credit card account as well as a potential fugitive.
3. It seems contrary to public policy and law.  For example, the California Department of Insurance (DOI) is the regulatory agency for bail bondsman.    In California, only licensed bondsmen are legally able to profit by posting a bail bond for somebody to get out of jail.  Credit card bail allows “third party” entities to make a tidy profit without being licensed.  It seems to skirt the licensing issues.
4. It seems to me to be predatory on unwary consumers.  Even though the customer is being charged a stated fee of 7%–that does not include the “real cost”.  What about the 2% cash advance fee charged by many credit card companies.  What about the fact that the cardholder may not be able to pay the monthly credit card bill and be charged a 10-35% interest charge?  Had the cardholder simply used a traditional bail bondman, the true cost would have likely been a solid 10% of the total bail.

I think that credit card bail is bad public policy.  It is my hope that California can find a way to abolish is completely.

So, without further fan fare, here are the necessary steps to becoming a licenced bail bondsman in California:

1. You must have lived in California for least 2 years and be prepared to provide proof.
2. You must be 18 years old or older.
3. You need a clean record. Kind of an obvious one since you are working within the legal system, but many people don’t realize that to be a bail bondsman, you must have no felony convictions on your record. (Unlike the NFL which employs many people without clean records.)
4. The California Department of Insurance regulates the bail industry. For someone interested in becoming a bail bondsman, you will spend a bit of time with this department. At the DOI, as it’s known, you will find all the necessary forms for becoming a bail agent. There’s quite a list of fees, forms, and applications, so be prepared to put a side a weekend to get through everything.
5. You must also get 12 hours of classroom study, called Pre Licensing Education. Usually available on weekends. Make sure they are approved providers.
6. After taking the class there is an exam that must be passed (that’s next up for me). Find an actual examination site through the DOI’s website. Online examinations are also available, fill out form Individual Application, Form LIC 441-9 and provide your email address and the DOI will email you an online examination schedule for you to choose from.
7. With the test passed, fingerprints are done (for another fee, of course), and all that’s left is finding a surety – an insurance company to underwrite your bonds. Then, filing the necessary applications and paying the fees to the Department of Insurance.

A final word about starting a bail bonds business: Writing bail is risky and at times can get very complicated. Sure, some of the smaller, $10K bonds, are quick and easy but you will learn in time that almost every bail bond is different. Obtaining the knowledge to make the right decisions can only come from working in the industry. It only takes one or two mistakes before you find yourself liable for a bail you shouldn’t have written and potentially out of business. So make sure you are mentored in to the bail bonds industry before you decide to go out on your own.

Good Luck!

(Assumedly, you already know how bail bonds work, so I’ll skip those details.) In order to survive as a bail bondsman, be prepared to be on call 24 hours a day, 7 days a week, 365 days a year. Any good bail bondsman or company will tell you, the entire livelihood of the company is generated from the 10% premium of the bail that is written. If you are not willing to take calls on Saturday morning at 3:00am, you probably won’t be in business for very long.

Additionally, doing all the necessary technical steps to becoming a bail bondsman are very straight forward, but becoming a bail expert is not. As a bondsman, you must use judgement and tolerate risk well. A bondsman is personally responsible for the liability of the full amount of every bond written. Although a bondsman is underwritten by an insurance company, as Greg points out in “What Makes A Bail Bond Different” the liability first falls to the bondsman. If you don’t have good judgement, you’ll be bankrupt in no time. Ready to take on hundreds of thousands in liablity?

So, if you don’t mind night owl shifts, birthday, Christmas and Valentine’s Day interruptions (and your friends and family understand this), and you have excellent judgement and a strong backbone for risk, you may be a good candidate to become a California bail bondsman.

Tune in tomorrow for recommended steps and qualifications in becoming a licensed bondsman. Now, I’m off to take my bail pre-licensing class…

Richard P. Herman, attorney for the bail agents indicates that former Sheriff Michael S. Carona allowed former Assistant Sheriff George Jaramillo to initiate a scheme whereby inmates steer arrestees to certain bail bond companies in returen for a kick-back.

Such allegations are not new in the bail industry. We regularly hear stories from people we bail out of jails in Los Angeles, Orange County and other places that inmates (I’ve heard them called “tank workers“) are “recommending” certain bondsmen. We’ve been told that these tank workers tell our clients that the bondsman they recomend will give a discount if they can get others to use his service or the bondsman will add money to their jail account. Unfortunately, stories are not enough. In my experience, it can be difficult to convince someone who is dealing with their own problems to file a formal complaint and give an affidavidt, as the Department of Insurance needs to open a case.

Given the problems of former Orange County Sheriff Carona, my guess is that these allegations are well founded. I just hope that there is enough support to not just move the complaint forward, but to actually clean up this offense. My gut tells me that until the public realizes that it’s not just a bondsman’s bottom line, but actually a public safety issue, such bail industry scams will continue or simply be slapped on the wrist.

Apparently, no arrests have been made yet, which is unfortunate. The described cavalier attitude of Mr. Ulmer, a bail bondsman who indicated that everyone on his street was doing the same illegal activity and thus he was seemingly justified, is disturbing to say the least. The bail industry is often asked to regulate itself, which is unfortunate on many levels. Departments charged with overseeing the bail industry, like the Department of Insurance in California, are under budgeted and underfunded. As we all know, tough economic times or not, programs that are in the public spotlight get the attention and the money. The bail industry does not enjoy that benefit.

Mr. McClendon’s article indicates that bondsmen achieve an unfair market advantage by accessing private arrest records. I have to ask: is that all? How about the fact that they broke the law? What about the personal privacy of the individuals arrested – who are presumed innocent – and now have had relatives and associates contacted with the news of their arrest? What about the indication that someone in the Sheriff’s Department supplied bondsmen with the password? Is that individual protecting the community at large?

Photo credit: © Feng Yu – Fotolia.com

When people hear that you’re a bail bondsman, they are always curious about the business. Last month, I blogged about what exactly is a bail bond. Once people understand that a bail bond is an insurance product, the next most obvious question is, “How is the underwriting of a bail bond different than the underwriting for typical insurance?” Comparing to an insurance you may have shopped for is probably the best way to understand the differences.

Let’s say, for example, you need fire insurance for your home, you might go to a fire insurance agent and apply. In most cases, your fire insurance agent will ask you questions such as, “What is the property worth?” or “Have you filed any previous claims?” or “Is your roof made of wood-shake or tile?” The premium you are charged on a fire insurance policy is simply a function of several standardized questions. The fire insurance agent simply puts this information into a computer / rate chart and out pops your premium. The fire insurance agent has extremely little flexibility in what they can ask. Furthermore, the customer could verbalize directly to the fire insurance salesman that they are a “three time convicted arsonist”. If arson is not a “filed” criteria with the determining insurance regulatory agency (and it probably isn’t), then a three time convicted arsonist may likely pay the same premium as an otherwise law abiding citizen who has the same history. Go figure.

However, a surety bond or bail bond is much different from typical insurance. Risk analysis and premium calculation are signficantly different in bail. A bail agent can use all available information to make an informed underwriting decision. A bail agent can ask whatever they like. They can use their intuition. Does the applicant seem trustworthy? Do they seem to be telling the truth? How long has the applicant been at their current job? Do they have kids that live in the area? What kind of work do they do? A bondsman can check the applicant’s credit history. Bondsmen can do all sorts of other seemingly arbitrary background checks. Furthermore, a bail agent can get a bad “gut feeling” and simply say, “I’m sorry Mr. Bail Applicant—we can’t help you.” If a fire insurance agent rejected fire insurance on a similar “gut feeling”, it would likely be illegal due to various “discrimination” laws.

Another major difference between a bail bond and other insurance is who is ultimately financially responsible. Again, let’s take a fire insurance policy: you pay your premium for the policy and in the unfortunate event you have a fire, you pay a deductible and the insurance company covers any additional loss. Contrast that with a bail bond. You pay your premium (10% of the full bond amount). In the unlikely event that the defendant doesn’t appear in court and cannot be located, you as the principal are responsible to pay the full bail amount to the court. If you cannot pay, the bondsman will. And, in the event that the bail bondsman cannot pay, his surety (an insurance company) would pay the court.

It’s really no wonder people have so many questions about bail. Besides the fact that so many people I talk to have never needed a bondsman, there really are a lot of details when it is such a simple process.

Photo Credit: © Irene Teesalu – Fotolia.com

The OCBAA was formed in 1996 to assist local Orange County bail bondsmen in educating the public, law enforcement and the courts how bail works. As an organization, the OC bondsmen have made in roads by contacting and visiting local police departments and the Sheriff’s Department jail. The group regularly hosts relative bail industry speakers such as Santa Ana Police Department Chief Paul Walters and the Department of Insurance investigators.

The newly incorporated bondsmen association will operate in much the same manner. The Board of Directors, including officers, remains basically the same. The Board will continue to meet monthly with quarterly member meetings. The mission of the newly incorporated organization will also will remain unchanged: To promote, advance, preserve and protect the business interests of retail bail agents based in Orange County, California.