The $14 billion for-profit ‘money bail’ industry is increasingly one of the most important contributors to mass incarceration in the U.S. In 2017, the vast majority of the nearly 11 million people who were processed and incarcerated in local and county jails were imprisoned not for having been convicted of a crime, but because they were unable to afford bail. Bail prioritizes wealth, not safety, as the primary determinant of whether someone is released while awaiting trial. Similar to the rest of the criminal punishment system, the bail industry profits from defendants and their families who are disproportionately eople of color and low income. This section focuses on the money bail industry and the major companies that profit from it.
There are an estimated 20,000 to 25,000 for-profit bail agencies across the U.S. in 2019 and together they post $14 billion in bail annually. These companies are mostly localized and privately owned. However, there is a select number of insurance companies that underwrite the overwhelming majority of these bonds. According to a 2017 report by the ACLU and Color of Change, nine insurance companies back the money bail industry. Three of the largest four insurers have since divested and exited the industry: Randall and Quilter, Tokio Marine, and Endeavor Capital. Full details below.
The main companies involved in this sector are:
Fairfax Financial Holdings Limited, of Ontario, Canada (TSX: FFH)
RLI Corp., of Peoria, IL (NYSE: RLI)
Action Immigration Bonds and Insurance Services, Inc. of Fort Lauderdale, FL (Private)
American Surety Company, of Indianapolis, IN (Private)
Allegheny Casualty International Fidelity, and Associated Bond (AIA Surety), of Calabasas, CA (Private)
Bankers Financial Corporation, of St. Petersburg, FL (Private)
Financial Casualty and Surety, Inc., of Houston, TX (Private)
Gonzales and Gonzales Immigration Bonds, of Los Angeles, CA (Private)
Lexington National Insurance Corporation, of Baltimore, MD (Private)
Libre by Nexus, of Harrisonburg, VA (Private)
Statewide Bonding Inc., of Fairfax, VA (Private)
The problem with Money Bail
When a person is arrested, a court can determine to release the individual under certain conditions while the case proceeds through the court system and they await trial. Money bail is a common condition for pretrial release in the United States. Money bail functions by requiring the defendant to pay a certain amount of money to the court as a pledged guarantee to show up to their court appearances or risk losing the money for failing to do so. If the bail is paid directly to the court, at the end of the court proceedings the bail amount is returned to that individual. However, most individuals in the U.S. cannot afford to pay their bail amount upfront. In 2017, the national median for bail for a felony arrest was $10,000, although some states like California have a median as high as $50,000. Additionally, there are enormous racial disparities in bail determinations, compounding the already existing racial disparities of arrests and charges within the criminal punishment system. Compared to white men charged with the same crime and with the same criminal histories, Black and Latinx men receive 35% and 19% higher bail amounts, respectively. There are also gendered consequences of money bail adversely affecting incarcerated women who are less likely than men to be able to afford money bail.
As the majority of people cannot afford to pay their bail, they are often forced to seek a for-profit bail bond company to pay the bail for them. For-profit bail companies in the criminal punishment system typically require the arrested individual to pay ten percent of the total bail. However unlike directly paying the courts, even if the arrested individual is found not guilty, they do not receive their money back and they are still required to continue paying the for-profit bail company.
If an individual cannot pay the full bail amount directly to the court or doesn’t seek a for-profit bail bond company, they will remain in jail for as long as it takes for the case to clear the system. This process can take months or years. Incarcerated pre-trial defendants unable to afford bail statistically receive harsher and longer sentences due to the resulting obstacles of engaging with legal council during their trial and pressure to accept plea deals in order to be released. A 2013 study by the Arnold Foundation detailed that defendants in long term pre-trial detention are three to four times more likely to receive a sentence to jail or prison, and their sentences are two to three times longer than defendants unincarcerated during their trial. As pre-trial detention is the biggest determinant of conviction in the criminal punishment system, for-profit bonds in effect create separate legal systems for the rich and poor.
Not only is for-profit bail financially predatory, but it robs the privacy and personal freedoms of defendants and their families. According to a 2017 ACLU report, a typical contract signed between a for-profit bail company and an arrested individual includes provisions that allow the bail bond company to conduct searches without warrants, vehicle tracking, and digital surveillance. Due to these extreme power imbalances, there are many reports of extortion, sexual coercion, and corruption by bail bond agents and “bounty-hunters”. In the year 2017 alone, the Southern Poverty Law Center sued four bail bonds agencies in New Orleans for “abusive and exploitative actions,” including kidnapping and extortion. In Washington, a bondsman was sued for shooting the mother of an arrested individual. And in West Virginia and North Carolina, several bondsmen were arrested and charged with sexual assault.
For-profit bail is considered such an unethical and predatory practice globally that in fact, the Philippines and the United States are the only two countries where for-profit bail is even legal. In Canada, selling private bail bonds carries a sentence of two years in prison on a charge equivalent to bribing a juror. In Australia, a government commission rejected the idea of introducing commercial bail in part because “it lends itself to abuses such as collusive ties between bondsmen and organized crime or police, lawyers, and court officials.”
The Role of Insurance Companies
While the thousands of localized bail bond agencies are the most visible profiteers within the industry, a small number of insurance companies are essential in financially backing the industry. In a 2017 ACLU report, nine major insurance companies were identified as covering “the vast majority of the $14 billion in bond posted by the industry each year.'' In most states and federally, bail bond agencies are legally required to insure their bonds in order to guarantee payment to the court as a last resort, necessitating insurance companies’ presence in the industry.
Bail bond insurance is unique in the insurance business in that it incurs virtually no risk of losses. Insurance companies have shaped the rules of the industry to make sure they would not have to pay the cost of violated bail bonds. Allegheny Casualty, International Fidelity, and Associated Bond (AIA), one of the largest bail insurance companies reported “no losses in 2015 and 2014”. In 2013, AIA’s chief legal officer told a reporter that in AIA’s 107-year history, the company had never paid a single bail loss. Bail insurers have also stated that recorded losses “are mostly a timing issue and are usually recouped”.
Bail Reform and Insurance Companies Divesting
Due to a growing public outcry about the questionable ethical nature of the industry, a number of states have enacted legislation banning or strictly limiting the practice of bail within their state. As of February 2020, some twenty states and many counties across the U.S. have either eliminated money bail altogether or have limited its use to violent or serious offenses. As a result, the bail industry has become less profitable. This, combined with unprecedented public pressure, has prompted several companies to exit the industry.
In March 2019, Randall and Quilter’s subsidiary Accredited Surety and Casualty Company, one of the largest bail bond insurance companies, sold its bail business to Fairfax Financial Holdings. According to a 2017 ACLU report, Accredited Surety and Casualty Company was the only Randall and Quilter subsidiary involved in the bail industry. In 2014, Accredited Surety and Casualty Company underwrote 200,000 bail bonds annually for over 1,600 bail agents in 49 states across the country. In 2014, the company was ranked third in the nation by the Surety & Fidelity Association of America on the face amount of bail bonds underwrote.
A month later, Tokio Marine Holdings, one of the largest bail bond insurance companies in the U.S., announced it would exit the industry and sell all of its subsidiary bail bond insurance companies to an “an undisclosed buyer” who is a “prominent player in the industry.” These subsidiary companies included American Contractors Indemnity Company, United States Surety, U.S. Specialty Insurance, and Bail USA.
In February 2020, Endeavour Capital disclosed it had sold its stake in Aladdin Bail Bonds, one of the largest bail bond companies in the U.S. The sale came after a campaign targeting Endeavour and its investors by the ACLU and Color of Change.
Lobbying by the Bail Industry
Despite bail reform efforts across the country, legislation has been met with intense pushback from the bail industry and the American Bail Coalition (ABC) in particular. Founded in 1992, the ABC, a coalition of for-profit bail insurance companies, works to maintain the legality and viability of the for-profit bail industry. ABC effectively lobbies politicians and drafts legislation through its membership in the American Legislative Exchange Council (ALEC), a conservative organization that brings corporations and state legislators to create and lobby business-friendly legislation. In 2011, leaked documents revealed that roughly 1,000 ALEC drafted bills are introduced in state legislatures every year.
The American Bail Coalition has referred to ALEC as a “life preserver”. In 2016, the ABC Board Chair served as the ALEC Private Enterprise Advisory Council Chairman. Bail legislation drafted by ALEC has included expanding the range of crimes that require posting money bail, loosening regulations on bail bondsman and restricting pretrial alternatives to bail. Since ABC formed in 1992, the use of money bail has increased dramatically. Between 1990 and 2009, the number of pre-trial releases using for-profit bail has increased from 24 to 49 percent of all releases.
Immigrant Bail Bonds
An immigration bond is a monetary payment that secures the release of a detained person from the custody of Immigrations and Customs Enforcement (ICE) on the condition that the person attends their court appearances and complies with the orders of the immigration judge. The ability to obtain bond greatly impacts the likelihood of an individual in obtaining immigration relief or receiving asylum. Detained immigrants are five times less likely to acquire legal counsel compared to non-detained immigrants and data consistently shows that immigrants with legal counsel are more likely to obtain immigration relief than individuals without legal counsel. Immigrants in detention have a hard time finding legal representation because of communication barriers with the external world and the shortage of attorneys willing to represent them. Detained immigrants also have less time to prepare their legal defenses because their cases are fast-tracked in immigration courts.
Detainees that are granted a bail release but cannot afford cash payment can be bonded out through a surety bond. Like in the traditional bail bond industry, immigrant bond agencies require insurance companies to underwrite bonds and guarantee to ICE that the full value of the bond can be paid if the individual does not fulfill the obligations of the bond. Surety bond contracts are struck between the Department of Homeland Security, a specific type of insurance firm called a “surety company,” a bail agent, and a co-signer who is typically a friend or family member of the detainee in question. The surety company underwrites the bond and shares liability with an immigration bail agent, who liaises with communities on the ground and posts the bond on the surety company’s behalf. The surety company and bail agent guarantee to DHS that the detainee will make court appearances and pledge to pay the full bond amount plus interest and penalties if the terms of bond/release are breached. In return, the co-signer typically pays the surety company and bail agent a 15-20 percent non-refundable premium, posts collateral in the form of property or credit card balances, and assumes responsibility for ensuring the detainee makes court appearances. Most surety contracts also stipulate that the co-signer will pay the full bond amount if the detainee violates the terms of release. Hence, under the surety bond system, it is the friends and family of detainees – not the surety company or bail agent – who assume most of the monetary risk.
The industry of immigration bail bond companies is much smaller than that of the criminal punishment system. Immigration bail bonds are viewed as riskier than criminal bail bonds, and bail agents usually need additional insurance and licensure to underwrite immigration bonds. There are several companies that specialize in immigration bonds that operate on a national level including: Action Immigration Bonds, Gonzales and Gonzales, Libre by Nexus and Statewide Bonding. However, there is some indication that the immigration bail bond industry is poised for growth as some states are pushing to ban or heavily curtail the practice of money bail within the criminal punishment system, traditional bail bond companies at the local and state levels are venturing into the immigrant bond industry.
One of the companies that best exemplifies the problems inherent in the immigrant bail industry is Libre by Nexus (LbN). LbN is not a bail bond agency or surety insurer itself, but an intermediary profiteer in the system. LbN directly targets individuals in ICE detention and offers to secure their bond via a certified bail bond agency. Instead of requiring the detainee to post collateral such as a cash or property, - as is commonly done with traditional bail bonds in the criminal punishment system - Libre by Nexus requires the detainee to pay $420 a month for an electronic monitoring device that monitors their movement 24/7. Compared to cash-bail immigrant bonds that ICE requires to be paid in full, Libre by Nexus’ monthly fees offer an alternative to desperate people and their families. However, on top of this monthly fee, detained asylum seekers or immigrants must pay a series of non-refundable installation, processing, and security deposit fees that can add up to $4,000 dollars. None of these fees or monthly rental costs are directed to paying off the bond. If an individual fails to pay the monthly fee or “breaks the contract” in other ways, Libre by Nexus will prompt “licensed recovery agents,” i.e. bounty hunters/ICE, to return them to detention. As of April 2018, Libre by Nexus has faced a federal probe, three state investigations, and a number of allegations and lawsuits by immigrants claiming the company misled and deceived them.