When it comes to bail bonds, financial risk is a major concern. But there are other risks associated with using an unlicensed or illegal bail bondsman. These risks can range from theft to double standards between bond companies and individual defendants. In this article, we'll explore the risks of using an unlicensed or illegal bondsman and how counties and states can protect themselves from these risks. Using false business names or aliases that seem unlicensed is a major risk.
An agent who illegally diverts or appropriates trust funds for his own use is guilty of theft. Theft can range from a class C misdemeanor to a class B felony, depending on the amount involved. The commercial bond industry could not exist without the support of insurance companies that act as guarantors. In many states with monetary bonds, the only way to enforce the payment of the bond is for the government to suspend the authority of bond agents and bond companies to issue more bonds, essentially cutting off their revenue stream until they pay what they owe.
This creates a double standard between bail bond companies and other bond companies, as well as between bond companies and individual defendants who pay their own bail. The law requires that a bondsman or managing general agent deposit “accumulated funds” with an insurance company or managing general agent in accordance with their contract. This gives ample opportunity to recover paid confiscations, which is a generous gift to bail agents and bail bond companies at the expense of counties. Counties and states that undertake such an effort should anticipate strong opposition from the litigious and adequately resourced bail industry. They should also consider whether completely abandoning commercial bonds would be more effective for the court and the taxpayer. This would have much more impact than focusing solely on commercial bonds. When Mother Jones investigated the financial records of 32 bond companies that underwrite bonds, she found that these companies paid less than 1% in bail losses.
This shows that bond companies won't pay foreclosures unless forced, and forcing these well-resourced companies to pay what they owe costs counties a great deal of time and money. The law defines a “managing general agent” as a person whom an insurer appoints or employs to oversee the bail bond business that bail agents appointed by the insurer write in Connecticut. The company can then use the money from the agent's “accumulation fund” first, instead of paying the lost bond with its own funds. Because the commercial bond industry is regulated at the state and local levels, the legality of the contractual provisions depends on where the commercial bond agent is located. Current practices of setting commercial bonds and bonds ignore the fact that most people arrested can be safe in the community. The law requires every insurer and bondsman who executes bonds in Connecticut to maintain and provide certain information to the Department of Insurance if requested. Counties and states should take advantage of this requirement to protect themselves from any potential risks associated with using an unlicensed or illegal bondsman.