Monday, December 19, 2011

Real estate collateral for bail bonds inflated

On Sunday, the Dallas Morning News published a story by Ed Timms and Kevin Krause (behind paywall) which:
found that bail bondsmen across Texas ... [write] millions in bail bonds while pledging real estate collateral worth a small fraction of that amount. Some hire private appraisers whose property values are dramatically higher than tax values that they contest.

Counties may collect only nickels or dimes on the dollar when they try to sell the properties pledged as collateral if bail bondsmen can’t pay for bonds that go bad, or if they go out of business. And that means financially strapped counties could lose many millions in revenue.
The Texas Occupations Code allows bail bondsmen in large counties to write bonds worth five to 10 times the value of real estate placed in trust with a bail bond board, depending on how long they’ve been in business and whether their license was ever suspended or revoked. Another option allows bondsmen to use insurance companies that back their bonds.

“The county has taken bath, after bath, after bath,” said Don Davis, a longtime assistant district attorney in Dallas County who monitored bail bondsmen. “If you don’t have a 1-to-1 ratio, that’s when the temptation is to start taking liberties with your liquidity and try to make as much money as you can before you pull out.”
The lengthy News story found that consistently property appraisals used to justify bail bonds were vastly higher than the appraised value at the tax assessor's office, and in some cases bail bond companies submitted much lower appraisals to the county taxing district disputing their valuation than the inflated estimates given to local bail bond boards. In some cases bail bond companies used appraisers with a history of disciplinary actions for writing inflated appraisals.

Krause and Timms have been tearing this story up for months. In a related item from December 6 (that's not behind the paywall), the Dallas News editorial board opined that:
At the very least, the standard operating procedure underpinning Dallas County’s bail bond system should be “trust but verify.” As revealed by this newspaper, the situation is more like “look the other way and approve.”

In a series of articles stretching back to June, The Dallas Morning News has detailed numerous cracks and loopholes in the county’s bail bond system. Shoddy follow-through is costing county taxpayers and making a mockery of a system intended to assure that a defendant doesn’t simply disappear.

The latest fiasco, detailed by reporters Kevin Krause and Ed Timms earlier this week, involves bondsmen who filed court papers claiming that clients whom they had helped get out of jail — and who later skipped town — had been rearrested. Those rearrests of bail jumpers saved the bondsmen substantial money.

There’s just one problem: Many of the bondsmen didn’t file — nor did judges and lawyers demand — basic documentation to back up the rearrest claims.

Let’s start with the disturbing fact that some bondsmen just make up these stories. How do citizens have confidence in a system that condones that kind of abuse? Equally important are the pocketbook implications of this laziness and dishonesty.
See Grits' discussion of the story they're discussing here.

I'm continually amazed at the deference afforded bail bondsmen by state and local officials. The amounts of money they give in political campaigns don't seem to justify it, but examples like these show there are a lot of folks willing to carry water for the bail bond industry, or at least, when necessary, to "look the other way."


Anonymous said...

the backstory smells - sounds like the the bailbond "insurance" industry is instigating and behind this story - in its attempt to replace current bailbond system with their bailbond "insurance" company model. most insiders know that bailbond "insurance company's have been trying to put all the "independents", the professional bail bondsman, completely out of business, and replace it with the insurance company industry - 20% kickback model. another insurer scam in the making, seeding the politicians, and now possibly the media, with their bogus but extremely self-lucrative scheme. the out-of-state insurer model will only suck revenues from the state of texas to non-texas entities. ps - ironically, they don't pay forfeitures, never have, and they even brag about it, plus they have plenty of slick lawyers to assure that they never pay a forfeiture - ever. thats the real story.

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