'Why would I deal with inmates for $11.91 an hour?' Gusman aide blames low pay for problems at troubled jail _lowres

Advocate staff photo by JOHN McCUSKER -- Inmates look out onto the Pontchartrain expressway from the new Orleans Parish Prison in New Orleans in September.

Nearly every bail bond company operating in New Orleans routinely charges illegally high rates to cut criminal suspects loose from jail, according to a complaint filed Thursday with the Louisiana Department of Insurance.

The Southern Poverty Law Center claims that average rates charged by bail bond firms in the city exceed the legal cap by $100 on average, adding up to more than $400,000 each year in excessive charges.   

The complaint names 21 bail bond companies and underwriters working in the city. The SPLC is calling on state regulators to halt the practice, fine the companies involved, force them to issue refunds to clients and suspend or revoke their licenses. 

At issue are the higher rates that the vast majority of bail bond companies charge in Orleans Parish compared with other jurisdictions in Louisiana. The Legislature long ago set the statewide "premium" for bail bonds at 12 percent of the total bail amount ordered by judges.

That means that people who can't afford $10,000 bail — the average in Orleans Parish — must scrape together $1,200 for a bondsman, for example.

The statute makes one explicit exception: an extra half-percent — or $50 in the case of a $10,000 bond — in Jefferson Parish. But according to Thursday's complaint, all but one bail bond firm charges 13 percent in Orleans Parish, a practice dating as far back as 2005.

That's when the Legislature passed a separate law, at the urging of the Orleans Parish Criminal District Court judges, that raised an existing statewide "license fee" for bail bondsmen from 2 percent to 3 percent, just for Orleans Parish.

The proceeds of the state license fee are divvied up among parish courts, sheriffs, district attorneys and indigent defender programs. The extra 1 percent for Orleans Parish, however, all goes to the criminal court.

According to the SPLC's complaint, bail bondsmen in New Orleans are passing that extra 1 percent on to their customers in "consistent and flagrant" violation of state law.

The group estimates that some 50,000 people who posted bonds in New Orleans since 2005 were "systematically" overcharged, with bondsmen and surety companies reaping some $5 million in ill-gotten gains over that period.

"It's taking advantage of the poor in New Orleans and draining their very limited resources," said Micah West, a staff attorney with the SPLC. West said bond companies in New Orleans made a "unilateral" decision to charge customers the added fee.

"I think those companies were flying under the radar," he said. "The bail bond companies are thumbing their nose at the Legislature and the law."

The complaint marks the latest attack by advocacy groups in Louisiana and elsewhere on a monetary bail system that they argue preys on the poor to fund the criminal justice system, resulting in the detention of many suspects who are simply unable to pay enough to get out of jail.

The New Orleans office of the Vera Institute of Justice released a report in January that found that some 550 Orleans Parish defendants sit in jail on any given day because they can't afford to get out or were booked for failing to pay fines and fees from a previous conviction.

In June, the SPLC sued one of the city's largest bail bond companies, Blair's Bail Bonds, alleging that it went to troubling lengths, including "kidnapping and extortion," to collect on credit for one client's bond under an illegal fee scheme.

Bail bondsmen in New Orleans call it an unfair attack, arguing that they frequently offer credit to arrestees to help free them from jail, at their own financial risk.

Thursday's complaint said that SPLC investigators called nearly two dozen bail bond firms operating in New Orleans and found only one, A Better Bail Bonds, that didn't charge 13 percent for a bond in the city.

Orleans bondsmen don't dispute that figure, and scores of bond documents reviewed by The Advocate from court files list premiums at 13 percent.

Blair Boutte, who owns Blair's, declined to comment on the 13 percent premium listed under several of his firm's bonds.

Local bondsman Matt Dennis, a vocal critic of bail reform who has sued to force the Vera Institute to turn over its risk assessments of Orleans Parish inmates, dismissed the idea that charging the 13 percent fee is illegal in Orleans Parish. Dennis called the issue a diversion from what he describes as a dangerous, unchecked assault on a system that brings accountability to inmate releases.

Dennis argued in an email that "Orleans is an exception from the 12 (percent) by having a special exception" in the 2005 law that increased the license fee in the parish.

An official with the Department of Insurance, which regulates the bond industry, agreed.

Barry Ward, deputy commissioner for the agency's Office of Licensing and Compliance, said in a recent interview — prior to the SPLC lodging its complaint — that state law allows bondsmen to levy the extra charge on customers.

"That's just a pass-through to the jailer," Ward said of the license fee.

He likened it to small administrative fees that court clerks and sheriffs often charge for processing bond documents.

Ward also referenced a 10 percent premium that is not contained in state law, but which he called the industry "standard" for bail bond underwriters, to support the notion that the license fee falls outside of the 12 percent premium set by state law.

He also cited a different statute that allows insurers to "receive reimbursement from the insured for expenses incurred (that are) directly related to the insurance coverage for the insured."

Ward said he came to his conclusion after consulting with a bond industry representative who is familiar with industry practices in Orleans Parish.

Madro Bandaries, a New Orleans attorney who runs a state certification course for bondsmen, also argued that the 12 percent premium "doesn't include the add-ons." Bandaries likened the license fee to added charges on phone bills.

"I would acknowledge the law is extremely confusing, and many of the statutes must be read together," he said.

State laws governing the license fee, and where the money goes, stemmed from a 1991 federal court ruling that invalidated an earlier bond fee structure in the state.

The court ruled that judges who assessed those fees to help fund courts in Orleans, Jefferson and Terrebonne parishes held too much power over the purse strings, creating "a temptation for the judges to forgo due process and assess high bail amounts" to raise money.

Similar fees are now spread among the courts and other players in the criminal justice system.

What remains in dispute is whether the Legislature meant for bondsmen to be able to pass on the added 1 percent when it raised the license fee for Orleans Parish.

Former Criminal District Court Judge Frank Marullo, who lobbied for the added court funding, said he couldn't recall the specifics, but said: "We had to fight the bondsmen on all this stuff. They didn't want the bond to go up, whether they paid it or not."

Jon Wool, director of Vera's New Orleans office, called the practice of charging 13 percent a clear violation of state law and another reason to "remove money as a factor and indeed an incentive" in considering inmates' release.

"We have gotten to a point where a goal of the justice system is to maximize revenue streams for government agencies and bail bondsmen. Not surprisingly, bail bondsmen and perhaps others take more from vulnerable New Orleans families than even the generous allotment the law allows," Wool said.

"This isn't just a rounding error; $5 million is a lot of money to take from low-income families," he added, "and it's critical that this money be returned to them."

Follow John Simerman on Twitter, @johnsimerman.