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Insurers Pay L.A. County Partial BailDebt

The $5.1 million is part of an estimated $10 million in unpaid forfeitures linked to Capital Bonding, now banned by the state.

August 06, 2004|Wendy Thermos and Anna Gorman | Times Staff Writers

In a sign that recently revealed bail industry problems are being cleaned up, two insurance companies paid Los Angeles County $5.1 million this week toward nearly $10 million they owe in forfeited bail, officials said Thursday.

"Five million dollars is a great deal of money to this county. What it says to the industry is that people are out there watching, so companies need to meet their obligations," said Lael Rubin, special counsel to Dist. Atty. Steve Cooley.

A July 25 Times article reported that the district attorney was conducting a widespread investigation of bail industry practices, prompted by millions of dollars in unpaid bail forfeitures in Los Angeles County as of August 2003.

The state Department of Insurance, which regulates the bail industry, is also investigating an undisclosed number of bail companies and their insurers.

Representatives of Aegis Security Insurance Co. and Harco National Insurance Co. said they were making a good-faith effort to pay massive debt run up without their knowledge in California and other states by a single bail company, Pennsylvania-based Capital Bonding.

"The problem is being solved," said Tom Anderson, project manager for Bail Risk Management, a firm hired by Aegis and Harco to determine the total amount owed nationwide.

"But it's going to take a long time, because there is so much outstanding liability."

In April, the state Insurance Department barred Capital Bonding from issuing bail in California.

Through his attorney, Vincent Smith, who was until recently president of Capital Bonding, has denied any improper conduct.

Aegis and Harco have been banned from issuing bail in Los Angeles County because of their unpaid forfeitures.

A spokeswoman for the California Bail Agents Assn., which has urged the district attorney to aggressively enforce bail laws, said the $5.1-million payment left her cautiously optimistic.

But "this doesn't fix the problems the bail industry in California is suffering," said Maggie Kreins, association secretary and owner of a Long Beach bail firm.

Cooley's investigators said that at least eight insurers in the last three years had gone bankrupt or been prohibited by Los Angeles County judges from underwriting bail until they paid outstanding forfeitures. The county's losses in that period might total as much as $30 million.

A bail bond is a written promise, backed by an insurer, to pay the full amount of the bail if the defendant fails to appear in court.

The $3.1 million paid to the county by Aegis and the $2-million check from Harco will be followed by others in coming months, said attorney Drew E. Pomerance, who represents both companies.

"This was done to show that we [are] going to live up to our obligations and to show everybody that the insurance companies [are] going to stand behind their product ... whether it's bail or other kinds of business," Pomerance said.

Deputy County Counsel Tony Nicklin, whose office is in charge of collecting forfeited bail, said he was pleased to see the effort made by Aegis and Harco to pay down the estimated $9.9 million they owe. But the county is not depositing the checks just yet, because the insurers failed to include interest.

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