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Probes Target Bail Bond Firms

Officials say laxity lets hundreds flee, costs counties dearly

July 25, 2004|Wendy Thermos and Anna Gorman | Times Staff Writers

A new breed of high-volume bail bond company is jeopardizing public safety for profits in California, enabling hundreds of criminal defendants to flee while costing county treasuries millions of dollars in unpaid bail, according to law enforcement officials and court records.

The California Department of Insurance, Los Angeles County Dist. Atty. Steve Cooley and prosecutors elsewhere in the state are investigating alleged corruption in the industry that could bring charges of perjury, conspiracy, obstruction of justice and unlawful business practices.

An examination of court records indicates that some firms have been issuing bail bonds to serious offenders without requiring sufficient collateral -- property pledged by a defendant to guarantee that a bond will be repaid. That greatly increases the risk that dangerous felons will flee, according to prosecutors.

Investigators said they believed that some of the firms had made bail easier to get in order to collect a steady stream of commissions from defendants -- typically 10% of the bail set by a judge. Some firms under investigation issued bail bonds regardless of the seriousness of the crimes or the suspects' backgrounds, prosecutors said.

State officials have no comprehensive records of bail forfeitures. In Los Angeles County, the records are kept by hand on index cards stored in the equivalent of shoeboxes.

But a review by The Times of records at the downtown Los Angeles criminal courts building showed that the county had been unable to collect at least $9.1 million in bail forfeitures during the two years ending in August 2003. Of that amount, $5.9 million was attributed to bail bonds posted by agents working with a single firm, Capital Bonding Corp., a Pennsylvania-based company that has touted itself as the "Wal-Mart of bail bonds."

Bailed-out suspects who are now fugitives include defendants charged with attempted murder, assault, burglary, drug trafficking and other serious offenses.

Carlos Alberto Hernandez, 26, fled from authorities in December 2002, nine days before he was to receive a life sentence for attempted murder. Capital had posted his $1.56-million bail without collateral. The county is still attempting to collect the forfeiture.

Javier Mendoza, 27, jumped bail even before he was arraigned in November 2001 on drug dealing charges that could have brought him 20 years in prison. He posted $500,000 bail with a bond from Capital.

Maria De La Luz Menjivar, 43, failed to appear in Orange County Superior Court in March after posting $100,000 bail with a Capital bond. She pleaded not guilty to running a sex-slave ring and then fled.

Public records do not indicate whether either Mendoza or Menjivar gave collateral for their bail. John Rorabaugh, attorney for Capital, said that "as a rule, there were bonds written based on credit ratings, not collateral."

Capital's president, Vincent Smith, recently stepped down at the insistence of the firm's bail bond insurer. Harco National Insurance Co. of Illinois took over Capital's operations last month after realizing that it could be liable for millions of dollars in delinquent bail in California and other states, Harco's attorneys said.

Karen Gorham, a Riverside County prosecutor, said high-volume bail agents had turned bail on its head.

"The system is set up for the corporate agents to pocket the highest [commissions] possible, while not looking at or caring about the likelihood of the defendant returning to court," she said, calling their money-making tactics "an outrage."

In Orange County, investigators from the FBI, the state Department of Insurance and the district attorney's office are investigating allegations of illegal activity by bail bond companies. Glenda Stroobant, owner of Glenda's Bail Bonds in Fullerton and former vice president of the Orange County Bail Agents Assn., said she was questioned by FBI agents two months ago and by an investigator for the Insurance Department about a month ago.

Stroobant said the investigations were focused on allegations that inmates at the Orange County Jail were recruited to steer business, sometimes by force, to some attorneys and bail bonds companies. Stroobant and other bondsmen have complained that jail inmates were paid kickbacks to refer other prisoners to specific defense lawyers and bail offices.

"A Department of Insurance investigator was in my office for four hours about three weeks ago, looking over reports of illegal activity forwarded to me by other bail bonds companies," Stroobant said. "The legitimate bail bonds companies are documenting information about illegal activity, like soliciting inside the jail, and forwarding it to us. We turn it over to the FBI and the state."

FBI spokeswoman Laura Eimiller said the federal probe was continuing. County officials declined to comment.

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