Canceled Bail Bonds Pose Big Problem

The bail bonds of more than 300,000 criminal defendants nationwide, including 3,000 in Los Angeles County, will be canceled Sunday night because the two Calabasas-based insurance companies that issued those bonds have been declared insolvent.

Some of those defendants could be rearrested and jailed or required to pay a second time for a bail bond. Others, accused of minor crimes, could be released on their own recognizance. Still others could skip bail, free from the fear of bounty hunters chasing them because the bonds have been canceled.

The companies are Amwest Surety Insurance and its wholly owned subsidiary Far West Insurance, both of which specialized in underwriting various types of bonds. Though Amwest is headquartered in Calabasas, it is incorporated in Nebraska. A judge in Lancaster County, Neb., issued an order in June liquidating Amwest and did the same for Far West last month.

The Nebraska court appointed the state’s director of insurance as liquidator, then he notified policyholders and bail agents that all bonds should be canceled as of Dec. 9. The impact of the bond cancellation is not fully clear, because individual judges have discretion on how to proceed.

Judges set bail, usually according to a schedule, when defendants are arraigned on criminal charges. Defendants can get out of jail by posting the entire bail to the court or part of it through a bail bond agent. If a suspect fails to appear, the court keeps the bail and issues an arrest warrant.

In most cases, a defendant or his family will pay a nonrefundable fee of about 10% of the bail through the bail agent, who then promises the court that the suspect will appear. Many defendants also put up collateral, such as a house, which gives them even more incentive to appear. Bail bond agents go after those who skip bail and, if they fail to find them, are left paying the bond forfeiture.

Insurance surety companies provide the financial guarantees for the bonds to bail bond agents. In the case of Amwest, its liquidation means defendants will have to obtain a second, replacement bond through bail agents from other insurance companies.

Neil Berger, an attorney for Amwest, said the company regrets the liquidation but must observe Nebraska law.

“Everybody is sorry for all the havoc this has caused the industry,” he said. “The problem is that Nebraska law is fairly strict on what Amwest and Far West have to do.”

Judges Are Told to Review Cases

In Los Angeles County, Superior Court Judge Dan T. Oki responded this week to the “unprecedented circumstances” by issuing an order directing local judges to review their cases and determine the need for arrest warrants. The court is preparing a list of cases in which bail bonds were issued by the two companies, and has asked prosecutors and defense lawyers to notify the court of any unusual cases, Oki wrote.

Judges were urged to consider the gravity of the charge and the amount of bail set when deciding whether to issue arrest warrants.

Court spokesman Kyle Christopherson maintained that the majority of cases affected involve a low risk to the community. Most violent criminals are held in jail on high bail or no bail.

“Public safety is not a great concern,” he said. “It does affect a large number of defendants . . . and each individual case will be reviewed by each bench officer. It may be a challenge in some cases.”

Los Angeles County Superior Court Judge William R. Pounders said he planned to have his clerk contact defense attorneys and tell them to bring their clients in to reset the bail bonds. Defendants will have to pay new premiums to make bail bond arrangements, he said. “It’s not fair to them,” Pounders said. “But it’s not the court system’s fault.”

Pounders said the failure of the insurance companies is a serious matter. “It’s certainly significant to the court if a bail is not good and a defendant absconds because there is no bondsman to go after them,” he said.

In Orange County, the spokeswoman for Superior Court said the number of suspects whose bonds are insured by Amwest or Far West is being determined.

“Once we have a list of cases, those defendants will be notified that they will have to post a new bond,” said Carole Levitzky, who added that the situation “is problematic.”

Hundreds of bail bond agents are scrambling to find replacement bonds, but say the job is difficult.

“It is an incredible nightmare,” said Francisco Rodriguez, owner of Hollywood Bail Bonds, which worked with Amwest. “I don’t what I am supposed to do or how I am supposed to do it.”

Rodriguez, who has issued bonds on 185 current defendants, said he can’t arrest any of them in anticipation of the bonds being canceled. But if he waits until Monday, he won’t have a right to arrest them because the bonds won’t exist anymore. “We’re in this Catch-22,” he said.

He added that it is unfair that these defendants should even be facing rearrest, because they are not at fault. Some, he said, may not appear in court because they don’t have the money and don’t want to be jailed. “You are going to trample on the rights of hundreds of thousands of people to satisfy a few creditors,” he said.

In addition, many defendants will lose the premiums they paid to bond agents, unless a judge orders them free on their own recognizance or a bond agent arranges for another insurance company to take control of the bonds.

Donald Armstrong, who runs a bail bond company in Glendale, said he worked with Amwest for 29 years and is upset about the company being liquidated and the bonds being canceled. “It’s a devastating thing,” said Armstrong, who has been writing bonds for 41 years. “Who is going to come to our rescue?”

Agents Urged to Get Replacement Bonds

Nebraska authorities, through the liquidators, urged all bail agents to obtain replacement bail bonds and to notify defendants and the courts of the bond cancellation. If the agents fail to comply with the court’s order, they could face hefty fines or the suspension or revocation of their insurance licenses.

Armando Roche, president of Professional Bail Agents of the United States, said the order will have a negative effect on the criminal justice system and public safety. “It’s tantamount to changing the rules in the middle of the ball game,” Roche said.

The association’s lawyers tried to get an extension Thursday, but the Nebraska court denied that request and said the law demands that the bail bonds be canceled 30 days from the date of the liquidation.

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Times staff writers Steve Berry, Stanley Allison and Ted Rohrlich contributed to this report.