New Jersey bond businesses eye new growth, from immigrants
Scott Berlin's father, the son of Russian immigrants, founded Berlin Bail Bonds in Newark in 1930, providing cash to release defendants in the state and federal courts in that gritty New Jersey city.
The family bond business is still going, but to survive, it is leaning on what used to be a small sideline: writing bonds for the release of detained immigrants.
"I do as many as I determine are secured," said Mr. Berlin, 64. "I would love to do more."
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In New Jersey, a change in the law in January largely did away with financial bail. As in other states, lawmakers in New Jersey wanted to reform a bail system that discriminated against the poor and contributed to prison overcrowding.
Under the new system, the New Jersey courts decide whether defendants should be detained or released pending their trial. The courts use an algorithm written to calculate the risk that a defendant will flee or commit another crime, as well as input from the police and prosecutors, to make their decisions.
Some of the more than 800 licensed bail agents in New Jersey are now looking to follow Mr. Berlin, by shifting from a business under threat, because its services are no longer needed by the state's courts, to a related one they see as a growth area under a new administration that has taken a hard line on immigration.
More than half of all immigrants subject to deportation proceedings are detained when the proceedings begin. About half the detainees will receive a custody hearing before an immigration judge; the other half remain detained pending a deportation proceeding. Only about half again of those who get a hearing will be released on bail, according to a report published last year by the Transactional Records Access Clearinghouse at Syracuse University.
There are roughly 950 immigrants detained in six facilities in New Jersey, according to United States Immigration and Customs Enforcement.
While there is no data on how many of the immigrants are now out on bail, New Jersey immigration lawyers and bail agents say detentions are on the rise.
New Jersey bail bond businesses want to tap that growth.
Antonio Roman, a bondsman in Camden, said he was studying for an insurance license that would allow him to write immigration bail bonds. In May, he wrote just $43,000 in bail bonds, compared with $2.9 million in the same month a year earlier.
Writing immigration bail bonds, he said, could help him make up some of that lost business.
Bail agents can charge a one-time fee, or premium, of 15 percent, for writing an immigration bond, compared with the 10 percent that most had charged for state criminal bail in New Jersey. (The average immigration bond in 2014 was $6,500.)
On the face of it, that might seem like a good deal: a 15 percent payout just to make sure that someone shows up at the government's request.
But it comes with some risks. It is not a short-term loan: United States immigration courts are dealing with a record backlog of cases and proceedings can draw out over many years.
In addition, bail agents can be on the hook for transportation charges if immigrants move for work or other reasons, and immigration cases are often shuffled to different courts. And while most immigrants want to remain in the country, the fear of deportation is enough to make some skip hearings. Then, if they do not have Social Security numbers, it can be harder for bail agents to find them.
"They're more risky than a regular bail bond," Mr. Roman said.
If someone released on bail fails to attend an immigration court hearing, the bail bond will be breached, meaning that the bail agent takes a loss.
Bail agents and the surety companies that jointly underwrite immigration bail bonds usually require them to be at least 80 percent secured by the immigrants and any co-signers. Still, it is an appealing business if you are selective about whom you write bail for, Mr. Roman said.
For some, like Mr. Berlin, immigration bail can be a lucrative niche, especially when the defendants already have lawyers. This is executive-style bail.
Clients might be employees of high-tech companies, for example, or immigrants who own their own businesses, he said. They might have overstayed their visas, or have some other residency status issue. Often, employers will co-sign for immigrant employees if they or their families cannot afford the price of bail.
"I evaluate risk," Mr. Berlin said. "I try to be a little compassionate but I try to be very selective, too. I have to be, otherwise I wouldn't exist, I just wouldn't make it."
Most of the people whom Mr. Berlin bails out of immigration detention centers in New Jersey, for example, have lawyers. That puts them in a different category of immigrant, since most detained immigrants do not.
Having access to legal representation also means the person is less likely to be deported, according to the Transactional Records Access Clearinghouse, which analyses immigration court data.
James Ryan McNeely, a New Jersey bondsman who specializes in immigration bail bonds at A. J. Dell'Omo in Neptune, N.J., said his company was also selective about the immigration bail bonds it writes.
He does not need to charge additional fees because his business has a low failure rate, he says. For clients recommended to him by lawyers, he might help pay some of the bail amount — say 20 percent — through an interest-free payment plan.
"If somebody fails to show up for an immigration bond, differently than a state bond, the feds don't give you the money back," he said. "That's it, conversation over."
Nationally, two big, privately held companies provide immigration bonds, Libre by Nexus and Action Immigration Bonds. Libre by Nexus, based in Verona, Va., has expanded rapidly since 2009 to offer a range of services to detained immigrants, including legal advice. Action Immigration Bonds, founded in 1974 and based in Fort Lauderdale, Fla., focuses on immigration bonds.
Some customers have sued Libre by Nexus, accusing it of exploiting them by using deceptive practices. The lawsuit, filed in federal court in California, claims that Libre by Nexus abused customers' limited English and vulnerability by tracking them with GPS shackles and signing them up to high-interest-rate loans to pay for their bail.
In a statement, the company's chief executive, Mike Donovan, said the suit was without merit and represented "a tiny fraction of the thousands of clients we have helped that eagerly recommend Nexus to their loved ones in the event they need us."
Action Immigration Bonds did not respond to requests for comment.
In the past, bad practices among some in the criminal bond business, like a failure to collect sufficient collateral, along with high rates of incarceration of people who could not afford bail, helped spur the changes in New Jersey.
The state's bail agents were prepared for the 2014 law, which took effect in January and allows more people on minor crimes to go free after arrest with just a summons, and for more people arrested for serious crimes to be automatically detained. They expected to still write bail for the people between those extremes.
But as the law has been put into effect, the majority of people arrested and given a court date have been released without financial conditions.
Jeff Clayton, the executive director for the American Bail Coalition in Lakewood, Colo., said he expected that some New Jersey bail agents would seek to write immigration bail bonds as a way to make up for lost business. But he said he worried the future of that aspect of bail bond writing is also in doubt.
"The Justice Department largely controls immigration bail and whether that market is going to shrink or increase we don't know, because we don't know what the policies are going to be," he said.
The New Jersey attorney general's office last month changed guidelines to require detention for certain charges, such as gun crimes. The American Bail Coalition is optimistic that further fine-tuning of the reform will happen, but Mr. Clayton said he worried it might take time that the bail agents, who are small-business owners, do not have.
"Agents are going out of business," he said.