MAY 2017 $ELLING OFF OUR FREEDOM How insurance corporations have taken over our bail system CONTENTS Color Of Change and ACLU’s Campaign for Smart Justice would like to acknowledge: Katie Unger, who spearheaded the research and analysis for this report. Thanks to the many advocates and practitioners whose insights and work were invaluable to this report, particularly to Alec Karakatsanis, Jonah Engle and Larry Schwartztol for providing thoughtful feedback. Thanks to the National Institute on Money in State Politics (Helena, MT) and Big Lake Data. Special thanks to the ACLU’s Udi Ofer, John Cutler, Andrea Woods, and Megan French-Marcelin; ACLU of California’s Margaret Dooley-Sammuli; and Color Of Change’s Rashad Robinson, Scott Roberts, Ryan Senser, Enchanta Jackson, and Michele St. Julien, who moved this report from vision to finished product; and Adina Ellis and the ACLU Communications Team, who provided critical editing and support. 01 Executive Summary 04 Introduction 09 At a Glance: A View of the Bail Industry 11 What is a Surety? 12 How Does a For-Profit Bail Bond Work? 16 How For-Profit Money Bail Fuels Mass Incarceration 20 The Corporations Profiting from Money Bail 23 The Big Corporations Behind Bail 24 Bail Insurance Corporations Reap Rewards on Low Risk 26 How Bail Corporations Control People’s Freedom 28 How Bail Corporations Decide Who Is and Isn’t Set Free 29 How Bail Corporations Trap People in Debt 32 How Bail Corporations Rig Contracts and Shift Risk to Families 33 How Bail Corporations Enforce Control 34 How the Bail Industry Evades Oversight and Regulation 38 Bail Insurance Corporations Enlist Lawmakers to Keep Control 42 State by State: The For-Profit Bail Industry Fights Reform 43 The Bail Industry at the Federal Level 44 Conclusions and Recommendations 48 Definitions 50 Endnotes CONTENTS EXECUTIVE SUMMARY This report tells the rarely heard and even less understood story of how the bail industry has corrupted our constitutional freedoms for profit: the freedom from exploitation in bail, the guarantee of being recognized as innocent until proven guilty, and the guarantee of the equal application of the law to all people. Corporate opportunists have hijacked The for-profit bail industry has reinforced public authority and created an and profited from the racially biased unnecessary and largely unaccountable nature of our criminal justice system, $2 billion bail industry that profits from which routinely targets low-income people, trapping people both inside and out of jail, Black people, and other people of color for often for long after their charges with the reasons that have nothing to do with their courts have been resolved. It may seem guilt or innocence. paradoxical to learn that bail—a process meant to guarantee freedom and fairness This report exposes how the industry in the criminal justice system for people works, the corporations and enablers in who have not been convicted of a crime— government that are behind it, who they is being used by corporations in this way. impact and the extent of their damage, Yet it happens daily nationwide, typically the inherent problems with allowing a with little resistance from the politicians, for-profit industry to hold the key to the judges, and prosecutors sworn to protect jailhouse gates, and why this practice of public rights. for-profit money bail must end. 01 Executive Summary The Basics of Money Bail far too many people and their families Each year, millions of are lured into exploitative arrangements people are forced to with bail bond corporations that typically charge a nonrefundable fee of 10 percent pay money bail after of the full bail amount. Many are trapped they are arrested. in a cycle of debt and fees related to their Just over two decades ago, most people payments, and even people whose charges arrested for felonies were released are dropped or who are determined without having to pay bail. But today, to be innocent do not get their money millions of people must pay bail in order back. Their debt and financial losses, to avoid detention in jail while their case is and the resulting problems in their lives, underway, though they are still innocent can persist long after their court case is in the eyes of the law. If they cannot pay resolved. Unsurprisingly, there is racial the amount set for their bail, they remain bias in determining who needs to pay and in jail for their inability to pay. Many plead who does not, and in how high bail is set. guilty regardless of the case against them Corporate insurance companies are largely and suffer the long-running consequences responsible for the way the bail system of convictions in order to be released. works today, and they are also the largest To come up with the money for release, beneficiaries of it. Who Profits From the Corporate Takeover of Our Bail System? In most of America, the insurance registered in tax havens like the Cayman corporations and local bond agents that Islands and Bermuda, these corporations make up the private for-profit bail industry and their executives operate far from the operate in the shadows—little understood influence of the people and communities and with inadequate oversight. Yet, in over whom they hold so much power. another sense, they operate very much out in the open—portrayed to the public Laws the industry often helps write and at large by news and entertainment media the politicians it has helped fund work as a nearly automatic and inherently to sustain the ability of bail corporations necessary part of the system. In reality, to extract money from arrested people for-profit bail is actually a global anomaly and their families. And a combination of used only in the Philippines and the insufficient and ineffective government United States. oversight enables the many abuses they perpetrate. In particular, the big insurance This report shows how corporate insurers corporations behind bail have been very operate with little risk, even leading effective at crafting and institutionalizing some of them to boast of going years laws, regulations, and practices that without paying any losses. Fewer than protect their profits; they have cultivated 10 main insurers underwrite a significant a more than 20-year relationship with the majority of the approximately $14 billion American Legislative Exchange Council in bail bonds issued in the United States (ALEC), the pro-privatization lobby each year. Bail insurance corporations group, to successfully write and pass their are increasingly held as under-the-radar own custom laws in state legislatures subsidiaries of large global companies. nationwide, while very effectively derailing Traded in London, Tokyo, and Toronto, or alternatives and reforms. 02 Executive Summary How Bail Corporations Control People’s Freedom including by submitting to invasive The result of bail surveillance, and to pay sweeping and corporations’ control unpredictable costs. is that millions of With little accountability, the for-profit bail people are no longer industry has thus created a way to profit from usurping the role and function of free: people stuck the courts, trapped families in debt while escaping scrutiny for consumer practices, in jail and families made armed arrests and surveilled people stuck in debt to without meaningful oversight by police, and evaded insurance regulators. This create profit for these report includes original and secondary corporations. research and stories from news media across the country about individuals harmed by bail corporations and the for- Leaving People in Jail. With only its profit bail system overall. bottom line to answer to, the bail industry determines who it will accept as customers Calls to eliminate the for-profit bail and who it will leave detained while their industry have persisted for a century, cases slowly make their way through a from publicly published studies in the complicated and extremely flawed criminal 1920s to Robert F. Kennedy to advocates justice system. and community leaders today.1 Many jurisdictions across the country are now Trapping Families in Debt and Loss. trying to minimize or eliminate both the People who post bail directly with courts destructive role of money bail and the bail get their money returned at the end of a corporations that sustain it. Yet on the case, regardless of its outcome. But bail whole, though the corruption and impact corporations keep families’ payments, even of this system have been widely exposed, when charges are dropped or people are the industry persists. found innocent. They also collect money from installment plans and fees long after In light of these findings, we call on they have any financial risk. In Maryland, state and federal regulators, attorneys the bail industry kept at least $75 million general, and legislators to immediately over five years just in premiums from investigate the industry and bring it out people whose cases were resolved without of the shadows, building on the evidence a conviction in District Court alone. offered by this report. State and local governments must respond to this wealth- Rigging Contracts to Forfeit People’s based detention crisis and work to create a Rights. Bail insurers’ contracts with people stronger and fairer criminal justice system seeking bail—and their families or friends that neither depends on the for-profit bail who co-sign—contain exploitative terms. industry nor supports it. Common provisions require people and their families to sign away their privacy, 03 INTRODUCTION 04 In the United States, a person is locked into a state or local jail nearly 11 million times a year, and unaccountable corporations have taken over our public authority as the gatekeepers for our bail system in order to profit. 05 Introduction ver more than 20 years, the use of money bail has grown substantially.2 In the period from 1990 to 2009, in the majority of theO nation, the proportion of jail releases involving the private bail industry doubled for people arrested for felonies.3 Bail amounts have risen, too.