Bailed out

Forty years ago, when Nikki McMains first starting writing bail in her father’s office, she could count the number of her competitors on one hand.

“There was old Bail Jack in Chico, and then the Shealys down in Marysville, and then us,” she remembered. “It was great. Everyone knew each other, and we all got along.”

But that was a long time ago, and the days of refined competition are long gone.

These days, the phone book listings for bail agents go on for nine pages with advertisements promising to post bond for practically nothing down. And while the new entrepreneurial spirit in the business may be great for clients, it’s been trouble for many bail agents, who complain that the newbies in the business are sullying their business’ reputation with shady practices and overly competitive rates.

So says McMains. If there’s a look to a stereotypical bail bondsman, she would be its opposite. McMains is a 60-year-old grandmother who lives in a “nice little old-lady house” above Lake Oroville and appears more likely to be found watching Matlock or Murder She Wrote reruns than zipping down to Butte County Jail to bail out inmates at 3 a.m. But both of her parents were bail agents (her mother, in fact, was writing bail until two weeks before she died), and she plans to stay in the business for “as long as I’m standing up.”

Butte County Jail is never short on inmates, and business at her McMains Bail Bonds has been brisk over the years. But it’s waned lately, and McMains is convinced that she knows why: There’s a glut of bail agents in Butte County, and their sheer numbers have allowed inmates—some dangerous—to dicker down the price of a bail bond. The results are twofold: Inmates who normally couldn’t afford to bail out of jail before are able to do so now, and bail agents are working double time trying to maintain their clientele.

The bail bonds industry was never supposed to be as competitive as it is now.

The Department of Insurance, which licenses and regulates bail agents, requires that all agents take 10 percent of an inmates’ bail amount (for a $100,000 bail, the agent would have to take $10,000 cash) to bail them out of jail. The inmate (or his family) also has to pony up collateral (such as a house or a car) in the full amount of the bail, which is forfeited if the inmate doesn’t show up for his court dates.

When the system works, it works well. The former inmate’s family, which usually ponies up the valuable collateral, has a reason to keep a close eye on the inmate (who can spend his time out of custody at work), the bail bonds agent makes a decent living providing the service, and the jail is prevented from overcrowding.

The regulations are uniform for all agents for a specific reason: to keep everyone on an even playing field. But it’s that very uniformity that’s forced the industry to be creatively competitive. These days, an agent hungry for a quick client will charge as little as 1 percent down to bail someone out of jail and then extend credit for the rest and accept monthly payments.

And that’s when the system, as loosely regulated as it is, breaks down. Technically, the practice—called discounting bonds—is not illegal, but it creates a snowball effect in the industry that has forced some agents to stoop to less-than-honest tactics to compete.

Chico Bail Bonds agent Matt Davis put it this way: “They say they’re extending credit, but it’s really just another way of saying, ‘Just give me 5 percent and I’ll bail you out,'” Davis said. “It’s not right at all.”

The Department of Insurance hasn’t cited or fined any bail agent for illegally discounting bonds in “many years, if ever,” said California Bail Agents Association Executive Director Peggy Harding.

She was careful to point out that some cases of bond discounting aren’t truly illegal. As long as agents keep their clients on a payment schedule for any credit they’ve extended, it’s not. But, she said, over-extending credit to flight risks is “overzealous at best” and has given the industry’s reputation a bit of a black eye recently.

And the apparent lack of oversight from the Department of Insurance allows unscrupulous bail agents to release tardy debtors from their payment schedules—the agents aren’t out any cash, per se, and their willingness to bend the rules “gets around.”

“One person starts it, and then the people who are looking to get bailed out of jail get smart, and they start calling around and shopping around for the best deal they can get,” Harding said. “That’s not the way it’s supposed to work. … There’s supposed to be one price, and everyone sticks to it. It’s not good for anyone.”

Yuba City bail agent Joe Renshaw grudgingly admitted that he has started offering discounted bonds recently—just to keep up with the competition.

“Everyone in the business complains about it, but they all do it,” he said. “Every one of them. You have to. I don’t like it, but for me to say in business, I have to do it.”

Extending so much credit, he said, makes for a razor-thin profit margin—if there’s a profit at all. The result? More and more bail agents going out of business.

“It’s dog eat dog out there,” Renshaw said. “If you don’t keep up with everyone else, you’re going under, fast.”

There are about 2,000 bail agents in California (by contrast, there are about 300,000 real estate agents). Agent Rich Nosenzo, of Allied Bail Bonds, agreed that the business has been sullied by a “few bad apples” but said that the agents provide a valuable service.

He pointed out that upward of 90 percent of those bailed out of jail by a bail agent show up for their court dates—and that far more inmates released on their own recognizance flee from their court dates. “This is a valuable service,” he said. “But it has to work the way it was supposed to. We’re essentially babysitting these guys until they go to court, and that saves the jails money.”

He’s right, but allowing alleged criminals to be supervised by bail agents who aren’t much above the law themselves is a system ripe for corruption. The Department of Insurance reports that it has hired “several” new investigators who will be assigned, at least partially, to investigate shady bail agents, but if the past is any indicator, their impact will be minimal at best.

That’s what agent Davis fears.

"[The Department of Insurance] should come in and audit everyone’s books, no questions asked," he said. "That would clean it up fast. But let’s see if that happens."