Two Bondsmen Shot in Louisiana

Louisiana media report the shootings of two local bondsmen who were attempting to apprehend a fugitive. According to reports, bondsmen Veronica King and Eddie MacKenzie were attempting to pull a bond on client, Arthur Basaldua. The bondsmen were talking to Basaldua when he pulled a gun on MacKenzie and King and fired at them several times. King was shot once in the thigh, once in the shoulder and a third bullet grazed her forehead. She was taken to a local hospital. Her condition is unknown. MacKenzie was shot once in the lower backside but refused medical treatment. A manhunt is underway conducted by local law enforcement and the FBI. A warrant has been issued for Basaldua’s arrest for two counts of attempted first-degree murder.

4th Postponement in Jackson/Dotson Trials

The Jackson and Dotson trials were scheduled to begin today and next Monday. Last Friday, joint motions were filed in both cases by US Prosecutor Dean Hoag. The motions state that all parties are not ready for trial, new indictments are expected, and the motions ask for another setting 30 days from now.

Previous Coverage below.
Lee Jackson held on federal charges 4/1/2006
Dotson Arrested/New Charges for Jackson 6/2/2006
Dotson/Jackson trial postponed 6/8/2006
Arraignment 6/13/2006
Trial postponed again 10/28/2006
Dotson Freed on Bond 11/15/2006
Jackson Accused of Another Murder Plot 11/22/2006
January Trial Date Postponed 1/22/2007

DIFP Issues Statements of Charges Against Bail Corporations

The Department of Insurance (DIFP) has issued statement of charges and show cause orders on why cease and desist orders should not be granted on the following bail bond companies:

1) 1A Bail Agency, LLC, Organizers Shawn Wilhite of Warrensburg, MO and Patricia Wilhite of Clinton, MO, organized July 2003
2) A&G Worldwide Investments, Inc., President-Wayne O. Anderson II of Kansas City, MO, organized May 2000
3) A Stan Moreland Bonding Services, Inc., President-Stan Moreland of Warrensburg, MO, organized October 1997
4) Absolute Surety, Inc., President-David Brackett of Lebanon, MO, organized March 1997
5) MCB Investment Corporation, President-Harold McBee of Chillicothe, MO, organized December 2004

In the statement of charges, the DIFP alleges that the above companies are operating as insurance companies without certificates of authority (RSMO 374.786), that they are operating as insurance companies without complying with the laws governing insurance (RSMO 375.158), and they have failed to obtain certificates saying the insurance laws of this state have been complied with (RSMO 375.161).

Additionally, the DIFP issued show cause orders to each company stating they each have fifteen days to respond to the cease and desist order asking for a public hearing with the Director of Insurance or the cease and desist order will be issued.

The cease and desist orders stated they must cease the three alleged violations described in the statement of charges and pay reasonable costs associated with the investigation of the matter.

Last fall, the DIFP announced it would no longer license bail bond corporations. In the meeting held with affected companies, the DIFP announced that prior administrations had allowed the licensing of corporations, but the current administration had decided it was not permissible under the current bail bond statutes and Missouri Supreme Court Rule.

SB153 Passed Out of Committee

Last Tuesday, the Senate Small Business, Insurance & Industrial Relations Committee passed a committee substitute on SB153. So far, the substitute bill is not available on the Missouri General Assembly's web site. According to the summary, the committee substitute looks to be similar to the substitute language offered by Senator Engler at the committee hearing. You can read the summary of the substitute here. Next, the bill will go to the full Senate for a vote.

Losses Continue For Bail Bond Insurer

Most insurance companies, insuring bail bond agreements, take no liability on the bond. Any losses are presumed to be absorbed by fully collateralized bonds, co-signor agreements, and/or the company writing the bond. Here’s what happens when indemnitors fail to cover the losses. Bancinsurance wrote reinsurance policies for a bail bond agency, which means a bail bond company purchased insurance against loss, and that insurance policy was reinsured by Bancinsurance. According to Bancisurance, the reinsurers were not required to pay losses unless there was a failure of the bail bond agency. As the bonds were to be 100% collateralized, any losses paid by the reinsurers were to be recoverable through liquidation of the collateral and collections from third party indemnitors. In 2004, auditors for the company withdrew their audits for the years 2001 through 2003 and was unable to complete the 2004 audit citing that the auditors could not rely on the representations of management regarding the bail bond program. NASDAQ responded by temporarily de-listing the company. Bancinsurance hired new auditors, amended its filings, and hired a team of lawyers to investigate how it could recoup on its losses.

Last week, Bancinsurance reported 4th quarter losses, reporting that it continues to pay losses on its discontinued bail bond judgment policies. Bancinsurance reported the following information to the Securities and Exchange Commission (SEC) on its 2006 annual report: Beginning in 2001 and continuing into the second quarter of 2004, Bancinsurance participated as a reinsurer in a program covering bail and immigration bonds issued by four insurance carriers and produced by a bail bond agency. The liability of the insurance carriers was reinsured to a group of reinsurers, including Bancinsurance. They assumed 15% of the business from 2001 through 2003 and 5% of the business during the first half of 2004. This program was discontinued in the second quarter of 2004. Based on the design of the program, the bail bond agency was to obtain and maintain collateral and other security and to provide funding for bond losses. The bail bond agency and its principals were responsible for all losses as part of their program administration. The insurance carriers and, in turn, the reinsurers were not required to pay losses unless there was a failure of the bail bond agency. As the bonds were to be 100% collateralized, any losses paid by the reinsurers were to be recoverable through liquidation of the collateral and collections from third party indemnitors. In the second quarter of 2004, the Company came to believe that the discontinued bond program was not being operated as it had been represented to the Company by agents of the insurance carriers who had solicited the Company’s participation in the program, and the Company began disputing certain issues with respect to the program, including but not limited to: 1) inaccurate/incomplete disclosures relating to the program; 2) improper supervision by the insurance carriers of the bail bond agency in administering the program; 3) improper disclosures by the insurance carriers through the bail bond agency and the reinsurance intermediaries during life of the program; and 4) improper premium and claims administration.

The reports furnished by Bancinsurance do not identify the bail bond company, if it is still in business, or why the company was unable to cover its losses. My guess is that the bail bond company was writing irresponsible bail, suffered losses, and the cosignors and collateral were either insufficient or nonexistent.

Unsatisfied Judgments-Pending Disciplinary Actions

The bail bond unsatisfied judgment list is compiled by the DIFP and the Missouri Office of State Courts Administrator. The following companies/general agents appear on the current list. The list is distributed to local courts via electronic means.

1) Billy Corn Sr., general agent, Cassville, MO-1 judgment
2) L&C Investment Group, president-Douglas Cheatham of Blue Springs, MO- judgment appealed, case in litigation
3) Sherry Goodin, inactive general agent of Marshall, MO-8 unsatisfied judgments
4) C&M Bonding, president-Cody Ice of Houston, MO-1 judgment

The following agents/companies appear in the section listing pending disciplinary action: A Way Out Investments, Ozell Scott, Kenneth Strange, 1A Bail Agency LLC, A Aarons Bonding, A Stan Moreland Bonding Services Inc, A&G Worldwide Investments Inc, A&J Bail Bonding LLC, Absolute Surety Inc, MCB Investment Corp, and David McKinney

Note: The judgment list does not provide the address of the company or corporate officers. I added the address, corporate presidents, and corporate status using the Missouri Secretary of State business database as well as the DIFP licensing information.

SB153 Heard in Committee

The Senate Small Business, Insurance and Industrial Relations Committee met last Tuesday and heard testimony on SB153. There were bondsmen in attendance speaking for and against the bill. Speaking in favor of the bill were the bail association leadership and its lobbyist. Speaking against the bill were several individual bail bond agents and general agents. A substitute bill was offered to the committee by Senator Engler. The substitute has not been adopted by the committee. The committee could choose to adopt the sub, the original bill, adopt its own substitute, or simply do nothing. Below is a synopsis of the substitute offered by Senator Engler.

1) The bill raises the CD required to become a general agent from $10,000 to $20,000 and then the DIFP can require the CD be increased to $40,000 based upon regulation. Whether a company has 1 agent or 51, it will be required to assign $20,000 to the State of Missouri.
2) The DIFP must notify the general agent of a notice of forfeiture within 48 hours of receiving notice from the courts. In my opinion, the language is vague and does not specify if this notice is a bond forfeiture hearing or an unsatisified judgment.
3) The Department shall include a photograph on the bail bond license. The bill does not say how this picture will be obtained or what the additional licensing cost might be.
4) An agent cannot write bonds without noticing the department of the name, address and telephone number for each employer he/she works or operates as an independent contractor. I don’t know why the department would need to know an agent's employment information unless it is related to his/her bail bond license. The licensing application/renewal form requires that a bail bond agent disclose the general agent’s name, address and license number in addition to the general agent's original signature. The law already requires a signed affidavit stating the agent does not work for a political subdivision of the State of Missouri. Why would the DIFP need to know if a bail bond agent sells Avon, works at a grocery store, or has contracted to roof the neighbor’s house?
5) If a bail bond agent goes to work for a new company he/she must file an affidavit with the DIFP and the new general agent, swearing “that to the best of their knowledge, there are no outstanding premiums owed at the time of the appointment.” First of all, notice the words "must" and "their." In order to go to work for a new company, you MUST file an affidavit saying there are no outstanding premiums owed. I think there is very little possibilty an agent could swear under oath that no one owes money to the agent and/or the company. And who are they? The writers of this bill use the possessive plural pronoun "their" to indicate that more than one person owes this money. Secondly, the section does not tell to whom the money might be owed. Premium owed the agent? The former company? The new company? All of the above? Additionally, the section does not differentiate between uncollected or uncollectible premium in the form of credit extended to clients and collected premium not turned into the company. The next sentence of this section states that IF premiums are owed (it doesn’t specify to whom the money is owed) and the agent does not satisfy this obligation, the former general agent may file notice, under oath, with supporting documentation, stating that the bail bond agent has failed to satisfy his/her obligation. Then upon receipt of this notification, the new general agent MAY cancel the authority of his/her new agent. IF the new general agent cancels the authority of the new agent, the cancellation SHALL remain in effect until all of the alleged premiums due the former general agent are paid in full. That is a lot of confusing language. Misappropriation of premium is already against the law. There are already remedies for a company who alleges an agent misappropriated funds. A company can file a complaint with the DIFP, file a complaint with the local prosecutor, or sue the agent for the amount due.
6) Gives the Director of the DIFP the power to suspend, revoke, refuse to issue, refuse to new, censure, or limit a license. The DIFP will have the power to investigate wrong-doing, will be the hearing body for complaints arising from its own investigations, and then will have the power to revoke licenses based upon its own discretion. Presently, the Director must file a complaint with the Administrative Hearing Commission to discipline a license holder. If, after a hearing, the Commission finds cause, the Director may discipline the licensee.
7) Keeps the 15 year felony clause, but adds that a license MAY be refused, revoked, etc. if an applicant has been convicted of: any dangerous felony defined by section 556.061, RSMo, any felony crime of assault, any felony crime that results in the serious physical injury or death of another person, any felony crime against the administration of justice, or any felony of which deceit or fraud is an element of the offense. Examples of felonies not included in this language would be manufacturing of meth, possession of child pornography, and distribution of drugs.

The committee meets on Tuesdays. They may (or may not) vote this substitute or another form of the bill out of committee and to the floor of the Senate. Check here to track the progress of this bill.

I know there are some who think I am being nit-picky about the language in this bill. Please remember the frustration and confusion caused by some poorly constructed language in the past. Here is a sample of some of the bail legislation passed in 2004. Try to explain these passages to a new agent in the field.
374.702(4) A person licensed as an active bail bond agent shall hold the license for at least two years prior to owning or being an officer of a licensed general bail bond agent. (Please, someone tell me how you can own a general agent!)
The DIFP can cause a complaint against any license holder believed to be "acting in the capacity of an attorney at a trial or hearing of a person for whom the attorney is acting as surety." [RSMO 375.755(11)] Go ahead, try to figure out why a bail agent can't practice law without a license at a trial or hearing for a person whose bond was written by an attorney.

Committee Hearing on SB153

Senate Bill 153 will be heard by the Senate Small Business, Insurance and Industrial Relations Committee next Tuesday, February 27th, at noon. This is the DIFP bill which has 7 pages of bail bond language included in the bill. Here’s a link to the whole bill as well as link to just the bail section.

To refresh your memory, here is what is presently included in the bill:

1) Doubles Your CD-Increases the general agent's assigned CD from $10,000 to $20,000 and allows by regulation, the Department to increase the CD to $100,000.
2) Dollar for Dollar-Includes a provision which by-passes filing with the local courts and establishes a system to report to the Office of State Courts Administrator. The language states that each general agent (but not insurance companies) file an affidavit saying that his/her total net assets exceed the aggregate (total) amount of bonds written. This provision creates a “dollar for dollar” system and assumes that 100% of your bonds will result in judgment. Insurance companies are exempt from this provision and only have to prove “solvency” to the local court. Additionally, a fee is associated with this process and that fee has not been disclosed in the bill.
3) Former General Agents Given Power to Revoke Your License-If you leave a company, your former general agent can revoke your authority for any outstanding premium. The bill does not distinguish whether this is collected premium owed the company or uncollected, (or worse, uncollectible) credit that you have extended to clients. This provision was borrowed from the Florida statutes, with two important differences. First, the Florida statute includes a due-process provision which stays the cancellation of authority until the Department investigates the allegations of the former general agent. Without this provision, a former general agent can deprive an agent of the right to earn a living without due process of law.
4) EVERY Forfeiture Must Be Noticed by Department-Upon notice by the court, the Department must notify general agents of a bail bond forfeiture within 48 hours. Courts already report unsatisfied judgments. Since most forfeitures are set aside and do not result in judgment, it seems quite onerous for the Department and the courts to notify for every forfeiture in the state.
5) Felon Language-Allows the 15 year felony clause, but adds that a license MAY be refused, revoked, etc. if an applicant has been convicted of: any dangerous felony defined by section 556.061, RSMo, any felony crime of assault, any felony crime that results in the serious physical injury or death of another person, any felony crime against the administration of justice, or any felony of which deceit or fraud is an element of the offense. Felonies not included in this language would be manufacturing of meth, possession of child pornography, and distribution of drugs.

Here are the committee members who will hear the bill:

John Loudon, 7th, Chair , Part of St. Louis County
Luann Ridgeway, 17th, Vice-Chair, Clay County
Dan Clemens, 20th, Counties of Christian, Douglas, Webster and part of Greene
Scott Rupp, 2nd, Lincoln County and part of St. Charles County
Delbert Scott, 28th, Barton, Benton, Cedar, Dallas, Henry, Hickory, Pettis, Polk, St. Clair
Carl Vogel, 6th, Callaway, Cole, Miller, Moniteau and Morgan
Victor Callahan, 11th, Part of Jackson
Rita Days, 14th, Part of St. Louis County
Tim Green, 13th, Part of St. Louis County

How you can be heard on this bill:

Contact your senator by letter, personal visit, or phone call, especially if your senator is on this committee. Need help locating your senator? Go to find my Senator. You can attend the hearing next Tuesday and tell the committee how you feel about this bill. If you think this language would be detrimental to your business, tell your Senator to strip this language from the bill.

Good Felony, Bad Felony

Are we returning back in time to the days of licensing bail bond agents by using the “good felony, bad felony yardstick?” It seems that may be the case. In a ruling issued by the Department of Insurance (DIFP), Gerald Franks, who pleaded guilty to a Class C felony one year ago, has retained his general bail bond license. In an order dated February 1, 2007, the DIFP suspended the Frank's license for three days. Franks entered a plea of guilty in February 2006 for possession of a controlled substance in Daviess County, MO. He was placed on five years supervised probation. In May, the DIFP filed a complaint to discipline Frank’s license. On December 4th a joint motion was filed before the AHC stipulating the DIFP’s grounds for disciplining Frank’s license. The AHC ruled there was cause to discipline Frank’s license. Later, the DIFP held a disciplinary hearing which resulted in an order suspending Frank’s license for 3 days.

This seems to be a drastic shift in policy by the DIFP. Previously, the Department appeared decisive in its stance against felons in the bail bond business. The DIFP issued several strongly-worded news releases regarding the issue. In November 2005 former director Dale Finke said in a news release, “The Missouri Supreme Court rules make it clear that convicted felons are not qualified for surety on bail bonds.” One month later, in another release, the Director said, “Individuals working in this capacity should, and must, uphold the law themselves.”

Previously, the DIFP had said that according to RSMO 374.715, Missouri bail bond agents and general agents could not be felons because they must meet the qualifications for bondsmen as required by Missouri Supreme Court rule. Supreme Court Rule 33.17(c) says: A person shall not be accepted as a surety on any bail bond unless the person has not, within the past 15 years, been found guilty of or pleaded guilty or nolo contendere to any felony of this state or the United States; or any other crime of this state or the United States involving moral turpitude, whether or not a sentence was imposed.

Stun Gun Bill Heard in Committee

A hearing was held last week in the Senate Judiciary Committee on the stun gun bill. The bill is SB61 sponsored by Senator Yvonne Wilson. The bill requires a permit to purchase a stun gun or taser. The permit is the same permit required to purchase a concealable firearm. The permit would be obtained by application to the sheriff in your county of residency. The qualifications of the permit are:

1)At least 21 years old and resident of the state for 6 months.
2) Has not pled guilty to or been convicted of a felony of any state or of the United States other than a crime classified as a misdemeanor under the laws of any state and punishable by a term of imprisonment of two years or less that does not involve an explosive weapon, firearm, firearm silencer, stun gun or taser, or gas gun;
3) Is not a fugitive or charged with any felony or misdemeanor involving an explosive weapon, firearm, firearm silencer, stun gun or taser, or gas gun.
4) Has not been dishonorably discharged from the armed services.
5) Is not known to be habitually intoxicated or in a drugged condition.
6) Has not been adjudged mentally incompetent or been committed to a mental health facility.

Another Trial Setting for Jackson/Dotson

Bondsmen Virgil Lee Jackson and Glen Dotson have been issued new trial dates. Jackson's trial has been set for March 19th and Dotson's has been set for March 26th. This is the fourth trial setting for these cases.

During the last continuance, Dotson's attorney wrote in a motion that they have been informed that the US government may seek a second or superseding indictment concerning a potential RICO violation. If this were to occur, the waiver states, Dotson and/or Jackson could be facing additional charges causing an additional trial.

Previous Coverage below.
Lee Jackson held on federal charges 4/1/2006
Dotson Arrested/New Charges for Jackson 6/2/2006
Dotson/Jackson trial postponed 6/8/2006
Arraignment 6/13/2006
Trial postponed again 10/28/2006
Dotson Freed on Bond 11/15/2006
Jackson Accused of Another Murder Plot 11/22/2006
January Trial Date Postponed 1/22/2007

Zero-Tolerance for Tardiness

Attention all continuing education students taking classes for bail bond license renewal

The State of Missouri, Department of Insurance (DIFP) has instituted a zero-tolerance policy in regard to tardiness. In a memo dated February 8th, the DIFP directed all continuing education providers to flunk all students who were tardy after lunch or breaks. The memo states: “It does not matter how late the student may be, whether it is 5 minutes or an hour, a Certificate of Course Completion cannot be given to that person. You should immediately make the person aware that they will not receive credit if they choose to stay for the remainder of the class.” In other words, there is no such thing as an excused tardy. If you are five minutes late to class, credit will not be awarded. You may not stay late and write on the chalk-board to make up your time. The memo further warns instructors that failure to comply with these policy guidelines will result in revocation of provider approval in Missouri.

I think the Missouri General Assembly should adopt a zero-tolerance for tardiness in the chambers. (Those warning chimes in the halls of the Capitol are not just there to make your ears ring.) And while we are at it, sounds like a good policy for the workplace, too. Maybe Governor Blunt should follow the DIFP’s lead; it could save the State lots of money if every employee who returned late from lunch or break would not receive credit if they chose to stay the remainder of the day.

Here are some tips to help you successfully complete your state required training. (Remember, if you are late you will fail the class and forfeit your $150 fee.)
1) First and foremost, synchronize your watches. You don’t want to fail a class because your instructor’s watch runs fast.

2) Limit fluid intake. Long lines at the bathroom during the 10-minute break could cost you the class.
3) If you MUST go to the bathroom, dart to the bathroom as soon as the instructor releases you. You don’t want to be in line behind someone who ate a greasy burger for lunch.
4) DO NOT eat lunch at a sit-down restaurant. You have no control over how soon your food will be served. Eat fast-food. Of course this may cause problems with number 3. You could also fast for the day, along with limiting fluid intake.
5) Weigh all emergency phone calls against the cost and time in the class. (If they are already dead, it can certainly wait.)

AHC Denies License to Convicted Felon

The Administrative Hearing Commission (AHC) has issued a ruling on the two-year-old case involving the licensing of James Gillihan. In Novemer 2004, the Department of Insurance (DIFP) denied Gillihan’s bail bond agent license application because he is a convicted felon and for using fraud or misrepresentation in applying for his license. Gillihan appealed the DIFP’s decision. According to the AHC record, Gillihan was a licensed bail bond agent from March 1989 to March 1997 and again from November 1999 to November 2000. He also held a general bail bond license from April 1996 to April 2000.

According to the record, Gillihan pleaded guilty in US District Court in October 1999 to aiding and abetting the use of a firearm during a crime of violence. He was sentenced to five years in prison and fined 1.2 million dollars. The AHC record also reflects that during the plea hearing, Gillihan testified that he took diamonds from a client that he knew were obtained through jewelry store robberies.

When Gillihan applied for his license in 2004, he claimed that he did not know the diamonds were stolen, contrary to his previous testimony. The AHC reports that Gillihan argued that his license should be granted because the DIFP had granted licenses to other felons and that his felony was not violent.

The AHC denied Gillihan’s license stating, “In exercising our discretion as to whether to grant or deny the application, we look to statutes on similar subject matter for guidance. We consider the nature of the crime, its relation to the license, how long ago Gillihan committed it, his conduct since that date, and other evidence. We also bear in mind that a license represents the State's seal of approval that an applicant is fit to practice a licensed profession and that applicants who have erred in the past should acknowledge guilt and embrace a new moral code.” The AHC also said in its ruling ….. supporting his clients’ criminal enterprises by purchasing their spoils weighs heavily against fitness for a bail bond license. (Emphasis added)

Note: The AHC made its ruling under the law that existed in 2004, before the new bail bond laws went into effect.

Newest Bail Bill: No Felons...For Now

Has the bail bond association turned over a new leaf? I was really surprised to read the latest version of the bail bond association’s proposed legislation in SB459, introduced Wednesday by Senator Shoemyer-D. Although it looked very similar the association’s language in the two insurance bills, (SB153 and HB586) I immediately noticed a change. The association’s new bill repeals the VERY controversial 15-year Lee Clause allowing felons to obtain a bail bond license. The association passed the Lee Clause in a 2004 bill sponsored by Representative Bob Behnen-R, Kirksville. (Back in 2004, the association was led by Jack Allison, Lee Jackson and a few others. Jackson wanted the law amended so that he could get a general bail bond license despite his felony convictions. Behnen’s bill created the 15-year felony clause which allowed Jackson and others with felony convictions to get licensed. It was dubbed the Lee Clause in honor of Jackson’s accomplishment. After the bill became law, Jackson was indicted in federal court on new felony charges for conspiring to murder a competitor and being a felon in possession of a firearm.)

The bail bond bill, (SB459) is sponsored by Allison’s senator, Wes Shoemyer of Clarence. Senator Shoemyer, who took office last month, ran a very aggressive campaign against former state representative Bob Behnen last fall. His campaign televised ads criticizing Behnen for working with felons in the bail bond industry and passing legislation to allow them to write bonds. Shoemyer’s introduced bill repeals the Lee Clause, at least for now. I am told that association lobbyist Steve Carroll opposed the repeal of the Lee Clause, although Shoemyer said he could not include the language because he had just run a campaign criticizing Behnen for the felon provision.

Shoemyer doesn’t support legislation allowing felons in the bail bond business, but he is sponsoring legislation promoted by an association president who hires felons. Allison, who has been president of the association since 2003, lobbies for the association at the Capitol. Until his federal indictment and incarceration, convicted felon Lee Jackson worked for Allison. Donald Christian, convicted of drug charges and facing new drug charges, also works for Allison. Greg Tetro, another Allison agent, is currently under federal indictment on drug charges. Last summer, the Joplin Globe ran a series of articles concerning Jerry Mitzner, a convicted felon in the bail bond business. Mitzner works for Allison. The Globe reported that Allison claimed that the state is wrong about felons being bond agents. He said he knows several who had felony convictions in their backgrounds, that they had paid for their mistakes, and that it was all perfectly legal.

Allison has shown through his statements to the press, his past legislation, and the people working for his bail bond company that he has supported felons in the industry. So, we shall see if he and the association have turned over a new leaf or if they are using Shoemyer and intend to restore the felony language as the bill works its way through the legislature. Watch this bill and see where they stand…..

Another Bondsman Faces Federal Charges

Another Missouri bondsman is facing federal charges. I recently learned that Gregory K. Tetro of Columbia, Mo. is facing two federal charges for conspiracy to possess marijuana and using a communications device to distribute marijuana. A change of plea hearing is scheduled for March 28th in the US District Court, Jefferson City.

Tetro currently works under the authority of bail association president Jack Allison of Mexico, MO. Tetro joins the ranks of two other licensed agents facing federal charges. Virgil Lee Jackson (who also worked for Allison at the time of his arrest) was arrested in October 2005 for attempting to murder competitor Jerry Cox and being a convicted felon in possession of a firearm. Bail bond agent Glen Dotson, who works for George Dodge of Columbia, was later arrested for allegedly furnishing the gun to Jackson. Both are awaiting trial on those charges.

Another one of Allison's agents, Donald Christian, was charged with attempting to possess a controlled substance in Lincoln County last November. Christian was previously convicted of drug charges in 1998. He obtained his bail bond license in March 2005, after the 15-year felony clause took effect. It is not known how he managed to get his bail bond license considering the recent felony conviction. After his November arrest, the Deparment of Insurance filed a disciplinary complaint against Christian. That hearing is scheduled for April 2, 2007.

No pending disciplinary charges have been filed by the Department of Insurance at this time against Tetro or Dotson. There are disciplinary charges pending against Jackson.

Bonding Company Files Suit Against Judge & Prosecutors

L&C Investments, Inc., and its president, Doug Cheatham, have filed a federal lawsuit against a presiding judge and Buchanan County officials. Named as defendants in the suit are the Honorable Patrick Robb, the Presiding Judge of the Fifth Circuit Court for the State of Missouri, Dwight Scroggins, Jr., the Prosecuting Attorney for the Buchanan County, Dawn Marie Williams, a former assistant Buchanan County prosecuting attorney, Matthew Liles, the current assistant Buchanan County prosecuting attorney, and criminal defendant Mark A. Wilson.

The lawsuit arises from a bond written by L&C for Mark Wilson. Wilson entered a plea of guilty in Buchanan County and was granted a stay of execution on his sentence to Missouri Department of Corrections. Wilson failed to surrender himself to the sheriff to begin his sentencing. A bond judgment was ordered and L&C was ordered to pay the $100,000 bond. L&C appealed the decision and lost.

The complaint alleges conspiracy, 14th amendment claims, and modification of contract. In the conspiracy charge, L&C alleges the defendants used knowledge of a pending federal indictment to “vex” Wilson into entering a plea of guilty to maintain jurisdiction in Buchanan County causing the bail bond forfeiture. In count II of the complaint L&C alleges that defendants failed to notify the bondsman of the modification of the pre-trial bond, failed to act on established procedures and rules regarding the modification of bond conditions after conviction, and defendants allowed or suggested Wilson a stay of execution of a Missouri prison sentence, in direct violation of Missouri Rules of Criminal Procedure and Missouri Revised Statutes. The complaint also alleges that the court modified the contract with L&C by allowing Wilson a 30-day stay on his sentence at Missouri DOC, which L&C contends is a post-trial matter not covered by his pre-trial bond.

The case is related to the case filed in December by L&C against the Missouri Department of Insurance. Both case have been filed in the US District Court, Western District of Missouri.

Earlier coverage of this case here:
Appellant Court Rules Against L&C
MO Supreme Court Denies L&C Case
DIFP Files Complaint Against L&C
Press coverage from KMBC-9

New Bail Bill Filed in House

A new bail bond bill (HB586) was filed in the Missouri House by Representative Brian Yates. It is the same as SB153 filed by Senator Engler last December. Whether you are a general agent or an agent, you will be affected by these changes. If you have an opinion to share, contact your senator and representative. If you think these changes would be harmful to your business ask them to remove the bail language from these bills.

Here is my take on the bail bond language in these bills:

■SB153 and HB586 increase the CD required by the state from $10,000 to $20,000 then allows the DIFP to quintuple the CD to $100,000 based on some future regulations that have not been written yet. Whether a company has 100 agents or 1 agent, it will be required to file the same amount in CDs, creating a higher percentage of overhead for small or family-owned bail bond companies. It creates other new regulatory fees without disclosing what the cost will be.

■The bill does not fix the problem we have with felons in the bail bond business. It does not remove the 15-year felony clause. This bill continues to allow the licensing of convicted felons. Under this bill, felons can be licensed as bail bond agents as long as they do not meet the statutory definition of “dangerous felon.” Examples of felons not covered by this statute would be those convicted of possession of child pornography, possession, manufacture, or distribution of drugs, felony stealing, and felon in possession of a firearm. The bill gives only lip-service to the problem by requiring a criminal background screen which is already being required by the Department. Instructs licensees arrested for a felony to report the arrest to the Department but does not instruct the Department on how to act upon this information.

■The bill transfers the bail bond qualification process from the local judges and places it upon the Office of State Courts Administrator. The cost associated with this filing is not disclosed. Although the nation-wide bail bond loss rate is 4%, but the bill requires a bail bond company to have assets to cover 100% of the bonds in force. This provision creates an unfair advantage for insurance companies, who are exempt from this provision.

■Requires that a bail bond agent wishing to leave a company, file an affidavit saying there are no outstanding premiums owed the company. The former general agent can cancel the authority of his former agent by filing an affidavit with the Department of Insurance. This provision was borrowed from the Florida statutes, with two important differences. First, the Florida statute includes a due-process provision which stays the cancellation of authority until the Department investigates the allegations of the former general agent. Without this provision, a former general agent can deprive an agent of the right to earn a living without due process of law. Secondly, Florida does not allow credit bonds, so any outstanding premiums would have been collected but unreported to the company. However, since Missouri allows agents to extend credit to clients, this provision could be applied to uncollected or uncollectible premiums owed both the agent and the company. Misappropriation of premium is already against the law. If an agent has misappropriated bail bond premium, there is already legal remedies for the company. The company can file charges with the local prosecutor, file a complaint with the Department for misappropriation of premium, or sue the agent for the premium.

■ Requires the Department to notify general agents of bail bond forfeitures within 48 hours. I assume the drafters of this bill meant to say upon notice of unsatisfied judgments, the Department must notify general agents. Courts do not routinely notice the Department of a “notice of forfeiture.” Since most forfeitures are set aside and do not result in judgment, this language creates the onerous task of notification of forfeitures by courts and the Department even though forfeitures rarely result in unsatisfied judgments. (Unpaid judgments are already reported to the Department by law.)

■Requires the Department to issue a photographic identification but does not disclose how the picture is to be obtained or what increased cost will be.

CDT Interviews Jetton About Bail Law

Jason Rosenbaum of the Columbia Daily Tribune Politics Blog interviewed House Speaker Rod Jetton concerning felons in the bail bond business. In answer to Rosenbaum’s question concerning allowing felons to have a bail bond license, Jetton answered, “…. people with felonies shouldn’t have bail bond licenses..” Jetton went on to say that he would have to read the language before deciding how to vote. The Tribune also interviewed Senator Frank Barnitz who said, ““I absolutely don’t think that felons should get bail bond licenses.”

The Columbia Tribune has been following the issue since the Missouri Senate race between newly elected Senator Wes Shoemyer and former Representative Bob Behnen. Shoemyer televised ads criticizing Behnen’s role in passage of the bill in 2004 which, among other things, allowed convicted felons to become bail bondsmen. (Behnen lost the Senate race to Shoemyer in November 2006.) The Lee Clause (SB1122) that Shoemyer criticized was promoted by the bail association while Lee Jackson was in a leadership position. Jackson had been denied a general bail bond license because of his previous felony convictions. After passage of the bill, Jackson applied for his general bail bond license which was later denied. The same year that the bill became law, Jackson was arrested by the ATF for allegedly conspiring to murder his competitor, former state representative Jerry Cox. Jackson awaits trial on those charges. For a comprehensive look at the events surrounding the passage of this bill, see my post “Law and Sausage.”

Unsatisfied Judgment List

The bail bond unsatisfied judgment list is compiled by the DIFP and the Missouri Office of State Courts Administrator. The following companies/general agents appear on the current list. The list is distributed to local courts via electronic means.

1) Billy Corn Sr., general agent, Cassville, MO-1 judgment
2) L&C Investment Group, president-Douglas Cheatham of Blue Springs, MO- judgment appealed, case in litigation
3) Sherry Goodin, inactive general agent of Marshall, MO-8 unsatisfied judgments

The judgments against David McKinney, A Way Out Investments, and A Aaron’s Bonding have been dropped from the judgment section of the list. However, these companies now are listed in the section dealing with pending disciplinary action.

Note: The judgment list does not provide the address of the company or corporate officers. I added the address, corporate presidents, and corporate status using the Missouri Secretary of State business database as well as the DIFP licensing information.

DIFP Enforcement Actions

The Department of Insurance (DIFP) has filed new enforcement actions on its web site.

1) The DIFP has filed complaints against Kristin Vickers, Ulis Vickers, and U&K Investments, Inc. In its complaint, the DIFP alleges that the Vickers and their company committed fraud, misrepresentation or bribery in securing a license by claiming to be citizens of the State of Missouri when they were from that State of Kansas. The case is set for August 17, 2007.

2) The DIFP has filed a motion for remedy in the original complaint filed against Cody Ice and C&M Bonding, Inc. The motion asks the Administrative Hearing Commission (AHC) to issue an order stating that C&M and Ice are deemed to have admitted that facts alleged in the DIFP's original complaint. The DIFP quotes state regulation stating that the AHC can issue this order when respondents fail to answer the complaint within thirty days. The hearing is currently scheduled for April 18, 2007.