Following fees and forfeitures: Where do bail funds end up in NYC?

While attacking state bail policies, New York City Mayor Bill de Blasio called the current system “fundamentally broken.” He said judges should be required to consider the danger posed by releasing a defendant before deciding to authorize bail. But he has also supported the City Council in starting a charitable fund, which will bail out defendants accused of minor, nonviolent offenses – a population lawmakers contend all too often winds up in jail simply because they cannot afford bail.

Despite discussions about who cannot afford bail fueling a push for reforms, the current bail process, particularly how much money is involved and where it ends up, remains poorly understood. Neither the city or the court system follows the flow of all cash and bail bonds.

But after months of digging into the numbers, City & State has identified figures on how much bail gets funneled into the city’s general fund and broad estimates on how much law enforcement officials believe the city is owed in unpaid bail bonds.

Last fiscal year, the city’s general fund received $2.49 million from the two major bail-related sources: fees levied on bail when the defendant is convicted of a crime and bail a judge decides has been forfeited to the city because a defendant did not show up to court or abide by other conditions imposed on them, according to the New York City Independent Budget Office.

Based on information provided by three of city’s five district attorney offices in early 2016, the DAs have initiated bail bond forfeiture cases for $1.42 million in bail bonds they believe must be paid.

Even though $1 or $2 million amounts to a fraction of the $75 billion budget passed that year, Steve Zeidman, a professor at CUNY Law School said it’s part of a larger, “staggering” $32 million the city courts collected in other fines and surcharges assessed by the criminal justice system in 2014.

“Information keeping, let alone information sharing, in criminal justice is pretty abysmal,” Zeidman said. “Where does the money go?”

Are the fees fair?

When judges believe someone accused of a crime may run, hide or evade the criminal justice system, the judges may order the person held in jail or set bail. Bail broadly refers to various forms of security the judge believes are needed to compel a defendant to return to court – such as  handing over property or cash until a trial is over. Often, in New York City, bail comes in two forms – cash bail and bail bonds – both of which impose financial consequences if a defendant does not abide by the judge’s orders.

Judges often authorize cash bail, in which the surety – the person posting money on behalf of a defendant – must pay the full amount of money in question. A bail bond, which is almost always set for a larger sum of money, allows a defendant who cannot afford the cash bail to hand over a smaller amount of money to a bail bond company. That company is then responsible for assuring the accused shows up to court – or paying the sum of the bail.

Once posted, cash bail is directed to the New York City Department of Finance, which sends most of the money to the city comptroller, who places it in low-risk investments. The department waits for a case to conclude, followed by instructions from the court. If the judge decides the defendant did not abide by the rules, the judge may rule the bail money be forfeited, which means it is not returned to the surety and belongs to the city. If the defendant fulfills the court’s conditions and the case is ultimately resolved in his or her favor, the money is returned to the surety in full. But if the defendant is convicted, state law entitles the city to impose a 3 percent fee for its role in administering bail before refunding the money. One percent of the bail must be directed to alternative to incarceration programs, which includes initiatives meant to keep people out of jail such as mental health services or drug and alcohol addiction assistance.

During fiscal year 2015, the city received $212,622 in alternative to incarceration or ATI fees, according to the Department of Finance. The city’s long-term revenue plan indicates it anticipates receiving $3.23 million in ATI fees by the end of the current fiscal year in June. From then until fiscal year 2020, the city projects it will take in $250,000 annually in ATI fees.

New York City Councilman Rory Lancman, who chairs the Committee on Courts and Legal Services, said he believes there are legitimate questions about the fairness of the fees. And Zeidman, the CUNY professor, said bail policies should never provide a financial incentive for convicting defendants. He described the fees as one of several  “inappropriate” ways the city’s criminal justice system takes money from largely low-income families, who he said often struggle to come up with cash for bail when a relative is arrested.

"If someone satisfies their conditions, convicted or not, why are you taking 3 percent? What exactly is the administrative cost?” he asked. “Here's a $1,000 bail. It's hard for a lot of families to make. They raise it, their son comes back to court six times, pleads guilty, gets probation. ... Forget about the sentence. If you plead guilty, you owe money. You have to pay mandatory surcharges, a crime victim's fee. … We’re already taking money from you.”

Where do forfeitures go?

A much larger pool of money – $2.28 million in fiscal year 2015 – was sent to the city’s general fund through bail forfeitures. About $665,469 of this came from cash bail payments that were deemed forfeited or dormant, according to the city Department of Finance. At the court’s order, the department sends forfeited cash bail payments to the city. The department classifies others as dormant if it has held onto the money for three years without receiving instructions from the court. The department has historically sent 60 percent of dormant bail to the state’s Office of Unclaimed Funds and 40 percent to the city.  The surety may recoup the bail if a court later deems it’s theirs. In an effort to simplify the process of recovering bail funds in these situations, the Department of Finance said it began sending the entire portion of dormant bail to Albany in April.

When a bail bond company is involved, district attorney offices may ask a judge to deem the bail forfeited if the defendant does not abide by conditions tied to his or her release. Last fiscal year, forfeited bail bond payments brought another $1.61 million into the city’s general fund, according to the Independent Budget Office.

The city divides forfeiture payments according to revenue sharing agreements the city has with district attorney offices. The IBO said it was unsure whether the $1.61 million sent to the city’s general fund reflected the final amount the city would receive after the money is shared with the four of the five district attorneys, or if that process happens later.

New York City Council budget documents indicate the district attorney offices, except the Bronx’s, have an arrangement with the city in which they keep a portion of money collected through settlements, fines, restitution and bail bond forfeitures. The administration did not respond to a request to explain the details of these arrangements.

Michelle Esquenazi, president of the New York State Bail Bondsman Association, said the trade group has repeatedly sought information about how New York uses the money, including through Freedom of Information Law Requests, but has been unable to discover many details about it. “The people of the state of New York have a right to know, where does that money go,” Esquenazi said. “Clearly, the money should go back to the communities.”

The city’s five-year revenue plan shows the city anticipates receiving $612,000 in bail bond forfeiture funds annually through 2020, which is a fraction of the $1.61 million the IBO said it took in last fiscal year. The forecast, however, assumes the city will get $1.5 million annually in forfeited cash bail, which is more than double the cash sums forfeited last year.

The sums discussed, Lancman said, are negligible when it comes to the city’s $82 billion budget and have no impact on driving criminal justice policy.

“It’s not a scenario where some measurable amount of the city’s budget is being funded by the fees collected in the bail process,” Lancman said. “There are a number of ticky tacky fees that really add up in ways that people feel, but the real crisis of our bail system, in terms of our city’s finances, are the tens of millions of dollars that we waste having people on Rikers Island who pose no threat to society and aren’t a real flight risk, but can’t make $500 or $1,000 bail.”

When forfeitures end up in court

Because neither the court system nor City Hall track court forfeiture cases, it’s difficult to gauge how much may be owed by bail bond companies that delay or do not pay forfeitures. In 2011, The New York Times reported these obligations amounted to about $2 million, based on information it received from the district attorneys. Figures that City & State received from three of the five district attorney offices in early 2016 indicate a collective $1.42 million is tied up in at least 100 bail bond forfeiture cases initiated over the past three years. That figure, however, does not include case information from Manhattan or Staten Island. Additionally, some of the cases involved could be dismissed, settled for a lesser amount or otherwise not concluded entirely in a district attorney’s favor.

Esquenazi said most forfeiture cases last six months to a year, so cases dating back to 2013 may indicate a lack of enforcement. The state Department of Financial Services,  which licenses bail bond agents, said it investigates allegations of wrongdoing, including courts’ or prosecutors’ claims that forfeitures go unpaid, and if substantiated, can take action as severe as revoking agents’ licenses.

Zeidman said a limited amount of time and resources may prevent prosecutors from prioritizing bail forfeiture cases – and doing so may cost more than the money at stake. Still, he said the idea that bail bond companies – or the insurance firms behind them – are not always meeting their obligations raises questions about the effectiveness of a system that treats them, fiscally, as a fallback for defendants who lack resources.

But Esquenazi pointed out that, once cases conclude, the court would probably not decide all of the $1.42 million in forfeiture cases must be paid. For instance, information from the Queens district attorney shows about 25 percent of concluded bail bond forfeiture cases initiated in 2013 resulted in a remission, settlement or exoneration, meaning $282,000 of the $755,000 in bail bond principal involved in the 2013 caseload was not forfeited.

Esquenazi estimated that about half of the time when forfeiture proceedings are initiated, the individual had a conflict, such as being hospitalized, that a judge will view as legitimate reason for missing court set aside the case. The other half of the time, Esquenazi said bail bond agents were usually able to track down a defendant who jumped bail within 72 hours, often by working with relatives who had secured the bond. These relatives, she said, had a vested interest in finding their family member and avoiding a forfeiture, in which case they would have to pay off whatever the bail bond company or insurance provider gave the government.

She said City & State’s figures overlooked how much taxpayers save by outsourcing a service to bail bond agents that would otherwise require a robust misdemeanor warrant squad.

“The surety bail industry is accountable pretrial release because we use the circle of love – mom, auntie, grandma – and let me tell you that $1,000 or $2,000 bail, if he doesn’t show up for court, a lot of the time, mom and grandma are so pissed that he was defiant that they’re going to help us to locate that individual,” Esquenazi said.