New law threatens to shut down Baltimore's biggest bail bonds company

A new district court rule may force 4 Aces Bail Bonds out of business.

That is the claim made in a lawsuit the company filed this month against Judge Ben C. Clyburn, chief judge of the Maryland District Court. Aces wants to overturn the rule, which requires that the company (or its insurance underwriters) not only pay more than $1 million in forfeited bail bonds but also bring in the defendants who skipped bail.

The "illegal and ill advised requirement that Plaintiff both pay the bond and produce the accused . . . will totally shut down the Plaintiff's business in Maryland," 4 Aces, which is represented by attorney Kenneth Ravenell, claims in a complaint for injunction filed June 7.

The injunction was granted, saving 4 Aces while the case winds through the court. No one on either side of the dispute responded to calls and emails from City Paper, but a motion for summary judgment filed on June 19 details the dispute. Here is the background.

Bail bonds companies pledge to pay the bail set by a judge in a criminal case, but they don't collect the full amount from the defendant or his family. On a $100,000 bail, the defendant is supposed to pay a non-refundable 10 percent fee-$10,000. In reality, many bondsmen accept less than that-sometimes only 1 or 2 percent-but they owe the full $100,000 to the court in the event the defendant does not show up.

If the defendant fails to appear, the bail bondsman has 90 days to pay but often gets that extended for another 90 days for "good cause." ("Good cause means you have bubblegum on your shoe," one court insider explained.) With six months to find the skip or produce the money, the bondsman can usually count on the defendant's family (which usually has pledged grandma's house to the bail bondsman) to get the guy to court. Or, in many cases, the defendant is arrested for another crime in the intervening months. But not always.

At the end of the six-month period, the court asks the bond company for the full amount of the bond. At this point, the bond company still has 60 days to pay. After that, the court can place the bond company on an "absolute forfeitures in default" list and bar it from writing any more bails in that jurisdiction.

The bond company could get back in business either by paying the forfeited bond in full or producing the defendant.

But there was another way also: The company could dispute the forfeiture in court to delay payment for years.

Reportedly, a New York-based (alleged) drug dealer named Asa Bell fled the country in 2008, leaving 4 Aces owing a $250,000 bond. Twice, 4 Aces appealed the forfeiture to the Maryland Court of Special Appeals, and twice that court ruled that 4 Aces needed to pay up. And yet no payment was forthcoming, and yet 4 Aces continued to write bails in Baltimore City, the jurisdiction from which Bell skipped.

The Bell bond is still listed among the 39 bails on the absolute default list for Financial Casualty and Surety, Inc., one of the two bail underwriters that covered 4 Aces bonds. (Financial Casualty and Surety's total default sums up to $930,351, according to the list dated March 31, 2013. The other 4 Aces underwriter, Continental Heritage Insurance Co., lists seven defendants totaling $102,500.)

In 2011, the state legislature passed HB 682, requiring tighter time limits on bail forfeitures. In the past, if the defendant was captured any time within 10 years of the forfeiture, the court would have to refund the bond. Under the new rule, the bondsman had to pay up within that initial 90- or 180-day period or face the prospect of never getting the money refunded, even if the bail jumper is captured later. It's a subtle shift, but key for the few companies-4 Aces may be the state's only one-that face cashflow problems (which, in 4 Aces' case, could have something to do with founder Milton Tillman's federal conviction on tax charges, and subsequent foreclosure actions on dozens of properties held by the company).

Still, just about every bail bond company finds itself on a forfeiture list at some point, says Brian Frank, president of Lexington National Insurance Corp., which is associated with 4 Aces rival Fred Frank Bail Bonds. Frank agrees with 4 Aces that "pay and produce" "was not the proper interpretation of the law."

So many issues-from clerical errors to defendants fleeing to other nations without extradition treaties-could make it impossible for a bond company to capture and return the defendant. And since small errors crop up regularly, under the district court's interpretation of the law eventually every Maryland bail bond company will be put out of business, he says. "If you look at the intent of the law that was passed, you will not see anything to the effect of pay and produce."

The law itself does not appear to require a fugitive be returned along with the money on a forfeited bail. But a provision of Maryland Procedure, cited in a letter to Ravenell from David Durfee Jr., the district court's executive director of legal affairs, says the court shall strike a bail forfeiture only if the bond company paid the forfeiture in the allotted time period, the defendant is returned, and the arrest . . . occurs more than 90 days after the defendant skips bail.

Citing the ongoing litigation, Durfee declined to elaborate.

In its motion for summary judgment, 4 Aces says Durfee double-crossed the company by saying in late May correspondence that no action would be taken until 4 Aces' legal objections were analyzed. But instead, the district court cut off 4 Aces' ability to write new bonds on June 6. "Plaintiff only learned of this disqualification at approximately 5 p.m. . . . after the courts had close [sic] for business [i.e. when they attempted to post bond for an accused and were denied the right to post the bond]. Had plaintiffs known that Defendants were not going to honor their agreement, they would have made payment on each bond forfeiture by May 31."

Attached to the motion for summary judgment is an affidavit by Milton Tillman III, 4 Aces' owner, which says that as a result of Durfee's interpretation of the law, "4 Aces has been completely shut out of the bond-writing business. Consequently, 4 Aces will no longer have any revenue stream."

That means 26 full-time and four part-time workers can't be paid, and all the bonds the company has written lately cannot be serviced. That's 37,000 active bonds with more than $300 million in liability, Tillman states.

One bondsman who writes under 4 Aces says the company is still in business as of June 20, and the offices seemed to be open for business that same day.

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