The Santa Clara County Bail Market

The Santa Clara Valley was once known as the Valley of Heart’s Delight because of its abundance of orchards, flowering trees and plants. While the valley is no longer known for its natural abundance, it does have an abundance of money and industry for those lucky enough to harvest. One such industry is the Bail Bond Industry. Their clientele: individuals desperate to get out of jail. Their attitude: focused on service, yet fiercely competitive. Their environment: open 24/7, day and night, ready to respond to your call.

Bail agencies are fruitful in Santa Clara County. Based upon analysis of monthly data posted online, Santa Clara County bail agencies posted 7,599 bail bonds to gain inmates their freedom in 2015. To “post bond,” the bail agency does not actually give the court any money. Instead, a bail agency hands to the court a bond (a promise) that they will pay the full amount of bail if their client skips town and does not show up to court. The 7,599 promises made last year amounted to a grand total of $198,068,815. Given that most bail agencies charge their clients non-refundable premiums anywhere from 8-10%, bail agencies made an estimated $15,845,505 to $19,806,881 from premiums in 2015. Sweet, sweet freedom.

Take a look at how the amount of bail bonds changed each month in 2015:

Monthly Bond Amounts for Bail Agencies2

The highest total number of bail bonds was posted in December. Apparently, Mama does want you home for Christmas. Interestingly enough, in my chat with one bail agent, she pointed out that November and December were some of the most difficult months for bail agencies, because Santa Clara County has a policy of releasing those with non-violent charges during “Amnesty month” as a courtesy during the holidays. This widespread release of inmates reduces the need for bail agencies to get people out of jail. However, looking at the numbers above, bail agencies look like they make their best numbers in December.

Analysis of the data also tells us that the mean bail amount posted was $26,065. The median bail amount was $15,000. This amount represents that the most common story is as follows: An inmate has their bail set at $15,000. They cannot come up with that amount of money, and so they pay a $1,500 premium to a bail agency in order to be released from jail. This story only makes sense if one considers the high cost of living in the Bay Area. To put this $15,000 amount in perspective, the median household income in Santa Clara County is $93,854. The median gross apartment rent is $1,637, totaling an amount of $19,644 per year. Imagine your household having to come up with $15,000 to bail someone out of jail. It’s almost like renting a whole other apartment for your family, for an entire year. $15,000 is a lot for the average person in Santa Clara County. It is no wonder why someone would turn in desperation to a bail agency for help.

One critique of the bail industry is that it hurts low-income clients. It is theorized that one way in which this happens is that bail agencies do not bother posting bail for inmates with low bail amounts. It may be more profitable for them to work only with those with higher bail amounts. This theory seems consistent with the numbers. Of the 7,599 bonds posted in 2015, only 289 of them were for less than $2,000 (3.8%).  The largest bail amount posted by a bail agency was $1,500,000, and the smallest was $100. Of the bail agents I’ve interviewed thus far, many also said that they would either 1) not bother with those with extremely low bail amounts, or 2) take them on but charge a minimum fee. This is because bail agents must pay their surety insurer a fee for every bail bond issued, and it is just not profitable to take on those with low bail amounts.

But back to that lovely $19,806,881 in premiums that bail agencies made last year. Sure, you say, that sounds like a lot of money, but what about the money that bail agencies lose to forfeitures? Bail bond forfeitures happen when clients fail to appear to court and the bail agency recovery agents are subsequently unable to find the person within 180 days. Forfeiture of a bail bond means that the surety insurance company that a bail agency works under must pay the court the full bail amount. Most bail agents that I have interviewed have said that bail forfeitures are rare, since their bail recovery agents are usually able track down those clients who failed to appear in court. Recovery agents are so effective, in fact, that one independent bail agent told me a story where he had been trying to find a client who had failed to appear to court for 6 months. Feeling frustrated, he finally hired a bail recovery agent to help him out. That agent found his client within half a day. The numbers confirm that forfeitures are relatively rare. In 2015, there were only 189 forfeitures of bail bonds that amounted to $3,395,000.

So can we say that bail agencies had a “loss” of $3,395,000 in 2015? Well, not exactly. A forfeiture must be paid to the court right away, but then a surety company can reimburse itself by collecting money from those who co-signed for the bond in the first place. Many bail agents I interviewed emphasized the importance of co-signors in their business. Some agencies require co-signors for almost every bail bond. Depending on the reliability of the co-signors, there may be a need for multiple co-signors. And for high bond amounts, there may even need to be collateral. Once bail has been forfeited, and the surety company has paid the court the full amount of the bond, you can be sure that they will then turn to the co-signors to pay up.

But pay up how much? Most co-signors think that if they helped pay a premium of $1,000 on a $10,000 bond, then when forfeiture happens, they will have to pay only $9,000. Not so. But according to the bail agents I’ve talked to, when a forfeiture happens, the surety company comes after the co-signor for the full amount of the bond: the $10,000. Something to keep in mind if your family member calls you from jail to help bail him out.

So it looks like it’s pretty sweet to be a bail agency. They get people out of jail, they make money on premiums, and they never really have to pay for forfeitures.

Let’s turn to the bail bond agencies themselves. Who are they? 100 different bail agencies posted bail in Santa Clara County in 2015. Of these, only 5 bail agencies made up 76% of the entire market: Aladdin Bail Bonds, All Pro Bail Bonds, Bad Boys Bail Bonds, Bail Hotline Bail Bonds, and LE Bail Bonds. These agencies dominated not only in the total monetary amount of bonds posted, but also by the number of bail bonds posted. Aladdin Bail Bonds in particular is dominating, with 32% of the market. As you can see below, the percentages of bond amounts and number of bonds posted for the most part mirrored each other.

Number of Bonds by numbersNumber of Bonds by money amount

Looking at this landscape of bail agencies leads us to one street in particular: North 1st Street in San Jose. The top four bail agencies are located here—as are many other bail agencies. LE Bail Bonds is located only 2 miles away. North First Street is prime real estate for bail agencies because of its proximity to the Santa Clara County Jail, located on Hedding Street. See the map below:

map

Bewildered family members of the incarcerated can leave the jail and stumble upon an abundant valley of bail agencies. These agencies are ready for your business.  In future posts, I will look at how exactly defendants and family members find bail agencies to work with, the competition between these agencies, and how they advertise.

 

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