According to an investigation conducted by the Southern Poverty Law Center, New Orleans bond companies have changed defendants illegally high bond rates over the past twelve years. The investigation claims that 50,000 people were charged over $5 million in excessive fees.
On September 7, the SPLC delivered the complaint to the Louisiana Department of Insurance. The paperwork lists 21 New Orleans bond companies and their insurance underwriters; the complaint also states that the list of 21 is not exhaustive or complete.
“The SPLC believes most bail companies and their insurers operating in New Orleans are charging premiums in excess of what is permitted under law,” the complaint states. It also demands the LDI fine the companies and suspend or revoke their operating licenses, if the companies are unwilling to refund the premiums.
Defendants pay the bond premiums rather than the full cost of their bond, set by a judge. State law sets bond premium rates at 12% of the bond, or $120, whichever is the larger amount. The SPLC states that bond companies in New Orleans charge 13%.
Where Does The Extra Money Go?
Companies keep 10% of the bond’s face value as their profit while the remaining 3% is divided among the courts, district attorney offices, and indigent offender programs. The New Orleans Advocate reported that those fees jumped from 2% to 3% in 2005, and the extra 1% Is earmarked for Orleans Parish Criminal Court.
The SPLC argues that the hike has been passed on to low-income defendants.
SPLC staff attorney Micah West said in a statement, “These companies have flouted state law and cheated tens of thousands of poor people and their families out of millions of dollars. Such blatant financial abuse is particularly egregious when it’s being carried out as part of the justice system and under the nose of the courts.”
New Orleans Bond Companies Raising Complaints
This complaint is the latest in ongoing efforts among civil rights groups to reveal the costs of the city’s criminal justice system, as well as the disproportionate impact among lower-income people of color.
In January, the Vera Institute of Justice found a widely disproportionate bail system which significantly affects low-income Black citizens of New Orleans, and which costs taxpayers millions. On any given day in 2015 alone, 558 people were placed in jail because they could not make bail or pay the full amount of their fines and fees. In total, the city collected $4.5 million on those fees; that’s great!
But it cost the city of New Orleans $6.4 million to jail people for not being able to pay.
Nearly one-fourth of the city lives below the federal poverty line, with a median income among black residents of only $26,819.57. This number is significantly lower than the median income among white residents.
The report from the Vera Institute of Justice states, “Collecting millions of dollars annually from individuals and families involved in the criminal justice system represents a siphoning of resources from historically under-resourced black communities. The enormous cost to people to extract a relative penny raises serious questions about whether charging users is worth it, let alone appropriate given that it leads to jailing those who can’t pay.”
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