The NYPBA, "New York's Department of Financial Services Snub's the New York's Criminal Procedure Law, the Legislature and Judiciary; New York Bail Constitutional Crisis Inevitable"

"The Department's Violations of The ‘Separation of Powers’ Doctrine & Interference With Bondsmen’s Private Contractual Indemnity Rights Is To Blame For the Impending Constitutional Bail Crisis In New York State"


New York, NY -- (SBWIRE) -- 03/22/2013 -- The New York Professional Bondsmen & Agents (The NYPBA), and president and principal lobbyist for New York’s bail bond industry, and New York State Professional Bondsman George C. Zouvelos, respond to NY DFS Docket No. 2010-0039-C, a Department ‘test case’, which has illegally condemned the rights of sureties and all New York Bondsmen to mitigate losses utilizing contingency clauses after the posting of bond--in clear violation of Constitutional and New York laws and doctrines.

“The recent Departmental findings in 2010-0039C and extra-legal actions violate basic precepts of New York and United States Constitutional law. The Department, has specifically, violated the Separation of Powers Doctrine, Due Process and Equal Protection Rights, and the Contract Clause. The Department has totally disregarded longstanding and unambiguous legislation; and has wrongfully infringed on authority vested solely for the New York’s Legislature and the Judicial branch. The Department based its findings on the false testimony of their ‘so called’ industry expert. We have dubbed this intentional dishonesty as ‘The Mark Wolin / Seneca Insurance Ephialt's of Trachis* Bail Canons’; which we have disproven in their entirety. The only thing the bail industry can say to Mr. Wolin’s alleged ‘expert’ and intellectually dishonest testimony is, ‘Sic semper tyrannis’,”** said George Zouvelos.

The NYPBA, its legal and industry experts believe that the New York bail industry, the taxpayer, and criminal defendants and their families seeking fair low cost bail alternatives, would suffer greatly if the legally untenable tactics of the Department of Insurance relating to 2010-0039C are permitted to stand. It is imprudent and legally irresponsible, for the Department to pit itself against the Judiciary, the Legislature and the unambiguous statutes and case law which contradict the citation and findings relating to docket # 2010-0039C.

“We remain confident that Judicial review of these matters would certainly sustain that the “separation of powers” doctrine which has been impermissibly crossed here, in clear violation of the Constitution of the State of New York and the United States. Moreover, the actions and methodologies utilized by the Department and the eventual findings totally ignore the “contract clause” which forbids governmental intrusion into private contractual matters unrelated to regulatory matters. If the Department does not correct itself, the extinction of New York Professional Bondsmen and the commercial bail industry is imminent. In the alternative, only swift Court intervention can stop the Department from destroying a well established industry which provides valuable social function to the public, and alleviates the costs and stresses on the criminal justice system and taxpayers,” stated George Zouvelos.

The NYPBA maintains that the Judicial branch, in criminal and civil Courts, have always sustained the New York Professional Bail Bondsman’s and bail sureties’ contractual provisions which provide full disclosure and understanding to their consumers and to those released from jail on ‘bail bond’, without fail. The Department’s impermissible actions deviate from, and are, in clear violation of the law which demands that Bondsmen disclose to the Court their enforceable indemnity remedies as defined in New York Criminal Procedure law 520.20 (4) (ii), in each ‘Bail Affidavit’ while posting a bond with the Court. By contravening the law the Department has caused a major Constitutional crisis, and if not immediately self-corrected will lead to the extinction of the New York commercial bail industry and Professional Bail Bondsmen operating in New York state.

The NYPBA membership maintains that the law mandates that the Department’s citation and findings, based solely on the limited scope of the ‘premium and compensation’, contained in Insurance Law 6804, is for the initial posting of bail alone. The New York statutes cannot be clearer in this regard.

“For the government, through the Department, to illegally extend Bondsmen’s and bail sureties obligations and liabilities, by now suggesting that the statutory ‘premium and compensation’ also covers any and all contingencies of a private bail contract, which may occur after the bond was posted; does not only tortuously interfere and alter a Bondsmen’s and sureties’ contract, but also is unlawful, financially untenable, and reckless. If the Department is permitted to continue in this manner, it will completely eviscerate all Bondsmen and bail sureties’ private contractual rights to protect themselves against non-compliant clients and fugitive criminal defendants. It is illegal for the Department under the present laws to forbid licensed professional sureties, after financially fully binding themselves to the Courts, to be forcefully exposed, left unprotected and stripped of all binding legal remedies against its indemnities. If this is permitted, no Bondsman or bail insurance company would have any reason to remain in, or conduct bail business in the State of New York,” said Zouvelos.

In 76 U.S. 13 9 Wall. 13 Reese v. United States, The Supreme Court of United States clearly states:

"There is also an implied covenant on the part of the government, when the recognizance of bail is accepted, that it will not in any way interfere with this covenant between them, or impair its obligation, or take any proceedings with the principal which will increase the risks of the sureties or affect their remedy against him.” …But in respect to the limitations of their liability to the precise terms of their contract, and the effect upon such liability of any change in those terms without their consent, their positions are similar. And the law upon these matters is perfectly well settled. Any change in the contract, on which they are sureties, made by the principal parties to it without their assent, discharges them, and for obvious reasons. When the change is made they are not bound by the contract in its original form, for that has ceased to exist. They are not bound by the contract in its altered form, for to that they have never assented. Nor does it matter how trivial the change, or even that it may be of advantage to the sureties. They have a right to stand upon the very terms of their undertaking.”

The NYPBA contends that under these illegal conditions unilaterally perpetrated by the Department relating to 2010-0039C, without legislative enactment, no Bail Bondsman or bail insurance carrier would be able to operate with any hope of profit in New York. The extinction of New York Bail Bondsman crisis was previously addressed at the time that the premium rates and compensation for the “giving of bail” was increased by the New York’s Legislature in 1997. At that time New York State Senator Hon. DeFrancisco maintained while arguing the position in favor of increasing the ‘premium and compensation’ for the “giving of bail” only, stated as follows:

“I think these fees that were set in the 70’s aren't even substantial enough to do the paperwork that has to be prepared in order to get the individual released from jail, and all I’m doing is basically conforming our laws with what more than 40 States have done since 1970 and place the bail at a reasonable figure so that we will still have a bail bonds business in the State of New York available for defendants.” Page 2087 New York State Governor’s Bill Jacket, 1997, Chapter 400.

In 1997 an increase in ‘premiums and compensation’ for “giving of bail”, only, were contemplated, because the bail bond business was almost extinct in New York—the New York State Senate Introducer’s Memorandum in Support stated that:

“Existing low bail bond rates provide a disincentive for bail agents to risk writing bail premiums because of the minimal premiums. A premium increase would be an incentive to assume more risk by bonding agents” which would “create availability of bail bonds”...and, “would result in the decrease in the number of persons held in county jails pending trial.”

Statutory premium rates as listed by Insurance Department’s nationally rank New York State bail bond ‘premium and compensation’ rates for the ‘giving of bail’ as being the lowest in the country. New York’s statutory premium rates have not been raised since 1997, and were only raised in 1962 and 1922 prior to that.

The NYPBA maintains that the New York Courts have affirmed that what the New York Department is attempting against Bondsmen now, without legislation, cannot be upheld. The recent First Department decision of Matter of Mayfield v. New York State Division of Parole, 93 A.D. 98, 938 N.Y.S.2d 290 1st Dept. 2012) held:

“It is true that a regulation adopted by an agency in implementation of the statutory scheme it is empowered to enforce, is to be read, if possible, in a manner consistent with, rather than in opposition to, the governing statute. However the Court cannot contort statutory language and elide legislative intent.”

“An Insurance Department’s illegal actions have been addressed by the High Courts in other States. This strict rule of law was clearly enunciated only two months ago in, Two Jinn v. Idaho Department of Insurance, Docket # 38759, January 11, 2013, where the Idaho Supreme Court, in reviewing an Insurance Department’s illegal attempts to expand its purview, as the New York Insurance Department is attempting in New York.,” Joseph Mainiero, NYPBA spokesman.

In Two Jinn (supra) the Court correctly held that:

“The plain test of I.C. section 41-1-42 permits a bail bond company to contemporaneously write a bail bond and contract with a client to indemnify the company..”and further noted that “the ability to enter freely into contracts that are neither illegal nor violate public policies is a substantial right” and further held that, “Therefore, we hold that merely contracting for future indemnity that is contingent on uncertain future events does not constitute a charge or collection within the meaning of the statute.” emphasis added.

Idaho’s Insurance Law regarding premium and compensation are even more comprehensive and thorough than New York’s Insurance law. However, that state’s highest Appellate Court recognized that the financial risks a Bail Bondsman assumes after the bail bond is posted is daunting. The Court, therefore, correctly ruled that all other future costs that can occur are only contingent upon the strict indemnitor and criminal defendant compliance with the bail / indemnity contract, and also the rules of the Court.

The Bail Bondsman’s private bail contract / indemnity agreements have always been universal upheld for example in the Court decision of, Lee v. Thorpe, 147 P.3d 443 (2006, Sup. Ct Utah) the highest Court in Utah succinctly stated that the, “relationship between the Plaintiff’s and the defendants was one of Contract Law, and their interactions were consistent with that contract”-- and further solidified the point that “parties to a contract regarding the subject matter of that contract, the contractual relationship controls and the parties are not permitted to assert actions in tort in an attempt to circumvent the bargain they agreed on.”

“The question remains why has the New York State Department of Financial Services now abandoned the well settled legal principles that have been widely recognized? This exacerbates the Constitutional crises created by the Department,” Joseph Mainiero, Defense Attorney for citation hearings NY DFS Docket No. 2010-0039-C.

“The bail crises that was occurring in 1997, is now recurring, and the proper method to effectuate change is a full discourse by elected officials, and not through singularly targeted actions that are against a Bail Bondsman through Departmental administrative prosecution. This is not the first time that the New York State Insurance Department has attempted to fabricate alleged laws without any legislative authority. The New York Court of Appeals in, Polan v. State of New York Insurance Department, 3 N.Y. 3d 54, 814 N.E.2d 789 (2004), condemned this type of illegal action by the New York Department of Insurance. Obviously the Department has not learned its lesson,” Zouvelos.

In Polan, the highest Court in New York State clearly enunciated that:

“When interpreting a statute, we turn first to its text as the best evidence of the Legislature’s intent. As a general rule, a statute’s plain language is dispositive.” Deference to an administrative agency’s “special competence or expertise does not come into play where, as is the case here, we are called upon to decide a question of pure statutory reading and analysis, dependent only on accurate legislative intent.” The Polan Court went further and stated in part...“we are unwilling to infer a legislative intent when to do so would upset longstanding industry practice …and, concluded that the Court would not “infer a mandate for radical change absent a clearer legislative command.”

The Polan Court tested the authority of New York’s Superintendant of Insurance to promulgate rules which were not contained in the law or the legislative intent, and which contravened longstanding practices.

“Our final reply** was sent yesterday to the New York Superintendant of Financial Services urging him not to ratify, and to dismiss with prejudice, the findings of NY DFS Docket No. 2010-0039-C. We expect that the Superintendant of the Department of Financial Services would acknowledge and follow precedent, and would fully comply with the letter of unambiguous law. The Department cannot view itself as its own private fiefdom immune from following the law, and certainly cannot view itself above the Constitution, the Judiciary and the Legislative branch. You would think that the Department had learned its lesson in the face of the Polan edict. The NYPBA, it supporters and members are prepared to take these matters to the New York’s highest Court, and Federal Court’s if necessary. We trust that the Superintendant of Insurance would recognize that if the Department does not again prevail as in Polan, the precedent that will be further set, and the damages payable to the respondent in NY DFS Docket No. 2010-0039-C, and any matter related to same, will be enormous,” That is why the Department has been put on notice,” said Joseph Mainiero, an NYPBA spokesman.

For More Information:
Contact the NYPBA at:
George Zouvelos Tel: (917) 613-3320

*Ephialtes of Trachis (Ephialt's; was the son of a Spartan warrior, Eurydemus of Malis. Ephialt?s betrayed his homeland, Sparta, in hope of receiving some kind of reward from the Persians, by showing the Persian forces a path around the allied Spartan Greek position at the pass of Thermopylae, which helped them eventually win the Battle of Thermopylae in 480 BC. However, a year later, in 479 BC a united Sparta, crushed the Persian Empire which defeated treason and betrayal. Until this day, the name Ephialt's means ‘nightmare’ in the Greek language.

**"Sic semper tyrannis" meaning "Thus always to tyrants."

*** NY DFS Docket No. 2010-0039-C to Hon. Benjamin M. Lawsky the Superintendant of New York State Department of Financial Services reply.