We are pleased to say that the Court of Appeals answered a certified question in our favor in Gevorkyan v Judelson 2017 NY Slip Op 05176 Decided on June 27, 2017 Court of Appeals
DiFiore, Ch. J. a case we have labored on over the past several years. In this novel question of law, the Court of Appeals defined when a bail bond agent earns a bail bond premium. Amici briefs suggested that there is widespread abuse of criminal defendants regarding bail bond premiums.
“The United States Court of Appeals for the Second Circuit, by certified question, has asked us whether an entity engaged in the bail bond business may retain the premium paid on [*2]a criminal defendant’s behalf when bail is denied and the defendant is never released from custody. Inasmuch as the Insurance Law provides that such an entity does not earn a premium for a bail bond if a court refuses to accept the bond following a bail source hearing, we answer in the negative.
In 2011, Arthur Bogoraz was indicted on state law fraud charges and bail was fixed at $2 million. Plaintiffs, the wife and family friends of Bogoraz, contacted defendant Ira Judelson, a licensed bail bond agent affiliated with the International Fidelity Insurance Company (International Fidelity), a bail bond surety. Judelson, on behalf of International Fidelity, entered into an indemnity agreement with plaintiffs whereby International Fidelity agreed to underwrite a bail bond to secure Bogoraz’s release from custody in exchange for a premium of $120,560. Plaintiffs promised to indemnify the bond and provide collateral. Shortly thereafter, plaintiffs paid the premium to Judelson, in trust for International Fidelity. ”
“Further, as discussed above, the bail bond statutes empower a court to examine a posted bail bond and determine whether it should be approved or rejected (see CPL 520.30 , [*6]; Insurance Law § 6803 [b]). The court may reject the bail bond if it is dissatisfied with the source of the funds, the reliability of the obligors, the value of the security, the qualifications of the surety, or indeed “any feature of the undertaking [that] contravenes public policy” (CPL 520.30 ; see also Insurance Law § 6803 [b]). Under Judelson’s interpretation, a court could reject a bail bond following a bail source hearing based on the surety’s qualifications or because the surety failed to properly vet the underlying security, yet, because the surety “posted” bail bond, the surety could still retain the premium. Such an outcome does not comport with the legislative intent to protect against abuses in the bail bond industry.
In short, Insurance Law § 6804 (a) prohibits a bail bond surety from retaining a premium when the criminal defendant is not released on bail.”