People v Miranda
Annotate this CaseDecided on June 22, 2009
Supreme Court, Bronx County
The People of the State of New York, Plaintiff,
against
William Miranda, Defendant.
012208C2009
The People (Bronx County District Attorney's Office) were represented by Hannah H. Freilich and Cynthia A. Carlson
The defendant, William Miranda, was represented by The Bronx Defenders, by Robin Steinberg and Robin Mar
Non-party witness, The Bronx Freedom Fund, was represented by Skadden, Arps, Slate, Meagher & Flom LLP, by Lauren Aguiar
Ralph Fabrizio, J.
The narrow legal question in these cases is whether the Court, pursuant to Criminal Procedure Law ("CPL") § 510.40(3), should accept bail posted on defendant's behalf by an unlicensed not-for-profit-corporation that was itself created and initially financed by a public defender organization for the purpose of posting bail for its own clients. This is apparently a case of first impression in many regards. The defendant's bail, in the sum of $3,000 cash, was posted by an individual working for a corporation called The Bronx Freedom Fund, after a request made by the defendant's attorney, who works on the staff of the Bronx Defenders. The Bronx Freedom Fund has been posting bail for clients of the Bronx Defenders for more than a year and a half, apparently without any regulatory oversight. The corporation does not post bail for every defendant referred by the lawyers; its sole salaried employee, Ms. Zoe Towns, makes a decision to post bail after conducting an independent evaluation of each client. The Bronx Freedom Fund has posted bail for more that 130 Bronx Defenders' clients. Because the corporation has become a "bail bond business" as well as an "insurance business" as defined in Insurance Law § 6801, it had to be licensed. For the reasons stated herein, the bail posted in these cases is rejected on both legal and public policy grounds.
BACKGROUND
The defendant is charged in two separate misdemeanor informations with Assault in the Third Degree, in violation of Penal Law § 120.00(1). In one case, Docket No. 012208C2009, the information alleges that on February 22, 2009, the defendant, along with three other people, punched, struck and kicked the complaining witness at 3:00 a.m. on a Bronx street, causing that [*2]individual physical injury. In the second case, Docket No. 012209C2009, the information alleges that during an hour and a half period of time on November 25, 2008, the defendant repeatedly struck a different individual inside a Bronx building, resulting in that individual's hospitalization. The complaining witness alleges that the defendant told him at the time, in substance, "I hate Guyanese people . . . I wish I could kick all of them out of the neighborhood."[FN1]
The defendant was arraigned on each of these accusatory instruments on February 24, 2009. The defendant's criminal history lists him as a "persistent misdemeanant," based on the fact that he has three misdemeanor convictions in the eight months prior to his arrest in these cases. The Criminal Justice Agency rated the defendant a "moderate risk" for failing to appear for future court appearances based on their independent evaluation. After hearing the People's bail application, and response by the defendant's attorney requesting that the defendant be released on his own recognizance, the arraignment judge, after evaluating all of the mandatory factors listed in CPL § 510.30(2), set bail in each matter at $5,000 bond, with a $1,500 cash alternative. The defendant was committed to the custody of the New York City Department of Corrections pursuant to two securing orders. The cases were adjourned until February 27, 2009.
Two days later, on February 26, 2009, Zoe Towns appeared at the New York City correctional facility in which the defendant was being held pursuant to the securing order, and posted the cash bail in each case. Ms. Towns paid for bail with cashier's checks drawn on a bank account in the name of The Bronx Freedom Fund. Ms. Towns personally signed the undertakings in each case, which contain the following language: "I undertake that the defendant will appear in this action whenever required & will at all times render himself/herself amenable to orders and processes of the court, and I acknowledge that the bail will be forfeited if the defendant does not comply with any requirement or order of process to appear in this action." A corrections officer at the facility accepted the checks, and the defendant was released from Department of Corrections custody sometime that day. No judge ever issued a certificate of release after the bail was posted.[FN2]
The next day, the defendant appeared in court with counsel. The Court began an inquiry into the circumstances surrounding the posting of cash bail. Defense counsel informed the Court that bail had been posted by The Bronx Freedom Fund, which was identified as a not-for-profit [*3]corporation which was already a "501(c)(3) charity." This was only the second time that this Court had heard the name of this organization.[FN3] The Court directed that Ms. Towns, the person who posted the bail, appear in Court that day for an inquiry. The Court was concerned about the apparent lack of any relationship between the defendant and Ms. Towns. In addition, since it had recently become known that The Bronx Freedom Fund existed and was posting bail in a number of cases, the Court specifically asked whether Ms. Towns or the corporation were licensed by the New York State Department of Insurance to post bail. The case was called into the record four times that day. Ms. Towns never appeared in Court, and the cases were adjourned to the following court day, Monday, March 2, 2009. The defendant's bail was not revoked.
On March 2, 2009, the defendant petitioned the Appellate Division, First Department, for a writ of prohibition, pursuant to CPLR Article 78, to stop the bail inquiry. The defendant opined that this Court was exceeding its authority in conducting the bail inquiry because the District Attorney's Office had not first requested the hearing. The defendant also argued that the Court's questions about whether The Bronx Freedom Fund had a license were irrelevant because the corporation qualified for a statutory exemption from the licensing requirements under Insurance Law § 4522(a)(3), which is applicable to certain charitable organizations. An interim stay was granted. On April 12, 2009, the Appellate Division denied the writ and dismissed the petition, without opinion. Matter of Miranda v Fabrizio, 2009 NY Slip Op 02839 (1st Dept). This Court has granted the defendant's request that the papers in the Article 78 proceeding be made part of the record in the CPL § 510.40(3) inquiry.
This Court finally received evidence on May 8, 15, and 26, 2009. The Bronx Freedom Fund secured new counsel to represent them. After all the evidence was presented, a briefing schedule was set, and the case was adjourned for decision until June 22, 2009. The Court specifically asked all the lawyers to brief the issue of the applicability of the exemption contained in Insurance Law § 4522(a)(3) to The Bronx Freedom Fund's bail business.
On June 3, 2009, counsel to The Bronx Freedom Fund informed the Court, the defendant's attorney and the Bronx District Attorney's Office, via an on the record conference call and without the defendant's presence, that, after reviewing the evidence at the hearing and conducting an independent evaluation of the Insurance Law's licensing requirements and the claimed exemption, they were advising their client to stop posting bail immediately. Counsel indicated that this legal advice would have "an obvious impact on what we are doing here." Based on that record, the Court asked that the defendant appear in Court as soon as possible so that a record could be made in his presence. [*4]
On June 9, 2009, the attorneys and the defendant again appeared in court. Counsel to The Bronx Freedom Fund acknowledged that "the issues that [the Court] highlighted that you were particularly concerned about in the context of the post-hearing briefing related frankly primarily to this insurance exemption issue. They now have advice on that. They are operating pursuant to the most recent advice that was given to them, which is that the exemption does not apply." Counsel stated that this made the issue before the Court "academic." The People argued that the Court was required to make a ruling on the issue before it, which was to accept or reject the defendant's bail. Counsel for The Bronx Freedom Fund stated that there was no legal problem with the bail in these cases, because the corporation had received "conflicting" legal advice from another law firm prior to posting the defendant's bail about whether it was exempt from the licensing requirements for "bail bond businesses," and therefore the bail had been posted "in good faith." There was no concession by the defendant that his bail was posted in violation of law, and this core legal issue has been rendered neither moot nor "academic." Both the Bronx Defenders and counsel for The Bronx Freedom Fund argue that this Court should accept the bail.
The Court has reviewed extensive evidence, legal memoranda, and a last minute motion to reopen the hearing from counsel to the defendant received on June 19, 2009 at 4:30 p.m.The application for an adjournment to file a sur-reply memorandum is denied. The Court makes the following findings of fact based on the evidence received. The testimony and evidence presented is credited only to the extent noted herein.
THE EVIDENCE AT THE BAIL HEARING
According to Ms. Town's testimony, the not-for-profit-corporation known as The Bronx Freedom Fund was created with grant money specifically provided in 2007 to the Bronx Defenders, a legal services organization that represents indigent defendants charged with committing crimes in Bronx County. One of the contributors to the fund, a reputable registered charitable foundation, indicated in its own 2007 financial disclosure form filed with the Attorney General that it made a $100,000 donation directly to the Bronx Defenders "to support the Freedom Fund." The Bronx Defenders issued press releases about the fund in 2007. One press release, dated October 5, 2007, is entitled "The Bronx Defenders' Freedom Fund Receives Grant . . ." In another press release, dated December 7, 2007, the Bronx Defenders indicated that the fund was formed to provide "bail money for the indigent arrested for nonviolent offenses," and that the fund was administered by "Zoe Towns, a non-lawyer who joined the Bronx Defenders four months ago as project director." That same press release indicated that more than $200,000 was raised by the Bronx Defenders for the bail fund.
Ms. Towns was interviewed by the Bronx Defenders in April 2007 for a position to do research about and organize The Bronx Freedom Fund, and was subsequently hired. She no longer has a copy of the employment letter she received from the Bronx Defenders, nor does she have a copy of an employment letter from The Bronx Freedom Fund. At some point during the fall of 2007, Ms. Towns, attorneys from the Bronx Defenders, other attorneys, and individuals Ms. Towns identified as founders of the fund, held meetings at which operating criteria for the fund were developed. Based on those meetings, written criteria were created that were intended to be used by Ms. Towns to determine which Bronx Defenders' clients would qualify for money from the bail fund, and the final criteria were ultimately approved by The Bronx Freedom Fund's [*5]Board of Directors.[FN4] The written criteria list four "factors to be considered for the criminal bail fund;" the person must be a "client of the Bronx Defenders;" the client's "bail is $1500 or below;" the "top charge is misdemeanor or non-violent felony;" and the "CJA score or adjusted/corrected CJA score' [is] 3 or above."
On November 6, 2007, a certificate of incorporation for The Bronx Freedom Fund was filed with the Secretary of State. The certificate indicates that the company was "formed for the purposes of supporting indigent clients of the Bronx Defenders, a non-profit public defender office, and helping them avoid the cost of short jail sentences." The certificate further indicates that "[i]n furtherance of these charitable purposes, the Corporation shall: (a) provide direct and full bail assistance for clients of The Bronx Defenders who have been recommended for release but who had bail set on their cases."
The members of the fund's Board of Directors do not include any current Bronx Defenders' employees. Ms. Towns is The Bronx Freedom Fund's only paid employee. She was initially paid by the Bronx Defenders, and testified that at some point in March 2008, the transfer of her salary and health benefits from the Bronx Defenders' payroll to The Bronx Freedom Fund was completed.[FN5] Her workspace was and has remained inside the Bronx Defender's offices, and her desk continues to be situated near both legal and non-legal staff members; she does not have her own separate office address. The Bronx Freedom Fund does not pay rent. Ms. Towns uses office supplies provided by the Bronx Defenders, including a computer which is networked to the Bronx Defenders' computers. She has access via that computer to the files of all of the Bronx Defenders' clients, even those who are not benefitting from the bail fund. Her own Bronx Freedom Fund files are password protected.
Ms. Towns has listed the Bronx Defenders' main telephone number on some of the undertakings she has signed and filed with the court clerk in other cases. She lists the Bronx Defenders' office address as her home address on these receipts. She gave her business card to court clerks in Criminal Court Bronx County when she began posting bail for Bronx Defenders' clients in November 2007. That business card identifies her as working for the Bronx Defenders. It contains her direct telephone extension, which happens to be the same telephone number that Ms. Towns listed on the bail receipts issued by the Department of Corrections that she signed in the defendant's cases. Ms. Towns has not obtained any new business cards indicating that she works for the Bronx Freedom Fund because she is waiting for an artist in California to complete [*6]a design for the card.
At some point during its existence, The Bronx Freedom Fund created a separate bank account, although no evidence was introduced to show the specific date. Ms. Towns testified that there are currently two signatories on that account: herself, and an individual named Franklin Cruz. According to Ms. Towns, Mr. Cruz had worked for the Bronx Defenders sometime in the past, left their employ and was as an unpaid consultant for The Bronx Freedom Fund, and is now back with the Bronx Defenders, possibly as a member of their Board of Directors; she also believes him to be that organization's Chief Financial Officer, although he may in fact be the office manager and not the CFO.[FN6] Ms. Towns states that she is the only person who ever withdraws funds from the bank account.
At first, Ms. Towns insisted that she is the only individual who posts bail for defendants using money from the bail fund. When pressed, Ms. Towns admitted that when she is away from New York and a situation arises in which an attorney from the Bronx Defenders makes a referral of a client for bail money from the fund, Ms. Towns directs a "non-legal" employee of the Bronx Defenders to got to the appropriate location — the courthouse or the city jail — to post bail. Ms. Towns insists that Bronx Defenders' employees do not decide whether a defendant qualifies for bail money; she herself screens the individuals referred to her by the lawyers, and she alone makes that determination, and she turns down most requests.
When she knows that she is going to be away, Ms. Towns leaves certified checks payable to the New York City Department of Finance in the office, drawn in amounts of $250 each, since in her experience bail is usually set in $250 increments. If a defendant is arrested when she is away, an attorney from the Bronx Defenders contacts her, no matter where she may be. On one occasion, she was contacted in California; in April 2009, she was contacted when she was out of the country. After she has approved using bail money for a Bronx Defenders' client when she is away, she directs a non-legal staff member working for the Bronx Defenders to got to the certified checks she has left behind, take the appropriate amount of money, and post the bail. Although the money belongs to The Bronx Freedom Fund, the Bronx Defenders' employee involved signs the undertaking, and agrees to the forfeiture of the money should that defendant not return to court. These individuals also indicate that the money should be returned to them when the case is over. In a situation where the bail is refunded, Ms. Towns testified that the New York City Department of Finance sends a check payable to the Bronx Defenders' employee, and that employee gives it to Ms. Towns to be redeposited into The Bronx Freedom Fund bank account. Ms. Towns testified that she believes she has directed non-legal staff members of the Bronx Defenders to post bail in between five and eight cases, although no documents were provided to substantiate the actual number. She also testified that The Bronx Freedom Fund's Board of Directors has given her permission to direct non-legal Bronx Defenders' staff members to go to court to post bail using corporate money, and to have these staff members sign the undertakings.
The People introduced a bail receipt from court records, dated July 7, 2008. In that case, [*7]an intern working for the Bronx Defenders posted bail.[FN7] That intern indicated on the bail receipt filed with the court as part of its business records that the name of the person posting bail was "Zoe Towns, c/o Bronx Defenders." That intern then signed his own name to the undertaking. The People introduced another receipt, dated December 26, 2008, in which the benefits advisor for the Bronx Defenders posted bail. That individual listed his own name as the depositor and the Bronx Defenders' office address. The checks deposited by that individual had been withdrawn on December 23, 2008. In this instance, Ms. Towns was in California when she received a telephone call from a Bronx Defenders' attorney. That attorney relayed information to her, and she then directed the Bronx Defenders' non-legal employee to post that defendant's bail.
Ms. Towns testified that the individuals who initially donated their money to begin the fund intended that defendants charged with violent felony offenses not be eligible for bail money, and especially in cases in which a complaining witness had been hospitalized. However, Ms. Towns has been authorized by the board to use her independent discretion to post bail in cases in which defendants are charged with violent felonies, and victims are hospitalized, based on her own assessment of risk of flight. She also said that individuals charged with committing any misdemeanor offense automatically qualify for posting of bail if other criteria are met; thus, individuals charged with misdemeanor assault and domestic violence, criminal contempt, misdemeanor sex offenses, and misdemeanor gun possession may be considered for bail.
Fund raising has continued on behalf of The Bronx Freedom Fund since its incorporation. Ms. Towns referred several times to what she called "The Nation" fund-raising drive that began in December 2008. Ms. Towns testified that an article called "10 Charities to Give To" was published in the magazine "The Nation" sometime in December 2008, and that the writer encouraged readers to give donations to a charity called The Bronx Freedom Fund. Ms. Towns and a member of The Bronx Freedom Fund's Board of Directors created the first Bronx Freedom Fund website at that time, to be used for this fund raising drive. Although Ms. Towns insisted that she had no longer worked for The Bronx Defenders at this time, she listed her contact information on the new website she created as being at the Bronx Defenders' registered web address. Ms. Towns changed that contact information after this Court issued an interim written decision in People v Francisco M, 007989C2009, on February 13, 2009, which was annexed by the defendant as an exhibit to the Article 78 petition. In that decision, written in anticipation of a bail hearing in that case and meant to inform the parties of the Court's questions, the Court asked if Ms. Towns might be an employee of the Bronx Defenders based on the web address.
Ms. Towns first testified that she changed the e-mail address because "the more I was reaching out to the outside world, and the more people sort of seemed confused, I thought it was important to clarify who I worked for." When asked to explain this during cross-examination, Ms. Towns said that she did not change her e-mail address until February 2009 because she was "pretty busy, and I hadn't gotten around to thinking all the very small details like that." The People annexed a printout of the Bronx Defenders' on-line staff catalog from February 5, 2009 as an exhibit to their answer to the Article 78 petition; Ms. Towns was listed as a member of the Bronx Defenders' staff on that date. The People further noted that, as of March 4, 2009, theon-line catalog no longer listed Ms. Towns as a Bronx Defenders' staff member. The [*8]People also included a printout of The Bronx Freedom Fund's website, from March 3, 2009. Ms. Towns' e-mail address had now changed, and she was now to be contacted at a web address registered to The Bronx Freedom Fund.
The first page of The Bronx Freedom Fund website contains the following words: "Thousands of poor people languish in jail because they cannot afford bail of $500 or $1000. The overwhelming majority are facing non-violent, misdemeanor charges. People who are detained pre-trial face worse case outcomes than those who can afford their bail. The Bronx Freedom Fund helps the poorest of the poor fight their cases from a position of strength and freedom." A link on that page contains the word "Donate," allowing individuals to give a donation via credit card. Ms. Towns testified that since The Nation article she has received donations from between 40 and 50 people, either by check, or via credit card over the internet. She does not know the individuals who made the donations. There is no system in place to screen donors to determine whether money given to the bail fund comes from any type of criminal activity.[FN8] As of May 26, 2009, Ms. Towns testified that The Bronx Freedom Fund has about $70,000 available for bail.
The Bronx Freedom Fund was not a recognized charity under 26 U.S.C. § 501(c)(3) when it posted the defendant's bail. Nor had it filed an application with the New York Attorney Generals' Office Charities Bureau prior to that date. At some point during the corporation's existence, it applied for "tax-exempt" status under Section 501(c)(3) of the tax code. The Bronx Freedom Fund was not given approval to operate as a Section 501(c)(3) charity until April 28, 2009. Ms. Towns testified that "Form 1023," which is the required document to be filled out and submitted to the IRS by a corporation seeking permission to operate as a 501(c)(3) organization, was not completed and filed until approximately April 2009.[FN9] The letter sent to Ms. Towns by the IRS indicates that The Bronx Freedom Fund's 501(c)(3) charitable status is retroactive to the date that the certificate of incorporation was filed. When asked on May 8, 2009 whether the Bronx Freedom Fund was registered with the Charities Bureau of the New York State Attorney [*9]General, Ms. Towns stated that she had no such knowledge. On May 26, 2009, at the conclusion of the evidence gathering portion of the inquiry, Ms. Towns testified that The Bronx Freedom Fund is now registered with that bureau. She said that this application had been filled out about a month earlier, after Form 1023 was completed and filed. No paperwork connected with either filing was introduced into evidence.
Ms. Towns explained the routine she uses to determine whether bail should be posted for a particular defendant. After the Bronx Defenders is assigned by the Court to represent a defendant, and a judge sets bail in a case, Ms. Towns testified that she receives a call, or e-mail message, from the defendant's attorney, asking her to review the case and determine whether bail should be posted. She is given information about that defendant gathered during the attorney-client conversation. Ms. Towns goes to the courthouse and checks the court file for the report of the Criminal Justice Agency (CJA). Individuals working for that agency make recommendations to judges in all criminal cases in New York City that are used as part of a bail determination. Information is gathered by the CJA representatives about defendants' community ties, including a current home address, past addresses, telephone numbers, employment situation, whether they are currently in school or have graduated, and whether they expect anyone in court when they are arraigned and who that person might be. The report includes that information, as well as the number of the defendant's prior felony and misdemeanor convictions, and whether the defendant has any history of not appearing in court on prior cases in which bench warrants were issued.
Ms. Towns takes information from the CJA report and then does her own independent evaluation, using any additional information given to her by the defendant's attorney. She does not review the defendant's criminal history, or, in a misdemeanor case, the allegations in the accusatory instrument, as she does not believe that a defendant's criminal history, or the particular charges or evidence in a misdemeanor case, are relevant. She automatically rejects any "bench warrants" shown on the defendant's record if they are more than five years old, as she believes that they are also irrelevant, even if a particular defendant has been incarcerated during that period.[FN10] If, after her own evaluation, Ms. Towns determines that a defendant is an [*10]appropriate candidate for bail from The Bronx Freedom Fund, the bail is posted. She does not post bail in every case in which an attorney from the Bronx Defenders has asked that she do so. There was no information provided about whether the attorneys from the Bronx Defenders refer every client charged with a misdemeanor who has had bail set, although Ms. Towns has received as many as ten referrals in one week. Since its incorporation, bail has been posted using money in The Bronx Freedom Fund for about 130 Bronx Defenders' clients. The defendant is considered to be one client, even though bail was posted in two separate cases. The Bronx Freedom Fund is not licensed by the New York State Department of Insurance to act as a "bail bond business." In the thirty days prior to posting bail in the defendant's two cases, Ms. Towns estimated that she posted bail in eight different cases.[FN11]
In terms of the defendant's case, Ms. Towns testified that she received a referral from the defendant's attorney, asking her to review defendant's cases to see if he would qualify for money from the bail fund. Ms. Towns stated that she believed that she was "well-acquainted with [the defendant's] community ties and with his family" before she agreed to post bail, and that she did "not consider [the defendant] to be a stranger in any way in any definition of the term." Ms. Towns learned that the defendant told his attorney that he was in a GED program, and received five telephone numbers he provided to the attorney, including one which was purportedly for the defendant's girlfriend. Ms. Towns never spoke with anyone at the GED program to confirm that he was actually in the program, and she never spoke with the girlfriend, before deciding to post bail; she spoke with the defendant's mother, the same individual that a CJA representative had spoken with. Ms. Towns testified that at some point she and the defendant's mother had "pretty serious conversations about a time of crisis for her son. I don't consider that to be a stranger." She never spoke at all with the defendant before agreeing to post bail on his behalf; the first telephone conversation took place after he was released.[FN12] The $3,000 bail posted for this [*11]defendant was twice the amount listed in the printed criteria for a potential client of The Bronx Freedom Fund, and Ms. Towns testified that this may be the most money she has ever posted for a client. She testified that in her opinion the bail was "pretty low." She also testified that the $1,500 criteria is just a guideline, and that she has permission from the Board of Directors to post bail in any amount she believes to be appropriate in a particular case, subject to the limited financial resources of the bail fund.
Ms. Towns first met the defendant at some unspecified time after he was released from custody, and definitely not prior to his next court appearance. When she spoke with the defendant, she stressed to him, as she does to all of her clients, that it was important for him to come to court for all appearances. She told him that if he did not, the bail money posted by the fund would be forfeited, and could not be used to post bail for future clients. As with all of her clients, she has maintained contact with him, reminding him of his court dates, and the importance of his appearance in court.
The bail receipts/undertakings in the defendant's cases signed by Ms. Towns at the correctional facility indicate that she is the individual posting the bail. There is no mention of The Bronx Freedom Fund. When she posts bail, Ms. Towns provides the information to the clerks and corrections officers to include on the bail receipts, they fill them out based on the information she provides, and then she signs the documents. Ms. Towns testified that she wanted the clerks to include the fact that she worked for The Bronx Freedom Fund on the bail receipts, but that the clerks indicated that they either would not or could not include that information.[FN13] The checks used to post bail in the defendant's cases are drawn on The Bronx Freedom Fund account, and contain the name of the fund on the checks themselves. These checks are sent to the Department of Finance. Ms. Towns believes that her submission of the certified checks is sufficient notice to the Court that the money used to post bail is not hers, but belongs to the corporation.
Ms Towns also testified that "my occupation is stated on the forms I fill out, Bronx [*12]Freedom Fund Project Director." The People introduced a series of bail receipts signed by Ms. Towns in 2008 and 2009 for different Bronx Freedom Fund clients. On one receipt signed by Ms. Towns on March 2, 2008, she is listed as "Project Manager - Bx. Defenders." Ms. Towns signed another bail receipt on March 18, 2008 which listed the depositor information as "Zoe Towns The Bronx Defenders." On March 10, 2009, less than two weeks after posting bail in the defendant's cases, Ms. Towns signed two separate bail receipts where the depositor information lists her as "Zoe Towns c/o Bronx Defenders." There were bail receipts introduced from five additional cases in July, August, September, November and December 2008 in which Ms. Towns identified herself in some way as being affiliated with the Bronx Defenders.[FN14] On one bail receipt, signed by Ms. Towns on September 29, 2008, she listed her occupation as "Freedom Fund Project Manager."
The defendant introduced several letters into evidence written by identified clients of The Bronx Freedom Fund, whose names are omitted from this opinion. One letter from a young woman thanked the fund for posting her bail because she was still able to attend high school while her case was pending. In another letter, a young man thanked the fund for posting his bail because it enabled him to be back with his family while the case was pending. In one other letter, a man who said that he was now in his early thirties, wrote that when he was sixteen, he "started going to jail. It was like a revolving door for 8 years. My wake up call was 3½ years in state prison." In terms of his current case, this individual wrote the he "came in contact with the Bronx Freedom Fund when I was arrested and had $750 bail. I was not able to make the bail because of my financial problems. The Bronx Freedom Fund stepped in and bailed me out of jail . . . If it was not for the Freedom Fund I might have been held by immigration and possibly deported and not be able to see my family. The case was dismissed after 5 weeks.[FN15] I would have been incarcerated during that time and not been able to fight my case from the outside, causing pain for me and my kids."
Ms. Towns testified that she keeps statistics about which clients have returned to court, and which clients have had warrants ordered for their arrest for failing to appear. She states that she believes about 93% of clients whose cases are now closed did not have warrants issued for their arrest, although she does not apparently keep statistics about whether a judge agreed to stay the issuance of a warrant upon request of the Bronx Defenders' attorney. The District Attorney's Office requested copies of the records Ms. Towns keeps to conduct her statistical analysis, in order to be able to conduct a meaningful cross-examination. The records were not provided, and [*13]the District Attorney's Office challenges the validity of this statistic.[FN16]
CONCLUSIONS OF LAW
Community Bail Funds provide money to individuals of minimal or no financial means and who pose little or no risk of flight, and that money is used to secure their release from jail while a case is pending. There is nothing new about them. They have probably existed as long as bail itself has existed. They are sometimes informal — members of communities have been known to pool their money to "bail out" a friend or relative. The United States Department of Justice, through their National Criminal Justice Center, has a "Community Bail Fund Organizing Manual" written in 1980 available for purchase through their website. In New York State, several organizations, including the United Way of Tompkins County, which has loaned bail money to defendants, and Catholic Charities of Onondaga County, which posted half the bail, have administered bail funds with money appropriated by the local county legislatures. These bail funds are administered as a part of the overall services these long-established charities provide. There is also the very well-publicized National Immigrant Bond Fund, begun in 2008 and in place in several states. It was set up for individuals awaiting immigration hearings who are not in custody based on any criminal charges. This organization gives part of the money for bail to an individual, and that person puts up the rest of the money and then posts bail. The information available via websites, press releases, and news articles about these organizations indicate that they are not affiliated with any particular defense attorney or organization. Every indigent member of the communities served by these charities and organizations has an opportunity to apply for the bail money.
The individuals who initially contributed hundreds of thousands of dollars to be used to post bail through the pilot project that later became the not-for-profit corporation called The Bronx Freedom Fund certainly intended that their money be used to provide bail for indigent individuals. Unfortunately, the corporation created to implement the posting of bail has been operating in violation of state law. The Bronx Freedom Fund is a "bail bond businesses" and an "insurance businesses." New York law requires that all business which exist for no purpose other than to post bail be licensed and regulated. The Bronx Freedom Fund had no such license when they posted the defendant's bail.
Insurance Law § 6801(1) provides that "Any person, firm or corporation in any court having criminal jurisdiction or in any criminal action or proceeding who shall for another deposit money or property as bail . . . [and] who within a period of one month prior thereto shall have made such a deposit or given such bail in more than two cases not arising out of the same transaction shall be deemed to be doing a bail bond business and an insurance business as defined in article eleven of this chapter." The bail in the defendant's two unrelated cases was posted on February 26, 2009. In the thirty day period prior to the bail being posted in these cases, [*14]the corporation posted bail in eight separate cases. This was not an unusually high number for The Bronx Freedom Fund. Between November 2007 and May 2009, bail was posted for 131 Bronx Defenders' clients, some of whom, like this defendant, were charged on multiple dockets. Thus, under the Insurance Law, The Bronx Freedom Fund was engaged in both a "bail bond business" and an "insurance business" when it posted bail for the defendant.
Insurance Law § 6801(b)(1) provides that "no person, firm or corporation shall in this state" conduct such an insurance/bail bond business "unless authorized by a license issued and in force as provided in article eleven of this chapter." Licenses are issued at the discretion of the commissioner, following a lengthy and thorough background investigation and application process. Insurance Law § 6802(c). The Bronx Freedom Fund never applied for such a license before posting bail for the defendant. And, based on the unambiguous statutory language, the corporation needed to be licensed at that time, and probably many months earlier.
There are potentially serious penal as well as financial consequences for unlicensed corporations solely in business to post bail. Insurance Law § 6802(a) provides that "[a]ny person, firm or corporation" acting as a bail bond business or agent without a license "shall be guilty of a misdemeanor." Moreover, companies engaged in an unlicensed insurance business "shall, in addition to any other penalty provided by law, forfeit to the people of this state the sum of one thousand dollars for the first violation and two thousand five hundred dollars for each subsequent violation." Insurance Law § 1102(a).
The reason for pointing out that the Insurance Law was violated when bail was posted in these cases is simply to make the point that it calls into question the validity of the bail itself. CPL § 510.40(3) provides that after cash bail is posted, the court reviewing the bail "must, in the absence of some factor or circumstance in law which requires or authorizes disapproval thereof, approve the bail." This inquiry is supposed to take place before a defendant is released, and therefore should be concluded rather quickly. In making that determination, a Court is entitled to rely on, inter alia, factors listed in CPL § 520.30(1), which include determining "whether any feature of the undertaking contravenes public policy." See Baker, 188 Misc 2d at 826-27. The undertakings in these cases are the contracts between Ms. Towns, as corporate representative, and the court. In these contracts, she assumed the responsibility of securing not only the defendant's appearance in court, but also his compliance with any and all court orders, which presumably also includes abiding by the terms of the orders of protection. But, under the clear and unambiguous statutory language, The Bronx Freedom Fund was engaged in both a "bail bond business" and an "insurance business," and had to have a license before directing that Ms. Towns execute undertakings on behalf of the corporation.
Public policy mandates that any corporation organized and operated solely to post bail as a business must be licensed and supervised by the Commissioner of Insurance. The legislature specified that the universe of entities that qualify for these specific licenses be very small. The People have provided the legislative history behind the current Insurance Law bail sections, adopted as Chapter 545 of the laws of 1962. It was the legislature's intent to consolidate all of the statutes then contained in various parts of state law, including the Code of Criminal Procedure, and establish a "simple statutory scheme . . . whereby a bail bond business . . . may be conducted only by fidelity and surety companies licensed . . . under the Insurance Law." That statutory scheme was in former Article 331, which is now Article 68, of the Insurance Law. The [*15]legislature specifically intended to "prohibit the licensing of an individual as a fidelity and surety insurer to conduct a bail bond business." And, the only exemption from the licensing requirement for bail bond businesses the legislature spoke of at the time was for those "insurers and agents who, incidental to the sale of automobile liability insurance, customarily post bonds for their insured in connection with traffic offenses."[FN17] Thus, the legislative intent at the time indicates that the only licensing exemptions for businesses operating exclusively to post bail, like The Bronx Freedom Fund, would be those in Article 68. Given this, the corporation, as it currently operates, may not even qualify for a license to conduct a bail bond business.
The licensing provisions, as well as the regulations, were enacted to facilitate strict control and oversight for "bail bond businesses." The Bronx Freedom Fund has avoided any type of oversight during its year and a half existence judicial, regulatory, or otherwise and this in and of itself is against public policy.[FN18] Insurers who are licensed to conduct bail bond business must keep detailed records subject to review by the Commissioner of Insurance. 11 NYCRR 28.0, 28.2. The insurance regulations also prohibit any "person, firm or corporation or officer, employee or agent" of licensed bail bond business from entering into any "pre arrest agreements . . . the purpose or substance of which is to provide, on a continuing basis, the furnishing of any bail bond, or security in lieu of bond." 11 NYCRR 28.1. The unregulated Bronx Freedom Fund operates according to a "pre-arrest" agreement - its own certificate of incorporation indicates that it has agreed to post bail exclusively for future clients of the Bronx Defenders. As Ms. Towns testified, pursuant to this arrangement, she withdraws money from the bank and gets certified checks in advance of any arrests, and even leaves checks behind when she is away just in case a Bronx Defenders' client is arrested and has bail set and is referred to her. The only licensed bail bond businesses who have an exemption from this regulation are automobile and boat liability underwriters. The Bronx Freedom Fund has completely avoided the type of oversight and regulation to which licensed bail bond businesses are subject. Thus, accepting the bail posted in the defendant's cases by this unlicensed, unmonitored bail bond business would not only be inconsistent with the law, but also with public policy.
Prior to and at many points during the hearing, the defendant argued that The Bronx Freedom Fund was exempt from the licensing requirement of Insurance Law § 6801(b)(1), pursuant to Insurance Law § 4522(a)(3), when it posted the defendant's bail. That statute exempts, inter alia, "organizations of a . . . charitable character, which are not organized or [*16]maintained primarily for the purpose of providing insurance benefits" from certain insurance licensing requirements. After all the testimony and evidence had been received, and after the case was put over for a briefing schedule and court decision, counsel currently representing The Bronx Freedom Fund conceded, in open court, that they have examined the Insurance Law and have now advised the Board of Directors that this "exemption does not apply" to the corporation, and the corporation has now stopped posting bail.
Nonetheless, the Bronx Defenders as well as counsel for the corporation argue that the bail in these cases is not affected by that advice because The Bronx Freedom Fund received some sort of "conflicting" advice from other lawyers in the past, and therefore acted in "good faith" when the defendant's bail was posted. The most prudent advice would have been to write to the Commissioner of Insurance for an opinion in advance of engaging in this insurance business. However, no matter what legal advice was given, it was not sought until months after bail had been posted in many other cases. Moreover, because The Bronx Freedom Fund's current lawyers have invoked the "attorney-client privilege," thereby preventing any fact-finding about what the individuals who sought the legal advice told those other lawyers, there is no frame of reference upon which this Court can base a finding that there was any "good faith" involved in the communications or even the details of the actual advice. However, the question before this Court has nothing to do with "good faith;" it is purely a legal one.
The Bronx Defenders as well as counsel to The Bronx Freedom Fund also now argue that this Court - and for that matter any "criminal court" - is without legal authority to issue a ruling which would find that The Bronx Freedom Fund does not qualify for the Insurance Law § 4522(a)(3) exemption. They opine that this decision can only be made by the Commissioner of Insurance. It is curious that the corporation's attorneys would take this position now, given their unequivocal concession on the record that this "exemption does not apply" to The Bronx Freedom Fund. The Bronx Defenders also told the Appellate Division, First Department, in March 2007 in the Article 78 petition that The Bronx Freedom Fund was exempt under this statute in an effort to convince that Court to grant the writ that would prohibit this Court from conducting and completing this bail inquiry. After months of prolonged litigation, those attorneys ask this Court to delay its decision until some unspecified future date at which time the Commissioner of Insurance has had an opportunity to "clarify and resolve" issues about the operation of The Bronx Freedom Fund.
This Court is rendering a decision to either accept or reject the defendant's bail. Counsel to The Bronx Freedom Fund, and the Bronx Defenders, either ignore or fail to accept the fact that the legislature specifically authorized this inquiry and anticipated that this type of issue would be relevant to a bail inquiry. CPL § 520.30(1)(d) provides that a judge in a bail hearing may consider whether an "indemnitor" posting bail is "licensed" by the Department of Insurance as a factor to be considered in determining to accept or reject bail. Moreover, Insurance Law § 6803(b) provides that a "court or other public officer concerned in the matter" may examine "any depositor of security for bail" and "refuse to accept such bond or deposit" after determining whether "this or any other section of the law has been violated," including whether the "depositor" posted "security" for bail "in more than two cases not arising out of the same transaction and that the person is not duly licensed by the superintendent in accordance with the provisions of this chapter." [*17]
There is no question that The Bronx Freedom Fund was conducting a "bail bond business" and an "insurance business" when it posted the defendant's bail — the Bronx Defenders and counsel to The Bronx Freedom Fund do not even appear to argue otherwise. It would be inconsistent for the legislature to give a court direct authority to conduct an examination to determine whether someone is acting as a "bail bond" and "insurance business" requiring a license in connection with a bail inquiry, and not be able to consider the merits of the legal argument that the same individual or corporation has a statutory exemption from the licensing requirement. The Commissioner of Insurance has complete discretion to issue licenses, and give opinions about exemptions; but the Commissioner has no authority to decide whether to accept or reject bail. That decision is left to a judge. CPL § 510.40(3). The Court is relying on available law as the basis for its ruling. In concluding their memoranda of law, the Bronx Defenders and counsel to The Bronx Freedom Fund ask this Court to accept the bail. This Court will not delay its ruling on this legal issue in this fact-specific matter any further. Based on the evidence and the law, it is this Court's opinion that the exemption claimed did not apply when the bail was posted.[FN19]
First, in order to qualify for the Insurance Law § 4522(a)(3) exemption, the organization involved must be a charity at the time it engages in an insurance business and posts bail. The Bronx Freedom Fund was not a charity on February 26, 2009. The corporation was not granted IRS 501(c)(3) status until April 28, 2009, more than two months after bail was posted in these cases. Ms. Towns testimony indicates that Form 1023, the document required to be submitted to the IRS for this type of application, was not even completed and ready for submission before the bail was posted. The letter Ms. Towns received from the IRS states that the effective date of the fund's 501(c)(3) tax exemption is retroactive to the date that they were incorporated, November 6, 2007. It further explains that the tax exemption is for the fund and its donors under the federal tax code. Thus, donors who may have made a contribution directly to the fund on or after November 6, 2007 can claim that the donations are fully deductible for federal tax purposes.[FN20] The letter does not say that the IRS retroactively relieved The Bronx Freedom Fund from [*18]licensing requirements. The defendant, who has the burden of proof in these types of proceedings, Esquivel,158 Misc 2d at 726-728, has provided no authority for his suggestion that this tax decision by the federal government directly impacted or nullified this specific New York State licensing law. If this Court were to find that it did, it would only encourage a corporation to engage in a bail bond businesses for as long as 27 months without having the required New York State license and then claim that it was not acting in violation of the Insurance Law because it filed a 501(c)(3) application at the eleventh hour and is now a 501(c)(3) charity. Of course, the IRS can reject these applications. Insurance Law § 4522(a)(3) can only be read to require that the organization claiming this exemption be a recognized charity when it conducts an insurance business for which a license would be required.
Also of significance is the fact that The Bronx Freedom Fund was not even registered with the New York State Attorney General's Charities Bureau at that time the defendant's bail was posted. The Bronx Freedom Fund is organized under New York law, does all of its business in New York, and solicits its donations from inside and outside the state, including via an internet web site. Ms. Towns indicated that The Bronx Freedom Fund did not file any paperwork with the Attorney General until sometime in April 2009, after the IRS Form 1023 was completed and filed. Thus, in terms of public policy, The Bronx Freedom Fund could, at best, be considered an unrecognized and unregulated New York based charity at the time it posted the defendant's bail, and this violates New York public policy, providing yet another reason to reject the bail.[FN21]
Most important, Insurance Law § 4522(a)(3) also mandates that this exemption cannot apply to a corporation "organized or maintained primarily for the purpose of providing insurance benefits." This not-for-profit corporation was not merely organized "primarily" for the purpose of providing "insurance benefits" — this is the only reason for its existence. Language throughout the Insurance Law recognizes that bail is a type of insurance. Article 68 of the Insurance Law deals entirely with bail and bail bonds. Bail statutes and regulations were specifically collected from throughout New York statutes and placed within the Insurance Law. The legislative history indicates Article 68 was not only to be read to apply to traditional insurers, but also to individuals and corporations who do not write policies, but who post cash and property for others as collateral for bail. When a person or corporation posts bail for someone, they confer a type of insurance benefit. The plain language of Insurance Law § 6801 states that a person posting cash [*19]bail more than twice in a thirty day period is deemed to be conducting an "insurance business."[FN22]
It therefore makes no difference whether The Bronx Freedom Fund was a charity, recognized or otherwise, when it posted the defendant's bail: under the Insurance Law, it would not be exempt from obtaining a license required for every other corporation which was is exclusively engaged in a "bail bond business" and an "insurance business." If the exception the corporation purported to rely upon when it posted the defendant's bail were read in any other way, it would swallow up the rule. Otherwise, any corporation organized solely for the purpose of posting bail as a business would escape the strict regulatory requirements for all such insurance businesses.[FN23] [*20]
All of this, of course, supports The Bronx Freedom Fund's current attorneys' concession that this "exemption does not apply" to their client. This Court's long-delayed ruling about whether to accept or reject the defendant's bail has to be made. The Bronx Freedom Fund was conducting a bail business and an insurance business when it posted bail for the defendant; it did not have the requisite license to do. Accordingly the bail is rejected.
The People have also posed the question of whether the lawyers working for the Bronx Defenders committed an ethical violation because of their involvement with The Bronx Freedom Fund. They argue that if there is such an ethical violation, then the bail should be rejected for this reason as well. The People rely on former Disciplinary Rule 5-103(b) of the Code of Professional Responsibility, now Rule 1.8(e) of the Rules of Professional Conduct, which prohibits a lawyer from advancing or guaranteeing financial assistance to a client, either directly or indirectly. The defendant has presented opinion evidence from a professor at a law school who is an expert in the area of legal ethics. The professor's opinion is that no ethical violations were committed by the lawyers at the Bronx Defenders. This expert has advised this Court that there is no opinion by the New York State Bar Association directly on point to the question posed by the People, nor any New York State court decision that would recognize that the attorneys committed any kind of ethical violation.
The People argue that the factual basis for the purported ethics violation rests on "the extremely close connection between the Bronx Defenders and The Bronx Freedom Fund." The evidence presented to the Court demonstrates that The Bronx Freedom Fund has many legal ties to the Bronx Defenders. First, The Bronx Freedom Fund's Board of Directors has given specific legal authority to Ms. Towns to direct Bronx Defenders' employees to execute written undertakings and post bail from pre-signed, certified, Bronx Freedom Fund checks left in the custody of the Bronx Defenders. The Bronx Defenders and counsel to The Bronx Freedom Fund dismiss this bail posting arrangement a mere "ministerial act." It is far from that. The undertaking is a binding, legal contract between the person who signs it and the court, in which the "obligor acknowledges an understanding of the obligation and the risk" being assumed by the person posting the bail. Preiser, Practice Commentary to CPL §520.15 (McKinney's 1995). If the defendant's bail is forfeited in one of these cases, the Bronx Defenders' employee has agreed to the forfeiture of The Bronx Freedom Fund's money. That person has also assumed the legal role of "obligor." Since a "surety" is an "obligor who is not a principal," CPL § 500.10(12), the [*21]Bronx Defenders' employee also assumes the role of the "surety" by reason of signing the contract. If the bail is returned, the Bronx Defenders' employee gets the money back. This is because "[m]oney posted as cash bail is and shall remain the property of the person posting it unless forfeited by the court." CPL § 520.15(3). Ms. Towns testified that there is an agreement or understanding that when money is returned to the Bronx Defender's employee, this individual will give the money back to The Bronx Freedom Fund. This arrangement, agreed to by both the Bronx Defenders and The Bronx Freedom Fund, is hardly demonstrative of corporations that have no direct legal and financial ties — these are significant ties that bind the two entities.
There are other legal ties that involve the money in the bail fund. The Bronx Defenders' Chief Financial or Fiscal Officer, and purported member of their Board of Directors, is a signatory on The Bronx Freedom Fund's corporate bank account. No reason has been given for why a Bronx Defenders' executive employee needs to have legal access to The Bronx Freedom Fund's bank account. It would suggest that he, too, has some other defined role in The Bronx Freedom Fund organization, which is something that would have to be disclosed in corporate filings to the IRS and the Attorney General. This Court has received none of these filings from either the Bronx Defenders or The Bronx Freedom Fund. No matter what the reason, giving a Bronx Defenders' executive employee legal power over and access to The Bronx Freedom Fund's money creates another legal and financial tie.
There was no explanation given during the hearing about why the Bronx Defenders raised the money for The Bronx Freedom Fund — if it were truly a separate entity, it should have been doing its own fund-raising, as it did during "The Nation" drive. And, as the letter from the IRS to Ms. Towns implies, there is absolutely nothing preventing a not-for -profit-corporation from conducting fund raising in advance of filing an application for 501(c)(3) status. The Bronx Defenders' post-hearing submission refers to something called a "fiscal sponsorship agreement." It appears that these are agreements in which an established non-profit organization does fund raising on behalf of a not-yet-created but potentially new non-profit organization. In a section of the literature provided by the Bronx Defenders, which is subtitled "How Does Fiscal Sponsorship Work," the author writes, "Although sponsored programs are not completely independent - they are legally part of the sponsor organization - they nevertheless retain programmatic autonomy and often have separate advisory boards making their own strategic decisions." In a section of the same submission subtitled "What Are The Risks," the author writes that "fiscal sponsors are legally responsible for all of the activities of the groups they house."
During months of litigation, both appellate and otherwise, there has not been a single reference to the existence of a "fiscal sponsorship agreement" between the Bronx Defenders and The Bronx Freedom Fund. The People, in their reply memorandum, ask this Court to read the Bronx Defenders' post-hearing submission argument to be a concession that such an agreement does exist. This Court has seen no such agreement and cannot therefore make any findings about whether there is one, let alone what the terms of that agreement might be. The Court can only at this point conclude that the Bronx Defenders has made an argument to explain, by means of analogy, that in certain situations, non-profits have been known to fund raise for other [*22]non-profits as "fiscal sponsors."[FN24]
Finally, there are legal ties between Ms. Towns and the Bronx Defenders' attorneys that are created when those attorneys disclose information gathered in attorney-client interviews. During the bail hearing, the Bronx Defenders objected to Ms. Towns disclosure of the conversation she had with an attorney in a case in which she changed her mind about posting bail, based on the "attorney-client" privilege. Thus, Ms. Towns could not and did not reveal the substance of that conversation. That she would be bound by this privilege, and that she testified that she understands that these conversations are privileged, would make sense. After all, Ms. Towns has unrestricted computer access to legal files for all of the Bronx Defenders' clients. She keeps letters and documents relating to defendants represented by the Bronx Defenders, even after the cases have been dismissed and the records sealed. She also receives information from attorneys gathered through conversations with their clients in cases where she decides that bail should not be posted. CPLR § 4503(1) provides that the attorney client privilege binds the attorney and "his or her employee," and, in some cases, "agents" of the lawyers. See People v Osorio, 75 NY2d 80, 84-85 (1989). So, the clear understanding that Ms. Towns may not reveal information learned from Bronx Defenders' attorneys based on a client communication represents yet another significant legal tie between the two entities. If there were no such understanding, or relationship, this itself could pose an ethical concern.
Put simply, the ties between the Bronx Defenders, the Bronx Freedom Fund, and Ms. Towns are historic, financial, legal, and on going. But, that does not necessarily mean that attorneys working for the Bronx Defenders have committed any ethical violations. The ethics expert notes that while "[i]n criminal cases, the custom and practice in New York is that a lawyer should not post bail for his client . . . there is no controlling ethics opinion or treatise that opines that there is a per se prohibition on such a practice" in this State. The People point out that there is also no ethics opinion that would per se allow such a practice. This Court's independent research has disclosed no such New York authority for either proposition.
The American Bar Association (ABA) opinion in this area recommends that lawyers should consider being involved in the posting of bail for their clients only in "rare circumstances where there is no significant risk" that the lawyer's representation "will be materially limited by" [*23]any desire to recover the money given to the client. ABA Formal Opinion 04-432 (2004). There is apparently no ABA opinion that forbids an attorney from being involved in the posting of bail where no financial interests are implicated. Similarly, the only New York State Bar Association Committee on Professional Ethics opinion dealing with bail states that an attorney cannot act as a paid bail bond agent for his own client. NY Eth Op 647, 1993 WL 560287. The opinion, which cites DR 5-103(b), rests on the fiduciary interest a lawyer has in acting as a bail bond agent, and the financial conflict this creates with the attorney's ethical obligation to the client. The same opinion also recognized that a lawyer may act as a paid bail bond agent for a non-client without any ethical problems, as long as the arrangement is otherwise legal. The Bronx Freedom Fund is a not-for-profit corporation, as is the Bronx Defenders. This limited opinion cannot be the basis of a court ruling on the New York State ethics question posed by the People.
There are appellate cases in which attorneys have been disciplined because they gave financial assistance to a client. In Matter of Moran, 42 AD3d 272 (4th Dept. 2007), the Court upheld a referee's decision to sanction an attorney who brazenly admitted that he used intermediaries to secretly funnel his own money to clients for business loans, sometimes without their knowledge, to circumvent the disciplinary rule preventing him from giving the clients money directly. The Bronx Defenders publically acknowledge their creation of this fund, even referring to it as "The Bronx Defender's Freedom Fund" in a published press release. In Matter of Cellino, 21 AD3d 229, 233 (4th Dept 2005), the opinion of the Grievance Committee noted that the attorney in question violated the rule against a lawyer advancing funds to a client "when representing the client in connection with contemplated or pending litigation when the client is not indigent and the financial assistance does not constitute the expenses of litigation for which the client remains ultimately liable." Here, it is assumed that the defendant is indigent. Moreover, The Bronx Freedom Fund does not require that a defendant reimburse the money when bail is forfeited.[FN25]
Thus, there is no New York State authority which would directly support a finding based [*24]on the evidence known to this Court that an ethical violation occurred. It is within a court's power to render legal decisions based on existing precedent where questions of direct ethical violations are implicated. See People v Bell, 99Q013474 (Crim Ct, Queens Co 1999), (a judge may relieve a criminal defense attorney who has, by his actions, violated a disciplinary rule by making himself a witness in a case). But, since there is no clear legal precedent covering the unique and limited facts revealed in this bail hearing, this Court cannot issue a ruling on the ethical question raised by the People.
The final issue, and the one which is most important to the defendant, is what happens to his liberty once the bail has been rejected. CPL § 510.40(3) provides that if cash bail is not approved after it is posted, "the court must order that the principal be committed to the custody of the sheriff." The statutory language is direct, and unequivocal, but also contemplates disapproval before the defendant is released. On June 9, 2009, after counsel to The Bronx Freedom Fund conceded that the "exemption" to the licensing requirement previously claimed by the fund "did not apply," the Bronx Defenders asked this Court to change the defendant's bail conditions and release him on his own recognizance. At this time, the Bronx Defenders and counsel to the Freedom Fund insisted that the defendant's bail should still be found perfectly acceptable. The Bronx Defenders argued that the defendant's appearances in court represented a "change" in legal circumstances; the People opposed the application. This Court had not yet even received legal arguments about whether this specific bail would be accepted, let alone determined that the bail would be rejected. The defendant's appearance at the time was secured by bail. Exonerating the defendant's bail just because he appeared in court as required would have been improper. This did not amount to a change in legal circumstance — it was just what was expected of this defendant, and every other defendant whose appearance is secured by bail.
This Court does, as in any case involving the question of bail, retain inherent authority to review bail conditions at any time in determining whether to accept or reject bail posted, raise the bail, or lower it. It has long been recognized that a "bail order is ambulatory. It is dynamic until the question of bail becomes moot. It is subject to change, depending on such circumstances as come into being while the defendant is awaiting trial or during trial." People ex Rel v Mancieri v Doherty, 192 NYS 140 (Sup Ct Kings Co 1959); see also People v Mohammed, 171 Misc 2d 130, 135-37 (Sup Ct Kings Co 1996). The Court chooses to exercise that inherent authority at this juncture and review the bail conditions set by the arraignment judge.
That judge was sitting as a local Criminal Court judge at the time. This Court sits as an Acting Supreme Court Justice. Thus, we do not share coordinate jurisdiction in this matter. To be sure, the arraignment judge appropriately evaluated all the risks involved in releasing the defendant, and, based on all of the information known at the time, set bail, which was not at all excessive and which Ms. Towns called "pretty low." The charges are serious and remain so. Given the delays in actually concluding this inquiry, which are not in any way attributable to the defendant himself, his cases are now trial ready. During the long and convoluted route traveled between the beginning of the bail inquiry and its resolution, this Court has observed, first hand, that strong traditional ties exist that would be considered by any judge as part of a bail determination; the defendant's mother is directly involved in bringing him to court. She works a night job to support him, and has been present in court with her son on nearly every occasion, despite her very obvious exhaustion. This Court is satisfied, after considering and weighing all [*25]of the factors listed in CPL § 510.30(2), that the bail conditions can be changed. The strong, demonstrated, traditional, independent family ties between the defendant and his mother have facilitated his appearances, independent of the now-rejected bail. The Court has been told that the defendant's mother will not be able to afford to post any bail money for her son. The bond alternative ordered by the arraignment judge was not specified to be secured in any manner, and either the defendant or his mother could execute an unsecured surety or appearance bond, which would actually keep the bail conditions the same. CPL § 520.10(1) and (2). That will not be necessary. In the very unique and somewhat unprecedented circumstances of these cases, the defendant is released on his own recognizance, to his mother's custody. The legal problems identified in this ruling are not in any way of the defendant's own making, and should not inure to his detriment.
For the reasons stated in this opinion, the bail posted by The Bronx Freedom Fund is rejected. The Court releases the defendant on his own recognizance in the exercise of its inherent power and discretion.
This constitutes the Decision and Order of the Court.
Dated: Bronx, New York
June 22, 2009
_________________________________
Ralph Fabrizio, A.J.S.C.
Footnotes
Footnote 1:There is no information
available to this Court about when this crime was reported, and why the defendant was not
arrested until two after its alleged occurrence.
Footnote 2: The legislature has required that
such a release order be signed before cash bail is accepted. CPL § 510.40(3); see Matter
of Ralys, 156 Misc 2d 268, 270-71 (Montgomery Co Ct 1992). The practice, however, at
least in New York City, is that defendants are released before a judge even has an opportunity to
review the cash bail. This situation, which needs to be addressed, was not the subject of this
particular hearing. See People v Pullara, 172 Misc 2d 63, 67-68 (Nassau Co Ct 1997);
See also Bender, New York Criminal Practice, 1- 13A, Form 13:8. When the defendant
appeared on his own after the arraignment, and the file indicated that bail had been set, the Court
had no information before it about whether bail had been posted, or by whom. That is how the
inquiry began in this case, after the bail had been posted, but also after the defendant had been
released.
Footnote 3:The Court first heard of The
Bronx Freedom Fund on February 11, 2009, in connection with the case of People v
Francisco M, 00789C2009. That defendant was charged with assaulting a patient in the
psychiatric ward of a hospital, and was awaiting sentence on a separate misdemeanor sex offense
case. After the Court denied an application to change bail conditions set by the arraignment
judge days earlier and release the defendant to an attorney and a social worker from the Bronx
Defenders, Ms. Towns, who was present during the bail application, told a court officer she was
going to post bail. The Court ordered a hearing to examine the bail before the defendant was
released. The hearing did not take place because the bail was never posted.
Footnote 4: The attorney representing The
Bronx Freedom Fund at first declined to turn over these written criteria, arguing that they were
confidential. Eventually, they were turned over at the Court's direction. Public policy certainly
requires, at a minimum, that corporations posting bail as a business do not do so pursuant to any
secret rules or agreements.
Footnote 5: This Court is not able to
determine with any certainty at what point Ms. Towns' salary was transferred to The Bronx
Freedom Fund, or whether the Bronx Defenders was ever reimbursed for any expenses incurred
from paying her salary or benefits. While Ms. Towns states that her salary is now paid via direct
deposit from The Bronx Freedom Fund bank account, the Court does not know whether the
money comes from the original $200,000 capitalization given to the Bronx Defenders, from
additional fund-raising, or from other sources.
Footnote 6:The Bronx Defenders'
post-hearing submission refers to Mr. Cruz as "the interim Chief Fiscal Officer of Bronx
Defenders." There are no documents filed indicating whether he has a staff title at The Bronx
Freedom Fund, or why he needs to be a signatory on their bank account.
Footnote 7:There is no information about
whether this was a legal intern.
Footnote 8:Counsel to the Bronx Freedom
Fund argues that there is no requirement that a charity screen donors to determine whether
money donated comes from a criminal source. This Court does not dispute that general
statement. But The Bronx Freedom Fund is not just any charity. The money it solicits is
specifically earmarked for use in posting bail for individuals accused of a crime. Judges, as well
as prosecutors, are entitled to examine bail posted to determine "the source of any money
or property deposited . . . and whether any such money or property constitutes the fruits
of criminal or unlawful conduct." CPL§§ 520.30(1)(b) and (c). This places a special
responsibility on those who solicit donations for a bail fund to ensure that the all the money
provided comes from legitimate donors. Obviously, the money initially given to the Bronx
Defenders came from completely legitimate sources. But now it has been co-mingled with
money donated by people whose backgrounds are largely unknown. Public policy dictates that
the source of all money intended to be used to post bail be ascertainable. See People v
Agnello, 183 Misc 2d 694 (Sup Ct, Queens Co 2000).
Footnote 9:This testimony cannot be
reconciled with the statements made on the record to this Court on February 27, 2009 that The
Bronx Freedom Fund was already a 510(c)(3) charity, or with Ms. Towns' affidavit to the
Appellate Division, First Department, dated March 2, 2009, which states that the corporation had
a "pending" 501(c)(3) application.
Footnote 10:This, of course, is not really
a complete "flight risk" assessment. Ms. Towns just focuses on one part of what the legislature
directs a judge to consider in deciding whether to set bail. In addition to the factors looked at by
Ms. Towns, which are the defendant's "character, reputation, habits . . . employment and
financial resources . . . family ties, and length of his residence if any in the community," the
legislature has also instructed a judge to look at the defendant's "criminal record if any . . . [the]
record of previous adjudication as a juvenile delinquent . . . [the] previous record if any in
responding to court appearances when required . . . the weight of the evidence against [the
defendant] in the pending criminal action and any other factor indicating probability or
improbability of conviction . . . [and] the sentence which may be . . . imposed upon conviction."
CPL § 510.30(2)(a). The Bronx Defenders and counsel to The Bronx Freedom Fund's post
hearing submissions repeatedly state that a defendant's criminal history "does not bear on
whether the defendant will return to court." That statement is not consistent with this statute. To
recognize otherwise would be in contravention of this specific law and the public policy behind
it.
Footnote 11:During the hearing, current
counsel to The Bronx Freedom Fund sought to introduce evidence that sometime in 2008,
months after the corporation began posting bail, it sought legal advice from an attorney who
specializes in insurance law about whether it needed to be licensed by the Commissioner of
Insurance. The current lawyer for the Bronx Freedom Fund claimed that the actual conversations
between representatives of the corporation and that attorney, including the facts given to the
attorney, were covered by the attorney client privilege, and the privilege would not be waived.
The Court ruled that without knowing the factual basis for the attorney's advice, the opinion
would not be admissible for any purpose, and the opinion is not part of the record in this case.
Footnote 12: Contrary to the rulings in
People v Baker, 188 Misc 2d 821, 823 (Sup Ct, NY County 2001), People v.
McIntyre, 168 Misc 2d 556, 560 (Sup Ct Kings County 1996), and People v Esquival,
158 Misc 2d 720, 721-23 (Sup Ct NY County 1993), counsel for The Bronx Freedom Fund
argues that a court can never consider whether there is a personal relationship between the
person posting bail and the defendant in a bail hearing. While the facts of those cases are
different from each other, as well as the facts of this case, the legal premise underlying a court's
ability to consider the relationship between the person posting bail and the beneficiary of the
bail, a criminal defendant, is a sound one. This factor would have been relevant on February 27,
2009. Ms. Towns had no direct relationship or even contact with the defendant when she made
her decision to post bail. She probably would have met the defendant for the first time in the
courtroom. The delays in completing the hearing have made this part of the inquiry moot, as she
now obviously knows him.
Footnote 13:This type of information is
legislatively mandated. CPL § 520.15(2). It was the specific intention of the legislature that
the bail receipts for cash bail contain the same detailed information as that required in bail bond
affidavits, so that a court could review all of the relevant information and decide whether to
accept the bail, and the District Attorney could be apprised of the source of the money. See
Pullara, 172 Misc 2dat 67; Matter of Ralys, 156 Misc 2d at 270. Thus, when the
legislature requires that the person posting bail list their "occupation," it means that the person
should be required to say who they work for, and provide some sort of proof the same
information required to be obtained by licensed bail bondsman and disclosed to the court. The
court and corrections individuals who fill out these important documents need to make sure that
they obtain and report all relevant information, including the actual source of the bail if it is a
corporate one.
Footnote 14:The court clerks assisted the
People in locating more than 60 bail connected to Ms. Towns in the clerk's office after The
Bronx Freedom Fund denied requests to provide bail receipts from its records. The Bronx
Defenders objected to the introduction of the court's bail receipts into evidence in cases where
the charges against their clients were dismissed, arguing that these documents should have been
sealed. Ms. Towns keeps copies of all receipts in her own records.
Footnote 15:It is presumed that this
defendant gave permission to use the letter for this hearing.
Footnote 16:The Bronx Freedom Fund
argues this Court should find as a matter of law that it would be consistent with public policy to
accept this defendant's bail, because defendants for whom the corporation has posted bail in
cases that are now closed returned to court at a high rate. Since the corporation did not have the
required license when it posted the defendant's bail, the defendant's bail is not accepted, even
assuming the accuracy of this limited statistic.
Footnote 17:This exemption has also
been extended to those who write "aircraft insurance" policies.
Insurance Law § 6802(o).
Footnote 18:No judge reviewing the bail
receipts in these cases, and just about every other one in which bail was posted by The Bronx
Freedom Fund, would ever know that bail was posted by it rather than Ms. Towns. Ms. Towns
claimed that the clerks declined to accommodate her request that they include information that
she works for The Bronx Freedom Fund on the bail receipts. This may be an administrative
problem that needs to be addressed with the Department of Corrections. But that does not
explain how, based on information she testified she gave to Bronx County Criminal Court clerks,
bail receipts regularly list her as being affiliated with the Bronx Defenders. Whatever the cause,
the lack of accurate information prevents meaningful judicial oversight.
Footnote 19:The People argue that the
only exemptions from the licensing requirements for bail bond businesses are those listed in
Article 68, which currently are given to motor vehicle and aircraft insurance underwriters.
Insurance Law § 6802(o). They have provided an opinion letter from the General Counsel
to the Commissioner of Insurance, dated January 11, 2202, advising an individual that the
licensing exemption contained in Insurance Law § 2101(a), applicable to employees of
insurance agents, would not apply in situations where bail was posted by those agents, because
the legislature did not intend that there be any exemption to the licensing requirements for bail
bond businesses except for those contained within Article 68 itself. There is apparently no
opinion dealing with whether the Article 45 exemption claimed could ever apply to the Article
68 license requirement. This Court need not reach this question because the facts demonstrate
that The Bronx Freedom Fund would not have met the statutory criteria for this exemption when
it posted the defendant's bail.
Footnote 20:Thus, the donors who gave
to their money directly to the Bronx Defenders prior to November 2007 would not be able to
afford themselves of The Bronx Freedom Fund's exemption.
Footnote 21: Thus, aside from the
Insurance Law, The Bronx Freedom Fund may have also been in violation of Executive Law
§ 172. That statute provides that before any charitable organization solicits contributions
from New Yorkers, it must file a prescribed registration form with the Attorney General. The
evidence presented at the hearing shows that the corporation ran a fund-raising campaign,
created a website, collected donations from almost 50 people, and then filed the registration
form. So, The Bronx Freedom Fund appears to have been non-compliant with the law requiring
that it be registered with the Attorney General for regulatory purposes before it engaged in any
fund-raising, which would constitute yet another public policy violation.
Footnote 22: Rulings from the
Commissioner of Insurance in other contexts also recognize that bail is insurance. For example,
in Circular Letter No. 12 (1978) and Circular Letter No. 2 (1979), both addressed to "All Motor
Clubs Operating in New York State," the commissioner referenced "Benefits That Are Available
to Members of Motor Clubs Which Have Insurance Aspects." One of those benefits involved
"arrest and bail bond certificates." The Commissioner clearly stated that "motor clubs may not
provide bail bond or arrest certificates directly to its members." If they did so, they would be
"doing an insurance business without a license in this state, in violation of Insurance Law."
Footnote 23:On Friday, June 19, 2009, at
about 4:30 p.m., this Court received a Notice of Motion to Reopen the Hearing from the Bronx
Defenders. The motion seeks either to allow the attorneys to call witnesses from the Catholic
Charities of Onondaga County Jail Ministry Program, which the Bronx Defenders say it did not
learn about until about June 18, 2009, or for the Court to take notice of the information provided
about this organization. There will be no further testimony or delays in this case. The Court has
taken the time to review the submission, although the People have not had a chance to even
comment on it, and the Court is not even sure that the Assistant District Attorneys working on
this case have seen it. Contrary to the statements in the motion that the information contained
therein is "newly discovered evidence not previously available," the internet has much
information about this well-regarded charity. The Jail Ministry administered a bail fund on
behalf of the county government for 13 years, with money appropriated by the Onondaga County
legislature. Catholic Charities administers all sorts of programs in a multi-county area that is also
the Diocese of Syracuse. It has been in existence since the 1920s. It has a website that refers to
the many charitable functions it performs, of which the Jail Ministry is a part; it is hardly a
charity that was organized solely to post bail. www.ccoc.us. The Catholic Sun, a publication of
the Diocese of Syracuse, also has a story retrievable on the internet about the public-financed
bail fund administered under a contract with the county by the Jail Ministry. And a website
called evangelist.org has an archived story in which the founder of the Jail Ministry explains his
work. The money in the bail fund was appropriated by the government, and the program had
direct legislative oversight. A story in the Syracuse News from February 24, 2009 discusses the
program, and states that the county money was used to "post half of the bail set for defendants
accused — not convicted — of non-violent misdemeanors." www.syracuse.com.
According to information provided by the Bronx Defenders, the Jail Ministry bail fund, which
did not receive it budget this year because of an unfortunate cut in funding of many programs,
had direct judicial oversight, as the bail receipts reviewed by the judges all reflected the fact that
part of the bail was being posted by Jail Ministry, and obviously with county government
appropriated funds. The director of the Jail Ministry states in an affidavit that the organization
did not have an insurance license, and posted bail for 400-500 individuals a year. The Bronx
Defenders argue that Catholic Charities of Onondaga County is "remarkably similar" to The
Bronx Freedom Fund, and the fact that it posted bail without having a license should be
considered by this Court in determining whether The Bronx Freedom Fund needed a license
before it posted the defendant's bail. The Jail Ministry program was nothing like The Bronx
Freedom Fund. Even counsel for The Bronx Freedom Fund acknowledges in their post-hearing
submission that the corporation "appears to be the first organization of its kind."
Footnote 24: It is also noteworthy that the
Bronx Defenders' post-hearing submission states its understanding that "programs may choose to
be fiscally sponsored or may be incubated by a host organization during the period of time that
the project is awaiting(1) incorporation and (2) designation as a charitable organization
[501(c)(3)]." If a fiscal sponsorship agreement does exist, it is certainly curious that no such
corporate documents were brought to the Court's attention, or even to the attention of the ethics
expert. According to the Bronx Defenders, if a "fiscal sponsorship" agreement did or does exist,
it would have remained in effect until April 2009, when The Bronx Freedom Fund received its
"designation as a charitable organization." which was after the defendant's bail was posted. If
there is an agreement by which the Bronx Defenders "fiscally sponsors" The Bronx Freedom
Fund, that fact would indicate that these two corporations have yet another contractual and
financial link because of such a "sponsorship" agreement.
Footnote 25:There are court decisions,
bar association opinions, and statutes in other states which are directly on point. For example,
unlike New York, some states have enacted laws that directly prohibit an attorney from being
involved in posting bail for a client. See e.g., Mich. Comp. Laws § 600.2665; Wis. Stat.
§ 757.34; and N.C. Gen. Stat. § 15A-541. Bar associations in other states
have adopted bright line rules also prohibiting attorneys from being involved in posting bail in
criminal cases, for profit or otherwise, based on Rule 1.8(e). See Pa. Ethics Op. 94-12,
1994 WL 928014. But, even in states which prohibit attorneys from posting bail for clients,
the rule is sometimes interpreted differently where indigent clients are involved. State Bar of
Mich. Standing Comm. On Professional and Judicial Ethics, Op. RI-91(1991). In at least one
state, the bar ethics committee views bail as an "expense of litigation," and therefore recognizes
that lawyers who post bail for indigent clients act do not violate any disciplinary rules.
Oregon State Bar Ass'n Board of Governors Formal Op. 199-4, 1991 WL 279145. The
ethical question posed by the People is the subject of a continuing debate, and is far from settled.
See generally, The Lawyer's Query: May a Lawyer ethically Post a Bond or Serve as a
Surety on Behalf of a Client, 18 Georgetown J Legal Ethics 959 (2005); Take the Money
and Run: The Risky Business of Acting as Both Your Client's Lawyer and Bail Bondsman,
36 St Mary's LJ 933 (2006).
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