BAIL-BOND COMPANIES TAKE BIG RISKS

Two In Drug Case Now Missing Leave Firms Facing Huge
Losses

The bail-bonding business can be a lot like gambling, said Stan
Wilson, who has owned Liberty Bail Bond Co. for three years.

"Even under the best circumstances, you risk losing your money," he
said.

It is not the best of circumstances for Roy E. Adams, the agent in the
Scottsboro office of All State Bail Bonding Co., an affiliate of
Capital Bail Bonding Inc. based in Reading, Pa.

On Jan. 9, Madison County Circuit Judge Bruce Williams ordered Adams
and All State Bonding/Capital Bail Bond to forfeit the $575,000 cash
bond guaranteed for accused drug trafficker Silvero Perez after Perez
failed to show up for two different court dates.

The first installment payment, $10,000, was due by
today.

When a cash bond is forfeited, the money is turned over to the
Administrative Office of Courts in Montgomery. The court that took in
the bail money gets half and the state gets half.

The A Alabama Bail Bond Co. Inc. of Huntsville, which guaranteed a
$575,000 cash bond for Perez's partner, Amador Ortiz, might soon face
a similar judgment.

Forfeiting Money

The story started in December 2000 when Huntsville police arrested the
two Texans, Perez and Ortiz, in a drug sting at a local motel. The 13
pounds of uncut cocaine seized at the motel was the largest amount
ever confiscated in Huntsville, but police and U.S. Drug Enforcement
Agency agents soon came to believe the men had smuggled in nearly 100
pounds during that month alone.

Perez, 28, and Ortiz, 27, were accused of delivering more than 70
pounds of cocaine to Leonard "Seekie" Smith in late December 2000.

Smith, police said, directed authorities to Perez and Ortiz. Perez and
Ortiz told authorities that Smith had kept most of the cocaine for
himself and his drug distribution network.

Smith, 34, of Huntsville was eventually charged with trafficking and
conspiracy under the state's drug kingpin law. He is in Madison County
Jail with bonds totaling more then $2 million. No trial date has been
set in his case.

Perez and Ortiz were also charged with trafficking, a charge that
carries a sentence of up to life in prison.

Their bail was originally set at $750,000 each by the county warrant
magistrate, but Judge Karen Hall reduced bail to $575,000 each after
Ortiz's lawyer, Patrick Hill of Huntsville, argued that his client was
entitled to reasonable bail.

"We pointed out that the defendants were significant flight risks and
had no connections to the community, so we asked for high bail," said
Don Rizzardi, an assistant district attorney.

But the bail-bond companies took the risk, and the two were released
in February.

How Bail Works

Bail is the temporary release of a prisoner in exchange for money or
property to guarantee the person's return to court. A bail bond is a
formal, written agreement signed by a criminal defendant or the person
who puts up the money for bail to guarantee compliance with the
court's terms.

Anyone who is accused of any crime in the state of Alabama is entitled
to bail under its constitution. However, bail is usually denied to a
defendant accused of a capital murder.

In Alabama, a magistrate initially sets the bond amount according to a
bail schedule listed in the Alabama Rules of Criminal Procedure, said
Huntsville attorney Fred Simpson. For drug trafficking, the bail can
be up to $1 million.

Some things that a magistrate or judge can consider in setting the
bail, Simpson said, include the defendant's age, family, ties to the
community, prior criminal record, other pending cases and his
likelihood to commit violence or commit the same type of crime while
on bail.

Most bonding companies charge a client 10 to 15 percent of the bond
amount in exchange for assuming the responsibility for paying the
total bond if the client doesn't show up in court.

Wilson, the owner of Liberty Bail Bond, said he will not guarantee
bonds as high as those demanded for the Texans, and he looks for more
security than 10 percent.

"It's like borrowing money from a bank, because you look for
collateral," he said.

He also likes his clients to have relatives in the community with
property and jobs or other income.

There are two different kinds of bail-bonding companies: professional
bail bonding companies like Liberty and A Alabama; and surety
companies, like All State and Capital. Capital is one of the largest
bail-bonding companies in the United States with affiliates in 48
states, said Tuscaloosa attorney John T. Fisher, who represents
Capital in Alabama.

Professional bail-bond companies must post a $25,000 certificate of
deposit with the court, said County Circuit Clerk Jane Smith. Once
that is done, there is no limit on the amount of bail bond the company
can assume, "but the bail-bondsman is responsible for all bond
forfeitures."

A surety bail-bonding company has something to back the bonds it
issues, often insurance policies.

"I'm not sure whether it was an insurance-backed bond in this case,"
Fisher said, "but the bond is backed by Capital."

Missing Defendants

Perez missed two trial dates, both in September. Though officials know
he often crosses the border into Mexico near the town of McAllen,
Texas, Perez has dodged both All State/Capital bounty hunters and
federal authorities, Fisher said. Perez is wanted by U.S. marshals on
federal charges of drug trafficking and money laundering in New York
state.

Perez spends a lot of time in a Mexican town - Monterrey, Nuevo Leon,
- - so notorious that it is dangerous for bounty hunters to try to catch
him there, according to papers Fisher filed in court.

"The feds asked us to cease our efforts to apprehend him," he said.
"So we were stuck between a rock and a hard place."

Judge Williams ordered All State/Capital to pay the court $10,000 by
today, then $3,000 per month over the next five months, then $25,000 a
month for the next 22 months.

Payments will continue until the $575,000 is paid or until someone
catches Perez, Fisher said. Once the court gets its money, there's no
refund, even if Perez is caught.

"After 60 or 90 days, if (U.S. marshals) have not apprehended him, we
are going full speed ahead and get him ourselves," Fisher said. "We
are not going to sit back and pay the money when we believe that this
guy can be apprehended."

Ortiz missed trial dates in October and on Jan. 7. He is scheduled to
appear for trial on Feb. 11. Rizzardi has asked the state to start the
bond forfeiture process if Ortiz doesn't show up.

Ortiz's lawyer, Hill, said Ortiz has not been informed of the trial
dates. All of the notices Hill mailed to Ortiz were returned unopened,
he said.

Jeff and Cathy Baucom, owners of A Alabama Bail Bonding, were not
available for comment. But an agent with the company said they are
making every effort to track Ortiz. His release was secured by a house
in California, the agent said.

"We have been in touch with his family in California," the agent
said, "and we hope to have him in court."