Instead of the judge holding them in custody, they get released into the community on bail.

What’s going on?

In Minnesota, as in other states, the state constitution in the Bill of Rights, Section 5  says: Excessive bail shall not be required.  Further, it’s been accepted in law that the purpose of bail is to protect the public and prevent flight.  So if it’s a right for every accused person to “get bail” to get out, how does it work?

There are two ways an accused can post bail.

1.  The defendant can give the amount of the bail to the court in cash.  This may be possible if the bail is set law, under $5,000.  But when the allegations are more serious, bail could be in the $100’s of thousands–difficult for almost anyone to come-up with.  If the defendant is wealthy and there’s strong evidence the defendant may run, like Tom Petters  in his fraud case in Minnesota, bail may be denied.

2.  The second method is to contact a bail bonding company.  These are companies that guarantee to the court the full amount of the bail–even if the defendant runs at which time the full amount of cash would be due to the court, payable by the company.  To offer this guarantee, the companies charge 10% of the amount of bail as a non-refundable fee to the accused.

Does the bonding company lose all of the money?

Usually not.  As part of the bonding contract, the company will demand security–often a co-signer with assets or an income.  If the accused boogies out of the state, the company can turn to the co-signer who will try to get the accused to come back and turn himself in.  If he does that, the bail can be re-set without forfeiting any of the money.  If the accused disappears for good, the company will demand reimbursement from the co-signer.  Sometimes, if the accused has an asset such as a house, the company will take ownership of the house and try to sell it to compensate themselves.

The bonding company can recover by actually hunting-down the accused person and bringing them back to the jurisdiction from which they fled.  They can talk them into returning or try to force them to do so.  Most bonding companies have a wide network of informants and “enforcers” to help them get the defendant back into court.

Once the case is over, the bail status is discontinued.  If the defendant has put their own cash with the court, it would be refunded.  If they’ve bought a bond, the 10% fee is non-refundable and remains with the bonding company.

The post Accused Criminals Released appeared first on Colin T. Nelson.

I’ve written lately about the convictions of con men–one locally in Minneapolis, Tom Petters and of course, Bernie Madoff. As a criminal defense lawyer, I’ve represented con men in the past. In my last post I suggested that one of the reasons they are successful is that their “victims” are willing partners.

What?

I’m not talking about charitable foundations, elderly people, or naive people who didn’t understand what they were getting into. I’m thinking of those wealthy people that both these con men sought out at country clubs and business networks. These are people who usually investigate the way they spend their money carefully. But in the case of these scams, the investors didn’t look much at all.

Why? Greed is a big factor.

All of us want to “get in on” the inside track of investing to make a huge score that we couldn’t ordinarily get from our 401k’s. The con man offers that illusion and if questioned, even backs it up with phony numbers. Usually, these types of investors turn over every rock to make sure what they’re putting their money into is legitimate. But they didn’t do that.

Of course, the skill of a con man is to build up trust so that investors will specifically not check out the deal as carefully as they normally would do. Still, when greed starts to rise, any of us can ignore the safeguards we put into place to protect us.

The con man bears the blame for the crime but doesn’t it make sense that smart, savvy investors, driven by greed should bear some responsibility? Their greed led them to give the crooks their money without much questioning. Or maybe once the scam breaks open, we should make sure the naive and uninformed victims get compensated first with whatever’s left. The sophisticated investor goes to second place in the recovery.

I know this sounds opposite to every idea we have about victims and their rights but these scams are different crimes than others that could only occur because greedy people think they’re getting on the inside track to make big money. Shouldn’t they bear some responsibility?

What do you think? Should we treat these “victims’ differently?

Check out my web site at: www.colintnelson.com

The post Should Victims Pay? appeared first on Colin T. Nelson.

Ponzi scheme tycoon Tom Petters was just convicted here in Minneapolis. Along with guys like Bernie Madoff, he stole billions of dollars. What I always wonder, and you may also, is:

How do these guys get other normal people to give them so much money? I have a hard time just getting my friends to buy me coffee!

As a criminal defense lawyer, I’ve represented con men over the years although not as big as these guys. I’ve talked to and cross-examined the victims and think there are three reasons con men can wiggle dollars out of tight places.

1. Trust The fundamental factor to start everything. The personalitites of con men are attractive and trustworthy anyway. They purposely sell the sense of trust right from the start. Remember, these guys don’t go door to door asking for money. After a few great scores (that may be legitimate) the clients rave about how good the con man is at making money for them. They refer to their friends and business people.

2. Exclusivity Any of us can call an 800 number to Fidelity or T Rowe Price and make an investment. (these are both good companies, by the way!) Imagine how flattered you’d feel if you were referred to someone who could do better by far, than the investments the “public” had to limit themselves to? This idea of an exclusive deal that only a few select people get access to–and there is usually a limited time to take advantage of the great opportunity–is very attractive to most of us. To be a member of the group that gets the “inside” track on investing is powerful and the con man knows that. There’s a little bit of arrogance here, on the part of the investor. The idea that the investor doesn’t have to swim with the masses; they have a superior opportunity.

3. Greed This is the ultimate hook the con man pulls on. Underlying the two previous reasons is the human factor of greed. The chance, the hope, the long shot that you can make a killing–combined with the trust established and the small group of “lucky” people chosen to get in on the great deal–pushes most people over into the con man’s grasp. When you see the results from the first few who introduced you, your eyes began to water.

I guess that leads to an interesting follow-up idea: if the investor is partly to blame, should that be taken into account during a trial of a con man or during the sentencing? After all, the con man couldn’t have committed the crime without a “willing” victim. What do you think?

The post How Did Madoff and Petters Do It? appeared first on Colin T. Nelson.