‘The system is tearing families apart.’ Group urges state to drop bail bonds investments

Racial justice activists urged a state board Thursday to stop investing with a private equity manager that has a majority stake in one of the nation’s leading bail bonds companies.

“The money-bail cash trail leads back to your door,” Scott Roberts, senior director of criminal justice campaigns for Color of Change, told the Washington State Investment Board. “The system is tearing families apart every day. It’s a crucial pillar of mass incarceration.”

The State Investment Board, which manages billions of dollars in investments for state pension and other public trust funds, said it will consider the request from Color of Change, a nonprofit advocacy group based in Oakland, California. The investment board typically does not divest in any of its investments based on social justice issues alone, said its institutional relations director, Christopher Phillips.

Since 2004, the state has invested $335 milllion in four funds with Endeavour Capital, a Portland-based firm with an office in Seattle. In 2011, the state invested $95 million in the Endeavour fund that includes the majority ownership in Aladdin Bail Bonds, among several other holdings.

“What this board does matters. If this board does nothing, it only encourages Endeavour Capital to keep making the types of investments that they have been making, preying on people, including people right here in Washington state,” said Jim Baker, executive director of the Private Equity Stakeholder Project, an activist group which joined Color of Change in asking the state to end its investments with Endeavour.

On Friday, Leland Jones, Endeavour’s managing director in Los Angeles, said Aladdin is a “well-managed company that operates with impeccable professional standards in helping its clients secure legally-protected release. We believe the underlying criminal justice issues probably largely revolve around sentencing reform and in the case of bail to some degree, the setting of pricing of bail by judges.”

Jones said Aladdin supports reforms of the bail bonds system, specifically to reduce the pre-trial incarceration rate for people of color. The firm’s proposal is for the bail system to operate alongside a case review process that the courts would manage. Those unable or not interested in posting bail would move through the court’s case review while others could work through a bail agent, providing more options for those in custody, Jones said.

“These systemic changes would also address abuses to the bail system by providing defendants with a refund if their case has been dismissed,” according to an Aladdin written statement. “Aladdin’s proposal would not only improve efficiency within the bail system, but also make bail more fair, affordable and accessible.”

Abbey McMahon, a King County public defender and a member of SEIU Local 925, said the state’s investment in Endeavour is appalling.

“People of color are statistically more likely to be held in pre-trial detention and people of limited socioeconomic means are asked for impossible sums of money to obtain their freedom,” McMahon said. “While our clients sit there in jail, they lose their social service benefits. They lose their housing. They lose their jobs. They lose custody of their children, and they become more likely to keep cycling through the criminal justice system because they lose everything.

“The cash bail system that Endeavour Capital funds does nothing to further justice and in fact leads to more people pleading guilty simply to get out of jail. It creates a system where the rich can walk the streets, free from pre-trial detention while poor people are left to rot in jail.”

A trade group, the Washington State Bail Agents’ Association, on Friday released a statement: “Commercial bail has long served a vital role in the criminal justice process by securing release and assuring appearance at court of the accused. While efforts to improve the system are always welcome, the WSBAA and others engaged in the current process, understand and appreciate the role of commercial bail as one option for judges when making difficult pretrial decisions.”

As the general partner in the investment funds, Endeavour Capital decides what companies to invest in for its portfolios. The State Investment Board is a limited partner in the funds, said Phillips, its institutional relations director.

“So we can’t direct the general partner to buy and sell anything. We can, and we do, keep them informed of any issue that we may have, any issue that public groups may have — investment, social, environmental. We pass along any concerns that are raised,” he said.

Baker, the executive director of the Private Equity Stakeholder Project, said the State Investment Board could sell its stake in the Endeavour fund that includes the majority ownership in Aladdin.

“It’s a little bit trickier than selling stocks, but it’s not impossible. It is doable,” he said.

Phillips said the board has not considered that option because it would involve selling at a discount and “therefore would not be in the best interests of our beneficiaries.”

Baker said Endeavour likely will ask the State Investment Board soon for additional capital as it attempts to raise money for a new fund. He urged the board to decline making any investment.