DECISION & ORDER The issue before this Court is whether to permit an unincorporated association, Free Them All for Public Health1 (“Free Them All”) to post $150,000 cash bail for a defendant who is charged with attempted murder and other felonies, and to whom Free Them All has no direct connection. With respect to this matter, this Court conducted an evidentiary hearing on August 17 and 18, 2020, and reviewed the following submissions: E-mail to Court dated 8/3/20 of Jamaal Jones, Esq., on behalf of defendant, with attachments E-mail to Court dated 8/4/20 at 10:12 a.m., of Sean Ubias, Esq., on behalf of the People, with attachments E-mail to Court dated 8/4/20 at 2:21 p.m., of Sean Ubias, Esq., on behalf of the People Letter to Court dated 8/6/20 of Rhiya Trivedi, Esq., on behalf of Free Them All for Public Health (Free Them All) Letter to Court dated 8/7/20 of Sean Ubias, Esq., on behalf of the People, with attachments Letter to Court dated 8/10/20 of Rhiya Trivedi, Esq., on behalf of Free Them All Letter to Court dated 8/21/20 of Jamaal Jones, Esq., on behalf of defendant E-mail to Court dated 8/21/20 of Rhiya Trivedi, Esq., on behalf of Free Them All E-mail to Court dated 8/25/20 of Rhiya Trivedi, Esq., on behalf of Free Them All Letter to Court dated 8/26/20 of Sean Ubias, Esq., on behalf of the People Court file Background The following information is gleaned from the parties’ submissions, the evidentiary hearing, and the Court file: a felony complaint against defendant was filed on or about June 6, 2020, in the Bronx County Criminal Court of the City of New York. The complaint alleges that on June 2, 2020, defendant pointed a loaded firearm at the complaining witness and discharged two rounds, one of which struck the victim in the chest. In addition, when police officers arrested defendant on June 5, 2020, they allegedly recovered two loaded semiautomatic pistols and additional ammunition from defendant’s person. The complaint charges defendant with Attempted Murder in the Second Degree, Criminal Use of a Firearm in the Second Degree, four counts of Criminal Possession of a Weapon in the Second Degree, and related crimes. On June 6, 2020, defendant was arraigned in the Bronx County Criminal Court. A Judge of the court fixed bail at a $300,000 insurance company bail bond, or $150,000 cash, or a $500,000 surety bond, partially secured with 10 percent cash. On June 23, 2020, another Bronx County Criminal Court Judge conducted a preliminary hearing to determine whether there was sufficient evidence to hold defendant for action of a grand jury (see CPL 180.10 [2]). The clerk’s entry in the Record of Criminal Action for this case indicates that, after the hearing, the court found reasonable cause to believe that defendant had committed a felony, namely, Attempted Murder in the Second Degree (Penal Law §§110; 125.25 [1]). Thereafter, defendant’s case was transferred to Supreme Court, Bronx County for grand jury action. On July 29, 2020, Caren Holmes posted defendant’s $150,000 cash bail while acting on behalf of Free Them All, which is organized as an unincorporated association. Holmes, an unpaid volunteer, is a member of the organization. After Free Them All posted defendant’s cash bail, the People applied for a bail sufficiency hearing as to whether “any feature of the undertaking contravenes public policy” (CPL 520.30 [1]). In connection with this matter, Holmes submitted her affidavit in July 2020 and testified at the evidentiary hearing in August 2020. Her affidavit states the following: Holmes is “an organizer with [Free Them All,]” which she describes as “ a grassroots formation.” In that capacity, Holmes “collected funds from numerous people who were concerned about New Yorkers being arrested and having bail set for exercising their right to protest during the recent uprisings for Black liberation and in solidarity with those protesting the murder of George Floyd in Minneapolis.” Holmes attached documentation of donations to Free Them All totaling more than $150,000, and indicated that the funds for defendant’s cash bail were drawn from a bank account holding all of Free Them All’s donated funds. At the hearing, Holmes testified to the following: Free Them All consists of about 30 members, all of whom are unpaid volunteers; Holmes is one of about eight “core members” of the organization. Free Them All solicited funds using Twitter and other social media. It also advocates through weekly phone banks and social media campaigning, and has organized rallies. Holmes’ descriptions of Free Them All’s mission in her testimony and affidavit are inconsistent. At the hearing, Holmes stated that the organization’s goal was “to advocate for incarcerated people during the [COVID-19] pandemic and against the deadly conditions happening in jails specifically in New York City,” but she also testified that the bail fund donors were “individuals…who were concerned about people getting arrested throughout the protests.” Explaining why Free Them All posted defendant’s bail, Holmes testified that the organization first heard of defendant when his mother contacted it, and determined that bailing him out was consonant with the organization’s mission, although he had not been arrested at a protest: “[W]e raise our money to post bails on behalf of people who are arrested associated with the protests, and [defendant] was arrested within the heightened policing related to the protest[s]…[W]e also raised an amount of money that was beyond what we had initially anticipated we would raise…. [W]hen defendant’s mother reached out to us, we saw it would be the mission of Free Them All to post the bail.” Holmes knew that defendant had not been arrested at one of the protests following George Floyd’s death and said she had no firsthand knowledge whether he had ever participated in the protests. In fact, she did not know any of the circumstances surrounding defendant’s arrest. Discussion As a threshold matter, and contrary to defendant’s claim, under CPL 520.30 this Court has the authority to conduct a bail sufficiency hearing about the circumstances of Holmes’s cash bail posting, because the statutory condition precedent to a hearing has been satisfied. Section 520.30 provides that, only in the case of cash bail postings, “before undertaking an inquiry…the court, after application of the district attorney, must have had reasonable cause to believe that the person posting cash bail is not in rightful possession of the money posted as cash bail or that such money constitutes the fruits of criminal or unlawful conduct” (CPL 520.30 [1]; see also People v. Shi Shen Yu, 50 Misc 3d 786, 788-794 [Sup Ct, New York County 2015, Dwyer, J.]). In the case of bond postings, a court need not make any preliminary determination before opening an inquiry. In Shi Shen Yu, a leading case on the subject at hand, Judge Dwyer analyzed CPL 520.30 [1] and addressed the distinction that the statute draws between challenges to cash bail and challenges to bond postings. The Court found that, in enacting the statute, “the legislature plainly limited cash bail inquiries so as to end them, if the surety is in rightful possession of the money and the money is not the fruits of illegal activity” (50 Misc 3d at 792). The Court added that, “[a]s a matter of policy,” it “disagree[d] completely with what the legislature has done in CPL 520.30 (1). It is absurd, in a cash bail case, not to permit the careful inquiries that are common in bail bond cases. If anything, more careful inquiries are appropriate in cash bail cases, where a professional is not available to assist in achieving the defendant’s return.” (50 Misc 3d at 793). However, the Shi Shen Yu court concluded, “the law is the law” (id.). This Court agrees both with Judge Dwyer’s reading of CPL 520.30 [1] and his criticism of the illogical distinction that the legislature drew between challenges to cash bail postings and bond postings. Accordingly, this Court will first determine whether the condition precedent to further inquiry has been satisfied here.2 I find that it has. Based on the parties’ submissions before the evidentiary hearing, this Court has reasonable cause to believe that Free Them All does not rightfully possess the bail funds. That is because, as this Court will further explain, when Free Them All solicited donations from the public and used the funds to post defendant’s bail, it was operating as an unregistered and unregulated charity, in violation of the Executive Law. I turn to the broader inquiry. Under the statutory framework governing the proposed bail post for defendant, Free Them All’s undertaking would violate the Insurance Law. In posting defendant’s bail, Free Them All would be acting as a “charitable bail organization,” which under the Insurance Law is a nonprofit entity which solicits donations and uses the funds to bail out third parties (see Insurance Law §6805). Charitable bail organizations can only use donated funds to post defendants’ bail if they have been certificated by the Superintendent of Insurance (Insurance Law §6805 [a]). The Superintendent may issue a certificate to a charitable bail organization authorizing it “to deposit money as bail for another…only if such entity is a non-profit organization pursuant to [Internal Revenue Code (26 U.S.C.) §501 (c) (3)], is registered as a charity pursuant to [Executive Law art 7-a], and is current on such registration” (emphasis supplied). In other words, under the Insurance Law all charitable bail organizations in the State must qualify as non-profit organizations under the Internal Revenue Code, and register as a charitable organization and be in good standing with the Attorney General. Insufficient evidence has been adduced as to whether Free Them All qualifies as a non-profit organization under the Internal Revenue Code, so this Court will assume that they qualify and turn to the issue of State registration and regulation. The Executive Law provides that “every charitable organization…which intends to solicit contributions from persons in this state…shall, prior to any solicitation,” register with the Attorney General (Executive Law §172 [1]). In addition, the Executive Law extensively regulates the operations of charitable organizations (Executive Law §§171-a to 177). Under the statutes, charitable organizations are required to file annual financial reports, registration statements, and other documents, which become public records in the office of the Attorney General. When soliciting, charitable organizations are also required to make certain disclosures to potential donors. In addition, the Executive Law prohibits charitable organizations from a number of activities, including making untrue material statements in registration statements and reports, using misleading advertising to solicit, failing to properly apply contributions, and failing to maintain proper books and records (id.) The Insurance Law further regulates the activities of charitable bail organizations. Among other restrictions, the statute limits them to posting cash bail in the amount of $2,000 or less for defendants who have only been charged with misdemeanors and who are financially unable to post bail (Insurance Law §6805 [b]). In Holmes’s testimony, she acknowledged that Free Them All has not been issued a certificate by the Superintendent of Insurance to operate as a charitable bail organization, and has not registered as a charitable organization with the Attorney General. Moreover, the proposed cash bail for defendant far exceeds the amount that a charitable bail organization can lawfully post, and a charitable bail organization cannot post bail for individuals like defendant who are charged with a felony. Accordingly, Free Them All did not did not rightfully possess the posted funds because it did not solicit donations or otherwise operate the organization in compliance with the Executive Law. Moreover, the organization’s posting of defendant bail violated the Insurance Law. The contention by Free Them All that it is exempt from regulation lacks merit. Free Them All argues that the Insurance Law statutes regulating charitable bail organizations only apply to entities conducting “a bail business,” and that an entity which does not post bail in more than two unrelated cases in a one-month period is not deemed to be conducting a bail business. It further contends that only persons, firms and corporations, and not unincorporated associations like Free Them All, are subject to regulation as charitable bail organizations under the Insurance Law. Accordingly, Free Them All claims, it is not conducting a bail business or subject to regulation because each of its members which posts a defendant’s bail, including Holmes, has refrained from posting more than two other bails in the prior 30 days.3 Free Them All’s position is based on a misreading of the relevant statute. Under the first subsection of Insurance Law §6801, “[a]ny 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 or execute as surety any bail bond 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 business and doing an insurance business as defined in [Insurance Law article 11].” (Insurance Law §6801 [a] [1]). Subsection two of the statute further provides that only two categories of entities can engage in a bail business in New York: (l) a for-profit “corporation authorized to write fidelity and surety insurance and to do a bail business pursuant to the licensing and regulatory provisions of article eleven of [Insurance Law article 11]” and (2) a nonprofit “ charitable bail organization holding a certificate issued by the [S]uperintendent pursuant to [Insurance Law §6805]” (Insurance Law §6801 [a] [2]). Given the overall statutory framework and the legislative intent underlying it, these somewhat ambiguous and inconsistent provisions of Insurance Law §6801 must be construed as providing that the only entities that can post bail for others are (1) individuals and other entities who have posted bail no more than twice in the past 30 days, using funds that they had not solicited from the public, and who are not deemed to be engaged in a bail business, (2) for-profit corporations which are authorized under the Insurance Law to write fidelity and surety insurance, who are engaged in a bail business, and (3) certificated, nonprofit charitable bail organizations, who likewise are engaged in a bail business. Thus, a charitable bail organization like Free Them All, regardless of how frequently it posts bail, is conducting a bail business which is exempt from Article 11 regulation but is instead subject to regulation by Insurance Law §6805. The legislative history and underlying legislative intent of Insurance Law §6805 supports this Court’s reading of the relevant statutes. Section 6805 is the successor to proposed legislation that, in 2011, was approved by the legislature but vetoed by Governor Cuomo (2011 NY Senate-Assembly Bill A.8158 — A/S.5734-A). The bill would have recognized charitable bail organizations and required them to register as a charitable organizations with the Office of the Attorney General, but did not restrict for whom the organizations could post bail or what amount they could post (id.). In his veto message, Governor Cuomo explained that the bill “seeks to create ‘charitable bail organizations’ with the laudable goal providing bail to poor persons. However, it does so in a manner which provides no meaningful oversight or regulation of such entities” (Governor’s Veto Mem, Bill Jacket, 2011 NY Senate-Assembly Bill A.8158 — A/S.5734-A at 5). In 2012, a successor bill was enacted by the legislature and approved by Governor Cuomo. It addressed the deficiencies in the vetoed bill by subjecting charitable bail organizations to authorization and regulation by the Superintendent of Insurance, and restricting who they could bail out and how much they could post (see NY Assembly Memo in Support of Legislation, Bill Jacket, L 2012, ch 181 at 7 ["This (bill) provides a structure for (charitable bail organizations) to exist and operate under the purview of the Insurance Department"]; Div. of the Budget Bill Memo, Bill Jacket, L 2012, ch 181 at 9 [under the legislation, the "sole purpose" of charitable bail organizations "would be the posting of cash bail for persons charged with misdemeanor offenses but financially unable to post bail"]; Letter in Support, NY Dept. of Fin. Servs., Bill Jacket, L 2012, ch 181 at 13 (the legislation “limits the type of bail business a charitable bail organization may conduct so as to deter ‘undesirable persons’ or criminal syndicates from engaging in a bail business as a charitable bail organization”]; Letter in Support, Steven Banks, Attorney-in-Chief, The Legal Aid Society, Bill Jacket, L 2012, ch 181 at 18 ["The restriction limiting 'charitable' bail to misdemeanor cases prevents any undue risks to public safety, and the $2,000 limit will prevent any undue risk to charitable funds"]). This Court concludes that the proposed posting of defendant’s $150,000 cash bail by an unauthorized organization which obtained the funds by soliciting donations from the public conflicts with the policy underlying both the regulation of charitable organizations and the purpose of bail. The registration and compliance requirements for charitable organizations are intended to “regulate…the operation of organizations which…violate the law by failing to register or by engaging in what is tantamount to fraudulent solicitation” (Green v. Javits, 1 AD2d 342, 344 [1st Dept 1956]; see also Viguerie Co. v. Paterson, 94 AD2d 672, 673 [1st Dept 1983] [enforcement of the provisions of article 7-A of the Executive Law is an "exercise of the State's police power, to prevent fraud and safeguard the public welfare in respect to charitable solicitations"], affd 62 NY2d 871 [1984]). Free Them All’s operations thwart that intent.4 Bail is intended to assure a defendant’s continued appearance in Court proceedings (see People ex rel Weisenfeld v. Warden, N.Y. Detention Facility at Riker’s Is., 37 NY2d 760 [1975]; People ex rel. Lobell v. McDonnell, 296 NY 109 [1947]). When bail is posted by the defendant’s family, or defendant’s close friends, it is assumed that the defendant will be motivated to return to court, based on the defendant’s loyalty to his family or friends, who risk losing the funds should defendant abscond (see People v. Baker, 188 Misc 2d 821, 827 [Sup Ct, New York County 2001]). In this case, defendant, who has been charged with serious crimes that carry lengthy prison sentences, has no direct relationship with Free Them All; rather, the organization is linked to defendant through his mother. However, defendant’s mother will not suffer any economic harm if he fails to return to court. Moreover, defendant has no significant incentive for loyalty to Free Them All, because he has no connection with the persons who donated his bail money. Defendant cannot be concerned that those donors will lose their contribution if he absconds, because the donors do not expect the return of their money. In short, defendant would have no “skin in the game” if Free Them All posted his bail. Accordingly, it is ORDERED that defendant’s bail proffer is rejected. The foregoing constitutes the decision and order of the Court. Dated: September 1, 2020
