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Lawsuit: Nexus bond scheme feeds feed off immigrants 'like a parasite'

Brad Zinn
The News Leader
Nexus Services Inc. in Verona.

HARRISONBURG - In a lawsuit labeling Nexus Services Inc. as a company “embracing immigrants only to feed off of them like a parasite,” six people from Central America are suing the Augusta County business for more than $1.5 million, according to paperwork filed in Rockingham County Circuit Court.

The lawsuit, among other allegations, claims Nexus fraudulently induces immigrants to enter into long-term contracts that require them to pay exorbitant monthly fees while wearing an electronic GPS ankle monitor.

On Thursday afternoon at 1 p.m., Nexus held a press conference in Falls Church outside of the Legal Aid Justice Center, which filed the suit. 

“Nexus cares about immigrants, and the Legal Aid Justice Center cares about headlines and donations," Nexus CEO Mike Donovan said in a press release. "The LAJC’s actions, if they were successful, could actually force tens of thousands of immigrants to return to abusive and dangerous detention camps that have drawn scorn from international human rights agencies. For an organization that claims to protect immigrants from exploitation, the Legal Aid Justice Center’s misguided tactics are actually doing the Trump administration’s bidding at the taxpayer’s expense.”

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Nexus, through its Libre by Nexus arm, helps post bond through third-party licensed bondsmen with federally-approved insurance companies for people being held in immigration detention centers while they await their court cases.

In exchange for their freedom, customers sign contracts promising to pay a monthly fee. Many are made to wear the company's GPS ankle devices at a cost of hundreds of dollars per month, the lawsuit says.

Nexus is said to have 30 offices in eight states. The lawsuit states the company also has an office in El Salvador. 

"Libre attempts to camouflage its practices by casting itself as a champion of immigrants and a re-uniter of families, when in reality its scheme traps desperate immigrants into paying thousands of dollars, often in amounts far exceeding their bond, sometimes sacrificing their basic necessities to do so," the lawsuit claims.

The Legal Aid Justice Center said Libre has used two different types of contracts since 2013 that require customers "to make hundreds of dollars in monthly payments for years" with the total "almost always greater than the immigrant’s bond amount, and far exceeds the 10-15 percent of the bond amount that a licensed bail bond company could charge under Virginia law."

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The first contract, used until 2017, is 22 pages with 20 of them written in English, according to the lawsuit. The two pages written in Spanish "have been poorly translated from English to Spanish," resulting in confusing and misleading language, the lawsuit states.

Michael Donovan

The contract is between Libre, the customer and an unspecified government "agency," leading signees to believe their non-compliance could lead to re-arrest, another stint in detention or disposition of the case, the lawsuit says.

"In fact, unlike licensed bail bond agents in Virginia, Libre has no authority under state or federal law to compel the immigrant to appear at their court hearing or deliver the immigrant back to immigration custody," according to the lawsuit.

The customer is required to pay 20 percent of the bond upfront, a $420 advance payment, a $460 activation fee and monthly payments of $420 to lease a GPS ankle monitor, the lawsuit says.

The contracts for most customers can be "measured in years, not months," the lawsuit claims.

Libre — which translates to "free" in Spanish — is also accused of misleading customers by using a “risk assessment" that the lawsuit says "always produces the same result: the customer is always required to lease and wear a GPS monitor in order to secure the bond."

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The revised contract has several mandatory fees, according to the lawsuit, but those with bonds of $4,999 are no longer required to wear a GPS monitor, and those with GPS can have them removed once 80 percent of the fees are paid.

According to Libre’s financial records introduced in another lawsuit, the company collected approximately $99 million between January 2016 and October 2018 in “customer deposits” and “combined client income,” the lawsuit states.

"Libre paints itself as a champion of immigrant rights and in the business of reuniting families," the lawsuit says. "In reality, Libre is an unlicensed middleman, embracing immigrants only to feed off of them like a parasite."

The lawsuit claims the GPS monitoring used by Nexus is unnecessary since it's not ordered by any court, judge or immigration authority. "In fact, ICE runs its own GPS monitoring program, which it operates free of charge for immigrants. Licensed surety and bail bond companies in Virginia would not be able to require their customers to wear GPS monitoring as a contractual condition," the lawsuit says.

The lawsuit states Nexus is incapable of monitoring many of its customers, and said the company has changed vendors twice in three years but failed to inform most of its customers and didn't switch out new GPS devices.

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The lawsuit isn't the company's only legal problem. In 2017, the federal Consumer Financial Protection Bureau filed a petition in federal court to force Nexus Services and Libre by Nexus to comply with a civil investigative demand issued earlier that year, the lawsuit notes. That investigation continues.

The Virginia Attorney General's Office is investigating the company and filed a petition in 2017 in state court to enforce its own civil investigative demand. The Virginia State Corporation Commission’s Bureau of Insurance also has initiated an investigation into the company for violations of the state’s insurance code, the lawsuit states.

The New York Attorney General’s Office filed a petition to enforce a similar order in March 2018. Libre also faces lawsuits filed by consumers in New York and California.

However, the most recent lawsuit alleges Nexus shouldn’t be in the bonding business at all. Its principal owners, Donovan and his domestic partner, Richard Moore, are both convicted felons, prohibiting them from becoming licensed bail bondsmen or serving as agents of a bail bondsman, the lawsuit states.

The lawsuit claims Donovan and Moore devised an "immigration bond scheme" around 2012 when Libre started making agreements with licensed surety companies. The licensed surety companies, through bonding agents, would guarantee bonds with the federal government for detained immigrants at the request of Libre, the lawsuit says.

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In exchange, Libre would collect a premium on the bonds from the detained immigrant, transfer a portion of it to the licensed surety company and their agents at the bail bond company, and indemnify the surety company for any bonds forfeited, such as when an immigrant failed to show at a hearing. The lawsuit claims "a portion, if not all, of these insurance premiums was collected in violation of Virginia law governing insurance."

The lawsuit states that Libre contends federal and state laws that regulate the surety insurance and bail bond industries do not apply to the Verona company "because Libre is not the company that makes the guarantees with the federal government. Because it considers itself outside the scope of such regulations, Libre charges its customers more than any licensed surety company and its bail bond agents would be allowed to charge under those statutes and requires its customers to wear and be surveilled by GPS monitoring devices, which licensed and regulated sureties in Virginia could not do."

The lawsuit says Nexus, along with Libre, moved their headquarters to Atlanta, Georgia in March, but said its principal place of business remains in Verona.

Each of the six plaintiffs are seeking more than $250,000, according to the lawsuit.

But the court filing questions whether Nexus can come up with the money if the lawsuit is successful, and claim that Donovan and Moore have disregarded the corporate structure of Nexus and Libre by commingling funds and taking out interest-free loans from the corporations.

"Upon information and belief, both Nexus Services and Libre by Nexus, together or separately, lack sufficient assets to provide a complete remedy for the plaintiffs," the lawsuit says.

Reached by phone following the press conference in Falls Church, Donavan said he's confidant the lawsuit will be dismissed.

"The complaint is full of falsehoods," he said.

The Nexus CEO said after reading the lawsuit, he came to the conclusion that the attorneys handling it don't understand Libre's business model.

"These lawyers are word vomiting confusion on these pages," Donovan said. "They don't understand bonding in general."

In a portion of the lawsuit that claims Libre collects premium on the bonds and transfers them to licensed surety company, Donovan said Nexus never shares premiums with bond agents.

"We purchase bonds from bail agents," he said. "This is another example of either outright lies or a complete and total misunderstanding of a business model."

Donovan said the six plaintiffs in the case all had a licensed bail agent and a licensed insurance company working on their behalf. 

Donovan believes the Legal Aid Justice Center is simply trying to get exposure with the lawsuit, and claimed he recorded one of their attorneys during a webinar for immigration lawyers, held prior to the lawsuit's filing, stating that Libre's business model was "generally legal in most states."

He also took issue with claims that Nexus earned $100 million in less than three years while also hinting at money flow problems. Donovan called it a "below the belt slap" and added "the entire lawsuit is one big lie."

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Have questions or a tip? Email Brad Zinn at bzinn@newsleader.com. You can also follow him on Twitter.