Montana State Auditor James Brown suspended the insurance producer license of a bail bondsman accused of exploiting people under his supervision, inclu
ding trading services for sex and allegedly taking possession of vehicle titles without proper documentation, authorization or timely return of titles after bond obligations were satisfied.
Brown received a referral from the Montana Department of Justice alleging Laine Kendall Callahan was abusing his authority as a surety bail bond producer. The Offic
e of the Commissioner of Securities and Insurance regulates bail bondsman as licensed insurance producers, and Brown opened an investigation.
The investigation showed Callahan allegedly compelled a witness to perform oral sex to “work off” what she owed him on a bond. The witness stated she believed Callahan held her “life in his hands.”
Another witness alleged that Callahan had him perform informal, unlicensed work as a de facto bail agent to work off the debt he owed on a bond. This witness also claimed that he received monetary kickbacks from Callahan to promote the bail bond service inside jail.
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Over a four-month period ending in March, Callahan issued 133 bonds totaling more than $1 million.
In an interview with an investigator, Callahan denied using his position as a bail bondsman to request anything personal from a defendant. Callahan can request a hearing to challenge the revocation within 21 days of receiving the order of suspension.
It’s too early to say if Patriot National owner Steven Mariano will appeal the verdict, said Bill Scherer, co-counsel in the case.
“We’re looking at our options. I don’t have many cases that don’t end up in the appellate court, but we’ll see,” Scherer told Insurance Journal Friday morning. “We felt there was plenty of evidence to show that the firm had let him down, had let Mr. Mariano’s companies down, but the jury didn’t see it that way.”
Mariano is the high-profile Fort Lauderdale entrepreneur who also owned Guarantee Insurance Co., a workers’ compensation insurer that famously was declared insolvent in 2017. A few months later, Patriot National, whose m
ain client was Guarantee Insurance, filed for Chapter 11 bankruptcy protection, just a few years after Mariano had hired Simpson Thacher attorneys to help take the company public.
Mariano quickly blamed his lawyers and others for a botched initial public offering and private investment in public entity (PIPE) transaction that sent Patriot’s stock price to the floor. He filed a professional malpractice suit against the white-shoe Simpson Thacher law firm in 2017, alleging the lawyers failed to protect Patriot from predatory hedge fund investors.
After years of delays, on July 14 the suit finally went to trial, a rarity in legal malpractice claims, which often settle, Law360 reported. Simpson Thacher’s trial attorneys, with the Stearns Weaver Miller and the Williams & Connolly firms, told a different story at the three-week trial, arguing that Mariano was desperate for cash, was millions of dollars in debt, and was fully warned about the dangers of certain financial arrangements.