The Washington PostDemocracy Dies in Darkness

Va. regulators threaten to shut down company accused of preying on undocumented immigrants

Mike Donovan, president of Libre by Nexus, shown in 2016 at the business’s headquarters in Verona, Va., has been accused by Virginia regulators of acting as an unlicensed insurance agent. (Norm Shafer for The Washington Post)

Virginia regulators are threatening to shut down an Augusta County-based company accused of preying on detained undocumented immigrants.

In documents filed last week, the state’s Bureau of Insurance claimed that Libre by Nexus and its parent company, Nexus Services, have been acting as unlicensed insurance agents.

“Though the Bureau alerted the unlicensed Defendants approximately 17 months ago about, and has since attempted to work with them to address, their violative conduct, the Defendants have taken no steps to come into compliance with the Code’s licensing requirements, have not filed any applications to become licensed, and have refused to cease their noncompliant and unlicensed insurance activities,” according to the documents, which were filed Oct. 4. “The Bureau, accordingly, asserts that, in addition to penalties, a cease and desist order should be entered.”

The company, which has an office in Verona, denied any wrongdoing and vowed to continue operations.

Libre by Nexus, it said in a statement, is accused of being “in the business of acting as an insurance company or insurance agent. We are neither.”

The statement continued: “Libre by Nexus actually buys insurance products and services as part of our ground breaking program to reunite families to make immigration bonds more accessible and affordable. We do this by contracting with insurance providers and bondsmen that would otherwise not provide an immigration bond without the program provided by Libre by Nexus.”

The company has until Nov. 1 to respond. The State Corporation Commission, which oversees the bureau, is scheduled to hear the case in March. Any final commission order could be appealed to the Virginia Supreme Court.

Ken Schrad, a spokesman for the bureau and the commission, said he could not comment on a pending case.

This company is making millions from America’s broken immigration system

Libre, which means “free” in Spanish, helps post bond for people being held in immigration detention centers while they wait for their cases to be heard in backlogged courts. In exchange for their freedom, immigrants sign contracts promising to pay Libre about $420 per month while wearing the company’s GPS ankle devices.

The contracts have been the subject of lawsuits and allegations of fraud by immigrants who claim they did not understand them.

Libre by Nexus has vigorously denied any wrongdoing, saying its contracts are transparent and preferable to someone remaining behind bars.

The company told The Washington Post in 2017 that it had more than 6,500 clients, 200 employees, nearly 30 offices and yearly revenue of more than $30 million.

In its filing, the bureau claimed Libre acts not as a middleman between immigrants and bond providers but rather as a one-stop shop, “soliciting, negotiating, and selling immigration surety bonds” without a license. Libre co-founders Mike Donovan and Richard Moore, both ex-felons, are prohibited from becoming licensed bail bondsmen.

“From the moment Customers contact Libre about obtaining immigration surety bonds through Libre’s finalization of the sale of the bonds to the Customers, the Customers’ sole interaction is with the unlicensed Defendants and their employees,” the bureau said. “At no point in this entire process do the Customers themselves interact at all with licensed surety insurance companies, bonding agencies, or their agents.”

Oversight is especially important, the bureau continued, “when the agents are dealing with vulnerable customers — such as immigrant detainees — who are navigating difficult situations, likely do not understand the underlying immigration or insurance systems, may not be able to fully comprehend contracts or other legal documents presented, and may speak a different language (or dialect) than the agents.”

The filing is the latest in a string of investigations into and complaints against the company.

In the wake of a March 2017 Post article that detailed the struggles of Libre clients to pay the monthly fee for the device, the attorneys general of Virginia, New York and Washington state launched investigations into Libre. So, too, did the federal Consumer Financial Protection Bureau (CFPB).

Firm accused of preying on detained immigrants faces widening investigations

At times those investigations have become contentious. In December, the New York attorney general’s office filed a motion to hold Donovan in civil and criminal contempt for allegedly failing to turn over documents.

“Donovan should be imprisoned until there is full compliance with the Court’s Order,” Assistant Attorney General Joseph P. Mueller wrote. Donovan said he was simply protecting the privacy of his clients, however, and a judge denied the contempt motion.

In August, Washington Attorney General Bob Ferguson announced that his office had reached an agreement with Libre for the company to provide more than $2.7 million in debt relief and refund a total of $58,800 to 140 customers in the state. The attorney general investigations in New York and Virginia are ongoing, according to spokesmen for the two offices.

The company has also been the target of multiple lawsuits. In early 2017, two Honduran immigrants filed a class-action complaint against the company in U.S. District Court in Northern California, arguing that Libre “preys on detainees’ vulnerability and limited understanding of English to foist crushing financial terms and GPS shackles on detainees.”

A similar lawsuit was filed in August in Virginia on behalf of six immigrants by the Legal Aid Justice Center. Hallie Ryan, one of the attorneys handling the lawsuit, said she welcomed the Bureau of Insurance filing.

“The sheer number of government agencies waking up to what has been happening in the shadows of this immigration system gives me a lot of hope that there may be relief for the frankly thousands of people walking around this country with Libre GPS monitors on right now,” Ryan said.