"The bail-bond system in New Jersey is highly prone to subversion by unscrupulous and improper practices that make a mockery of the public trust," according to the report by the State Commission of Investigation (SCI).
"Operating in the shadows of poor government oversight, the system is dominated by an amalgam of private entrepreneurs who profit from the process but are subject to weak controls easily manipulated or ignored with little or no consequence."
The commission, a watchdog agency established in 1968 to investigate organized crime, called for more regulation, oversight, and enforcement, and criminal penalties for unlicensed agents.
"This report is welcomed by the industry," said Nicholas Wachinski, executive director of the American Bail Coalition, a nonprofit trade organization in Pennsylvania.
Wachinski said that unlicensed agents in any business are a problem and that payment programs for bail are acceptable within the industry. There was no guarantee Houston would have remained jailed or that Williams' death could have been prevented, he said.
Houston, known as "Tank," allegedly fired the shot that hit Williams in the stomach. Authorities allege he was in a gun battle to control the drug trade in the 1700 block of Broadway.
Williams was the only one shot. During Houston's arraignment, Superior Court Judge Samuel Natal set bail at $750,000.
"You can't be serious," Houston said, denying that he was the gunman.
It was a stark contrast to a hearing in May 2010, when Houston was charged with attempted murder and aggravated assault after a shooting in the 1800 block of Broadway. Bail then was set at $175,000.
According to the SCI report, weeks later, Houston's aunt posted $8,000 of the $17,500 bond set by the court. ABC Bail Bonds in Camden agreed to post the remainder and to allow Houston and his family to make $350 monthly payments.
Trenton lawyer Jack Furlong, who represents ABC, said the agency did nothing wrong. Tighter regulation, he said, is long overdue to protect reputable agencies.
He said legislators want to go too far by eliminating bond agencies and mandating detention for people who cannot post bail, which he noted is a constitutional right.
The SCI contends that payment programs undermine the judicial system.
"Beyond subverting judicial intent - and doing so with no transparency - these arrangements put dangerous offenders back on the street for minimal cash and make it nearly impossible for prosecutors to verify the true source of the bail funds," the report said.
Houston is serving a 17-year sentence on weapons offenses. No trial date has been set in Williams' slaying.
The SCI investigation of the bail-bond industry stemmed from a probe of inmates linked to organized street gangs. The inmates figured out how to coordinate three-way calls through bail agencies, leading to questionable relationships between criminals and the agencies.
Exacerbating the practices and abuses, the report said, are a "diminished and archaic" government, and regulations that treat the bail system as an "afterthought."
The industry is regulated by the Department of Banking and Insurance, which provides lax oversight, with weak laws and violations with minimal penalties, the report said.
The report highlighted a case involving Thomas Dobrek, once the majority owner of Mr. Lucky Bail Bonds, with offices in Camden, Mount Holly, Atlantic City, North Brunswick, and Asbury Park.
Although the agency was sold in 2003, state authorities revoked Dobrek's license in 2007 based on allegations by a client that $10,000 posted for bail had been misappropriated.
In 2003, Dobrek's wife opened Atlantic Bail Bonds in Mount Holly. In an interview Wednesday, Thomas Dobrek said, "I deny all allegations and anything involving Mr. Lucky."
An employee, Dobrek said, stole the $10,000 from a client and he never received the money. He said he no longer was in the business.
"I'm Mr. Mom," Dobrek said, adding that he cares for his children, 8 and 11, while his wife "does the bail."
According to the SCI report, Thomas Dobrek was fined $21,000 and ordered to pay $18,000 in restitution. The report said Dobrek never paid the fines or made restitution, but asked that his license be reinstated, which was denied.
SCI investigators reported that the industry also includes agents with extensive criminal records. In addition, the report said, runners were used to create business inside jails, giving some criminals a cut of the proceeds for referrals, "a practice that, strikingly, is not a crime here as in other states."