BILL NUMBER: SB 1058	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 1, 2012
	AMENDED IN SENATE  APRIL 17, 2012
	AMENDED IN SENATE  APRIL 16, 2012
	AMENDED IN SENATE  MARCH 26, 2012

INTRODUCED BY   Senator Lieu

                        FEBRUARY 13, 2012

   An act to amend Sections 1502 and 2117 of, to add Chapter 22.5
(commencing with Section 2280) to Division 1 of Title 1 of, and to
repeal Section 1502.5 of, the Corporations Code, relating to the
Victims of Corporate Fraud Compensation Fund.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1058, as amended, Lieu. Victims of Corporate Fraud Compensation
Fund.
   Existing law establishes the Victims of Corporate Fraud
Compensation Fund, a continuously appropriated fund, within the State
Treasury administered by the Secretary of State, the sole purpose of
which is to provide restitution to victims of corporate fraud.
   This bill would revise and recast those provisions, including
eliminating the requirement that the Secretary of State adopt those
regulations. The bill would provide that an aggrieved person who
obtains a final judgment, as specified, against a corporation based
upon the corporation's fraud, misrepresentation, or deceit, made with
intent to defraud, may file an application with the Secretary of
State for payment from the fund for the amount unpaid on the judgment
that represents the awarded actual and direct loss to the claimant
in the final judgment. The bill would limit the amount to be paid
from the fund to $50,000 with respect to any one claimant, as
specified.
   This bill would require a claimant to apply for restitution on a
form prescribed by the Secretary of State including specified
information and representations. The bill would establish procedures
for the Secretary of State in determining whether a claim shall be
paid, including giving written notice to the claimant and the
corporation, as specified. The bill would prescribe procedures for
judicial review of a denied claim. The bill would require a
corporation to reimburse the fund and pay interest for any payment
made from the fund by the Secretary of State in settlement of a claim
or toward satisfaction of a final judgment against the corporation,
as specified. The bill would make it a crime to file a document under
these provisions that is false or contains willful, material
misstatements.  The bill would   apply its provisions to
applications submitted to the Secretary of State on or after January
1, 2013.  The bill would make conforming changes.
   Because this bill would create new crimes, the bill would create a
state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1502 of the Corporations Code is amended to
read:
   1502.  (a) Every corporation shall file, within 90 days after the
filing of its original articles and annually thereafter during the
applicable filing period, on a form prescribed by the Secretary of
State, a statement containing all of the following:
   (1) The name of the corporation and the Secretary of State's file
number.
   (2) The names and complete business or residence addresses of its
incumbent directors.
   (3) The number of vacancies on the board, if any.
   (4) The names and complete business or residence addresses of its
chief executive officer, secretary, and chief financial officer.
   (5) The street address of its principal executive office.
   (6) The mailing address of the corporation, if different from the
street address of its principal executive office.
   (7) If the address of its principal executive office is not in
this state, the street address of its principal business office in
this state, if any.
   (8) If the corporation chooses to receive renewal notices and any
other notifications from the Secretary of State by electronic mail
instead of by United States mail, the corporation shall include a
valid electronic mail address for the corporation or for the
corporation's designee to receive those notices.
   (9) A statement of the general type of business that constitutes
the principal business activity of the corporation (for example,
manufacturer of aircraft; wholesale liquor distributor; or retail
department store).
   (b) The statement required by subdivision (a) shall also
designate, as the agent of the corporation for the purpose of service
of process, a natural person residing in this state or a corporation
that has complied with Section 1505 and whose capacity to act as an
agent has not terminated. If a natural person is designated, the
statement shall set forth that person's complete business or
residence street address. If a corporate agent is designated, no
address for it shall be set forth.
   (c) If there has been no change in the information in the last
filed statement of the corporation on file in the Secretary of State'
s office, the corporation may, in lieu of filing the statement
required by subdivisions (a) and (b), advise the Secretary of State,
on a form prescribed by the Secretary of State, that no changes in
the required information have occurred during the applicable filing
period.
   (d) For the purposes of this section, the applicable filing period
for a corporation shall be the calendar month during which its
original articles were filed and the immediately preceding five
calendar months. The Secretary of State shall provide a notice to
each corporation to comply with this section approximately three
months prior to the close of the applicable filing period. The notice
shall state the due date for compliance and shall be sent to the
last address of the corporation according to the records of the
Secretary of State or to the last electronic mail address according
to the records of the Secretary of State if the corporation has
elected to receive notices from the Secretary of State by electronic
mail. The failure of the corporation to receive the notice is not an
excuse for failure to comply with this section.
   (e) Whenever any of the information required by subdivision (a) is
changed, the corporation may file a current statement containing all
the information required by subdivisions (a) and (b). In order to
change its agent for service of process or the address of the agent,
the corporation must file a current statement containing all the
information required by subdivisions (a) and (b). Whenever any
statement is filed pursuant to this section, it supersedes any
previously filed statement and the statement in the articles as to
the agent for service of process and the address of the agent.
   (f) The Secretary of State may destroy or otherwise dispose of any
statement filed pursuant to this section after it has been
superseded by the filing of a new statement.
   (g) This section shall not be construed to place any person
dealing with the corporation on notice of, or under any duty to
inquire about, the existence or content of a statement filed pursuant
to this section.
   (h) The statement required by subdivision (a) shall be available
and open to the public for inspection. The Secretary of State shall
provide access to all information contained in this statement by
means of an online database.
   (i) In addition to any other fees required, a corporation shall
pay a five-dollar ($5) disclosure fee when filing the statement
required by subdivision (a). One-half of the fee shall be utilized to
further the provisions of this section, including the development
and maintenance of the online database required by subdivision (h),
and one-half shall be deposited into the Victims of Corporate Fraud
Compensation Fund established in Section 2280.
   (j) A corporation shall certify that the information it provides
pursuant to subdivisions (a) and (b) is true and correct. No claim
may be made against the state for inaccurate information contained in
the statements.
  SEC. 2.  Section 1502.5 of the Corporations Code is repealed.
  SEC. 3.  Section 2117 of the Corporations Code is amended to read:
   2117.  (a) Every foreign corporation (other than a foreign
association) qualified to transact intrastate business shall file,
within 90 days after the filing of its original statement and
designation of foreign corporation and annually thereafter during the
applicable filing period, on a form prescribed by the Secretary of
State, a statement containing the following:
   (1) The name of the corporation as registered in California and
the California Secretary of State's file number.
   (2) The names and complete business or residence addresses of its
chief executive officer, secretary, and chief financial officer.
   (3) The street address of its principal executive office.
   (4) The mailing address of the corporation, if different from the
street address of its principal executive office.
   (5) The street address of its principal business office in this
state, if any.
   (6) If the corporation chooses to receive renewal notices and any
other notifications from the Secretary of State by electronic mail
instead of by United States mail, the corporation shall include a
valid electronic mail address for the corporation or for the
corporation's designee to receive those notices.
   (7) A statement of the general type of business that constitutes
the principal business activity of the corporation (for example,
manufacturer of aircraft; wholesale liquor distributor; or retail
department store).
   (b) The statement required by subdivision (a) shall also
designate, as the agent of the corporation for the purpose of service
of process, a natural person residing in this state or a corporation
that has complied with Section 1505 and whose capacity to act as the
agent has not terminated. If a natural person is designated, the
statement shall set forth the person's complete business or residence
street address. If a corporate agent is designated, no address for
it shall be set forth.
   (c) The statement required by subdivision (a) shall be available
and open to the public for inspection. The Secretary of State shall
provide access to all information contained in the statement by means
of an online database.
   (d) In addition to any other fees required, a foreign corporation
shall pay a five-dollar ($5) disclosure fee upon filing the statement
required by subdivision (a). One-half of the fee shall be utilized
to further the provisions of this section, including the development
and maintenance of the online database required by subdivision (d),
and one-half shall be deposited into the Victims of Corporate Fraud
Compensation Fund established in Section 2280.
   (e) Whenever any of the information required by subdivision (a) is
changed, the corporation may file a current statement containing all
the information required by subdivisions (a) and (b). In order to
change its agent for service of process or the address of the agent,
the corporation shall file a current statement containing all the
information required by subdivisions (a) and (b). Whenever any
statement is filed pursuant to this section, it supersedes any
previously filed statement and the statement in the filing pursuant
to Section 2105.
   (f) Subdivisions (c), (d), (f), and (g) of Section 1502 apply to
statements filed pursuant to this section, except that "articles"
shall mean the filing pursuant to Section 2105, and "corporation"
shall mean a foreign corporation.
  SEC. 4.  Chapter 22.5 (commencing with Section 2280) is added to
Division 1 of Title 1 of the Corporations Code, to read:
      CHAPTER 22.5.  VICTIMS OF CORPORATE FRAUD COMPENSATION FUND


   2280.  The Victims of Corporate Fraud Compensation Fund is hereby
established in the State Treasury. The fund shall be administered by
the Secretary of State for the sole purpose of providing restitution
to the victims of a corporate fraud. The Secretary of State shall
adopt regulations in furtherance of the administration of this
chapter. Notwithstanding Section 13340 of the Government Code, the
money in the fund is continuously appropriated to the Secretary of
State for the purposes authorized by this chapter.
   2281.   As used in this chapter:
   (a) "Application" means a request for payment from the fund
submitted to the Secretary of State pursuant to this chapter.
   (b) "Claimant" means an aggrieved person who resides in the state
at the time of the fraud and who submits an application pursuant to
this chapter.
   (c) "Complaint," for the purpose of an application based on a
criminal restitution order, means the facts of the underlying
transaction  or transactions  upon which the criminal
restitution order is based.
   (d) "Corporation" means a domestic corporation as defined by
Section 162 or 2509 or a foreign corporation that is qualified to
transact business in California pursuant to Section 2105.
   (e) "Court of competent jurisdiction" means a  small
claims or superior court of any state, or a United States district
  state or federal  court  or United States
bankruptcy court   situated in California and applying
California law  .
   (f) "Final judgment" means a judgment, arbitration award, or
criminal restitution order for which  appeals have been exhausted
or for which  the period for appeal has expired, enforcement of
which is not barred by the order of any court or by any statutory
provision, which has not been nullified or rendered void by any court
order or statutory provision, and for which  the claimant
has not otherwise been fully reimbursed. The following are examples
of final judgments:
   (1) A civil judgment that has been entered against a corporation
for  intentional  fraud  , misrepresentation, or
dece   it, with the intent to defraud,  and includes
findings of facts and conclusions of law.
   (2) If the matter was submitted to arbitration, a copy of the
arbitration decision and any other documentation supporting the
arbitration award. An arbitration award against a corporation for
conduct constituting  intentional  fraud  ,
misrepresentation, or deceit, with the intent to defraud,  that
includes findings of fact and conclusions of law rendered in
accordance with the rules established by the American Arbitration
Association or another recognized arbitration body, and in accordance
with Sections 1280 to 1294.2, inclusive, of the Code of Civil
Procedure where applicable, and where the arbitration award has been
confirmed and reduced to judgment pursuant to Section 1287.4 of the
Code of Civil Procedure.
   (3) A criminal restitution order issued by a court of competent
jurisdiction against a corporation for  intentional 
fraud  , misrepresentation, or deceit, with the intent to
defraud,  pursuant to subdivision (f) of Section 1202.4 of the
Penal Code or Section 3663 of Title 18 of the United States Code. An
application for payment from the fund that is based on a criminal
restitution order shall comply with all of the requirements of this
chapter.
   (g) "Fund" means the Victims of Corporate Fraud Compensation Fund
created by Section 2280. 
   (h) "Judgment," for purposes of an application based on a criminal
restitution order, means the criminal restitution order. 
   2282.  (a) When an aggrieved person obtains a final judgment in a
court of competent jurisdiction against a corporation based upon the
corporation's fraud, misrepresentation, or deceit, made with intent
to defraud, the aggrieved person may, upon the judgment becoming
final  and after diligent collection efforts are made  ,
file an application with the Secretary of State for payment from the
fund, within the limitations specified in Section 2289, for the
amount unpaid on the judgment that represents the awarded actual and
direct loss, any awarded compensatory damages, and awarded costs to
the claimant in the final judgment, excluding punitive damages.
   (b) The application shall be delivered in person or by certified
mail to the Secretary of State not later than 18 months after the
judgment has become final.
   (c) The application shall be made on a form prescribed by the
Secretary of State and shall include each of the following:
   (1) The name and address of the claimant.
   (2) If the claimant is represented by an attorney for the
application, the name, business address, and telephone number of the
attorney. If the claimant is not represented by an attorney for the
application, a telephone number where the claimant can be reached
during regular business hours shall be included.
   (3) The name and address of the corporation.
   (4) The identification of the final judgment, the amount of the
claim that remains unreimbursed from any source, and an explanation
of the claim's computation.
   (5)  A detailed narrative statement of the facts in
explanation of the allegations of the complaint upon which the
underlying judgment is based.  A copy of a  final 
judgment  that specifies the facts of the allegations of the
complaint   and a copy of the civil complaint and any
amendments thereto upon which the judgment finding fraud,
misrepresentation, or deceit, made with the intent to defraud, was
made  shall be deemed to satisfy compliance with the
requirements prescribed in this paragraph.  The claimant may also
provide any additional documentation that he or she believes may
help the Secretary of State in evaluating the application, including,
but not limited to, evidence submitted to the court in the
underlying judgment or a detailed narrative statement of facts in
explanation of the allegations of the complaint upon which the
underlying judgment is based.  
   (6) A description of searches and inquiries conducted by or on
behalf of the claimant with respect to the corporation's assets
liable to be sold or applied to satisfaction of the judgment. A court'
s determination or finding of the corporation's insolvency or lack of
assets to pay the claimant shall be deemed to satisfy the
requirements prescribed in this paragraph.  
   (6) 
    (7)  Each of the following representations by  ,
and information pertaining to,  the claimant:
   (A) That the claimant is not a spouse or an immediate family
member of an employee, officer, director, managing agent, or other
principal of the corporation nor a personal representative of the
spouse or an immediate family member of an employee, officer,
director, managing agent, or other principal of the corporation.
   (B) That the claimant has complied with all of the requirements of
this  chapter   section  .
   (C) That the judgment underlying the claim meets the requirements
of  subdivisions (a) and (b) of  Section 2282  .
  ,   including all of the following: 

   (i) That the judgment was for fraud, misrepresentation, or deceit
by the corporation, with the intent to defraud.  
   (ii) That the judgment is unpaid in part or in whole.  
   (iii) That the underlying judgment and debt have not been
discharged in bankruptcy, or the underlying judgment is statutorily
nondischargeable, or, in the case of a bankruptcy proceeding that is
open at or after the time of the filing of the application, that the
judgment and debt have been declared to be nondischargeable by the
judge or stipulated as nondischargeable by the parties in the
proceeding and that the claimant has been granted permission by the
bankruptcy court to proceed with collection or otherwise proceed with
the claimant's claims against the corporation.  
   (D) A description of searches and inquiries conducted by or on
behalf of the claimant with respect to the corporation's assets
liable to be sold or applied to satisfaction of the judgment. A court'
s determination or finding of the corporation's insolvency or lack of
assets to pay the claimant shall be deemed to satisfy the
requirements prescribed in this subparagraph.  
   (E) That the underlying judgment and debt have not been discharged
in bankruptcy, or the underlying judgment is statutorily
nondischargeable, or, in the case of a bankruptcy proceeding that is
open at or after the time of the filing of the application, that the
judgment and debt have been declared to be nondischargeable.
 
   (F) A copy of the final judgment and a copy of the civil complaint
upon which the judgment for intentional fraud was issued. If one or
more amendments or amended complaints were filed, a copy of all
amendments and all prior versions of the complaint shall be submitted
by the claimant.  
   (G) 
    (D)  That  the  claimant does not have a
pending claim and has not collected on the final judgment from any
other restitution fund. If the claimant has a pending claim or has
collected from another fund, a description of the nature of the
pending claim and the recovery amounts from any restitution fund.

   (H) That the application was mailed or delivered to the Secretary
of State no later than 18 months after the underlying judgment became
final. 
   (d) (1)  Except as provided in paragraphs (2), (3), and (4) the
Secretary of State shall not condition an award of payment from the
fund upon a claimant providing any additional information or
documents other than those prescribed in  this section
  subdivision (c)  .
   (2) If the final judgment in favor of the claimant was by default,
stipulated, a consent judgment, or pursuant to Section 594 of the
Code of Civil Procedure or if the action against the corporation was
defended by a trustee in bankruptcy, the Secretary of State may
request additional documents and information from the claimant to
determine whether the claim is valid.
   (3) If the final judgment does not expressly set forth 
that there   has been a finding of fraud or
 the amount of damages that were awarded for actual loss and
compensatory damages that are payable from the fund pursuant to
Section 2289, the Secretary of State may ask the claimant to provide
copies of documentation  pertaining  to  support a
finding of fraud or  the amount of the actual and direct
loss and the awarded compensatory damages or both of those findings.
For purposes of this section, "sufficient proof of money damages" may
include any of the following: copies of bank account statements
showing or confirming particular transactions, copies of the front
and back of checks made payable to the  judgment debtor
  corporation  that have been negotiated, credit
card statements showing or confirming particular transactions, or
similar documentation demonstrating financial loss directly resulting
from the fraudulent acts by the  judgment debtor 
 corporation  and the amount of compensatory damages awarded
by the court.
   (4) If there is no court determination or finding of the
corporation's insolvency or lack of assets to pay the claimant, the
Secretary of State may request additional information and
documentation from the claimant to determine what assets, if any are
available to satisfy the final judgment.
   (e) The Secretary of State shall include with the application form
a notice to the claimant of his or her obligation to protect the
underlying judgment from discharge in bankruptcy, to be appended to
the application. 
   (f) If a claimant is a spouse or an immediate family member of an
employee, officer, director, managing agent, or other principal of
the corporation, or is a personal representative of the spouse or an
immediate family member of an employee, officer, director, managing
agent, or other principal of the corporation, the claimant shall not
be precluded for that reason alone from receiving an award where the
claimant can otherwise meet the requirements of this section. 
   2282.1.  (a) The Secretary of State shall provide notice to the
 judgment debtor   corporation  that a
claimant has submitted an application for payment from the fund and
shall also provide within that notice, as prescribed by the Secretary
of State, the method to contest the payment from the fund.
   (b) The notice shall be provided by certified mail addressed to
the  corporation's   corporation's  last
designated agent for service of process of record with the Secretary
of State and notice is   shall be deemed 
complete five calendar days after  mailing   the
notice is mailed  .
   (c) If the corporation wishes to contest payment of an application
by the Secretary of State, the corporation shall mail or deliver a
written response addressed to the Secretary of State within 30
calendar days of the notice of the application, and shall mail or
deliver a copy of the response to the claimant. The written response
of the corporation shall not be directed to issues and facts
conclusively established by the underlying judgment. If the
corporation fails to mail or deliver a timely response, the
corporation shall have waived the corporation's right to present
objections to payment of the application, and shall not thereafter be
entitled to notice of any action taken or proposed to be taken by
the Secretary of State with respect to the application.
   2282.2.  (a) The response by the corporation shall be by an
officer or director and shall contain proof of service showing that a
copy of the response was sent to the claimant, or if the claimant is
represented by an attorney for purposes of the application, to the
claimant's attorney, at the address specified in the application for
the claimant or the claimant's attorney, respectively.
   (b) If the corporation is not represented by an attorney in
objecting to payment of the application, the response shall contain
the name, title, and address of the officer, director, managing
agent, or other responsible person authorized to represent the
corporation and the address at which the corporation wishes to
receive correspondence and notices relating to the application, and a
telephone number at which the corporation's representative can be
reached during regular business hours. If the corporation is
represented by an attorney in objecting to the application, the
response shall contain the name, business address, and telephone
number of the attorney.
   2283.  (a) If the Secretary of State determines that the
application, as submitted by the claimant, fails to comply with the
requirements of Section 2282, the Secretary of State shall, within 21
calendar days after receipt of the application by a single claimant
or within 40 calendar days after receipt of the application by
multiple claimants, mail an itemized list of deficiencies to the
claimant.
   (b) The time within which the Secretary of State is required to
act under Section 2284 shall be measured from the date of receipt by
the Secretary of State of a completed application. In the event of an
irreconcilable dispute between the claimant and the Secretary of
State on the question of whether the application is complete, the
claimant may immediately file the claim with the court pursuant to
Section 2287.
   (c) If the Secretary of State has mailed one or more itemized
lists of deficiencies to a claimant, and, if after 30 calendar days
the Secretary of State has not received a response to the latest list
of deficiencies, the Secretary of State  may  
shall  notify the claimant that  ,  unless the claimant
responds to the deficiencies within a specified period of time of
not less than 15 calendar days,  that  the
application will be denied.
   2284.  (a) The Secretary of State shall render a final written
decision on the application within 90 calendar days after a completed
application has been received unless the claimant agrees in writing
to extend the time within which the Secretary of State may render a
decision.
   (b) The Secretary of State may deny or grant the application or
may enter into a compromise with the claimant to pay less in
settlement than the full amount of the claim. If the claimant refuses
to accept a settlement of the claim offered by the Secretary of
State, the written decision of the Secretary of State shall be to
deny the claim. Evidence of settlement offers and discussions between
the Secretary of State and the claimant shall not be competent
evidence in judicial proceedings undertaken by the claimant pursuant
to Section 2287.
   (c) Upon issuance of a proposed decision to award payment or an
offer to compromise, the claimant shall have 60 calendar days from
the date of service of the proposed award or offer to compromise to
accept the proposed award or offer to compromise. If the claimant
fails to accept the proposed award or offer to compromise within the
specified time, the application shall be deemed denied.
   2285.  The Secretary of State shall give written notice, as
prescribed by the Secretary of State, of a decision rendered with
respect to the application to the claimant.

   2286.   The Secretary of State shall give notice, as prescribed by
the Secretary of State, to the corporation that the Secretary of
State has made a decision to award funds to the claimant and shall
provide a copy of the decision to the corporation.

   2287.  (a) A claimant against whom the Secretary of State has
rendered a decision denying an application may, within six months
after the mailing of the notice of the denial, file a verified
petition in superior court for an Order Directing Payment Out of the
Victims of Corporate Fraud Compensation Fund based upon the grounds
set forth in the application to the Secretary of State. If the
underlying judgment is a California state court judgment, the
petition shall be filed in the court in which the underlying judgment
was entered. If the underlying judgment is not a California state
court judgment or is a federal court judgment, the petition shall be
filed in the superior court of any county within California that
would have been a proper venue if the underlying lawsuit had been
filed in a California state court, or in the Superior Court of the
County of Sacramento.
   (b) A copy of the petition shall be served upon the Secretary of
State by the claimant. A certificate or affidavit of service shall be
filed by the claimant with the court. Service on the Secretary of
State may be made by mail addressed to the Secretary of State's
office.
   (c) The Secretary of State shall have 30 calendar days after being
served with the petition in which to file a written response. The
court shall thereafter set the matter for hearing upon the 
petition   request  of the claimant. The court
shall grant a request of the Secretary of State for  a
  one  continuance of as much as 30 calendar days
and may, upon a showing of good cause by any party, continue the
hearing as the court deems appropriate.
   (d) The claimant shall have the burden of proving compliance with
the requirements of Section 2282 by competent evidence at an
evidentiary hearing. The claimant shall be entitled to a de novo
review of the merits of the application as contained in the
administrative record.
   (e) At any time during the court proceedings, the petition may be
compromised or settled by the Secretary of State and the court shall,
upon joint petition of the claimant and the Secretary of State,
issue an order directing payment out of the fund.
   2288.  (a) Whenever the court proceeds upon a petition under
Section 2287, it shall order payment out of the fund only upon a
determination that the aggrieved party has a valid cause of action
within the purview of Section 2282, and has complied with Section
2287.
   (b) (1) The Secretary of State may defend any action on behalf of
the fund and shall have recourse to all appropriate means of defense
and review, including examination of witnesses and the right to
relitigate any issues that are material and relevant in the
proceeding against the fund  and that were determined in the
underlying action on which the judgment in favor of the claimant was
based  . The claimant's judgment shall create a rebuttable
presumption of the fraud, misrepresentation, or deceit by the
corporation, which presumption shall affect the burden of producing
evidence.
   (2) If the civil judgment, arbitration award, or criminal
restitution order in the underlying action on which the final
judgment in favor of the petitioner was by default, stipulation,
consent or pursuant to Section 594 of the Code of Civil Procedure, or
if the action against the corporation was defended by a trustee in
bankruptcy, the petitioner shall have the burden of proving that the
cause of action against the corporation was for fraud,
misrepresentation, or deceit.
   (c) The Secretary of State may move the court at any time to
dismiss the petition when it appears there are no triable issues and
the petition is without merit. The motion may be supported by
affidavit of any person or persons having knowledge of the facts, and
may be made on the basis that the petition, and the judgment
referred to therein, does not form the basis for a meritorious
recovery claim within the purview of Section 2282; provided, however,
the Secretary of State shall give written notice at least 10
calendar days before hearing on the motion to the claimant.
   2289.  (a) Notwithstanding any other provision of this chapter and
regardless of the number of persons aggrieved in an instance of
corporate fraud, or misrepresentation or deceit resulting in a
judgment meeting the requirements of Section 2282, or the number of
judgments against a corporation, the liability of the fund shall not
exceed fifty thousand dollars ($50,000) for any one claimant 
regardless of the number of corporations   per single
judgment finding fraud, misrepresentation, or deceit, made with the
intent to defraud  .
   (b) When multiple corporations are involved in the same event or
series of events that are the basis of the claimant's final judgment
and the conduct of two or more of the corporations results in a
judgment meeting the requirements of Section 2282, the claimant may
seek recovery from the fund based on the judgment against any one of
the corporations, subject to the limitations of subdivision (a).
   (c) When multiple claimants are involved in a corporate fraud, or
in misrepresentation or deceit by a corporation, resulting in a
judgment meeting the requirements of Section 2282, each claimant may
seek recovery from the fund individually, subject to the limitations
of subdivision (a).
   (d) Claimants who are spouses, registered domestic partners, or
persons other than natural persons, that have obtained an eligible
final judgment shall be considered one claimant.
   2290.  If, at any time, the money deposited in the fund is
insufficient to satisfy any duly authorized award or offer of
settlement, the Secretary of State shall, when sufficient money has
been deposited in the fund, satisfy the unpaid awards or offer of
settlement, in the order that the awards or  portions thereof
  offers of settlement  were originally filed,
plus accumulated interest at the rate  of 4 percent per year
  set by the Federal Reserve   Bank of San
Francisco on advances made to member banks under Sections 13 and 13a
of the Federal Reserve Act, at the time of the award or settlement
offer, not to exceed 2 percent per year  .
   2291.  Any sums received by the Secretary of State pursuant to any
provisions of this chapter shall be deposited in the State Treasury
and credited to the fund.
   2292.  It shall be unlawful for any person or the agent of any
person to file with the Secretary of State any notice, statement, or
other document required under the provisions of this chapter that is
false or untrue or contains any willful, material misstatement of
fact. That conduct shall constitute a public offense punishable by
imprisonment in a county jail for a period of not more than one year
or a fine of not more than one thousand dollars ($1,000), or both.
   2293.  When the Secretary of State has paid from the fund any sum
to the claimant, the Secretary of State shall be subrogated to all of
the rights of the claimant and the claimant shall assign all of his
or her right, title, and interest in the judgment to the Secretary of
State and any amount and interest so recovered by the Secretary of
State on the judgment shall be deposited in the fund.
   2293.1.  If the Secretary of State pays from the fund any amount
in settlement of a claim or toward satisfaction of a final judgment
against a corporation, the corporation shall be required to pay to
the fund the amount paid plus interest at the prevailing legal rate
applicable to a judgment rendered in any court of this state, within
30 calendar days of the date  that  the Secretary of State
 provides   provided  notice of the payment
of the award or compromise. If the corporation fails to make the
required payment to the fund within the required time, the
corporation shall be suspended until the payment is made. A discharge
in bankruptcy shall not relieve a corporation from the penalties and
disabilities provided in this chapter.
   2294.  The Secretary of State shall not make any award to a
claimant from the fund if the claimant has received payment from any
other restitution funds or for the portions of the judgment that the
claimant has collected from the corporation or any other defendant in
the underlying judgment.
   2295.  The failure of an aggrieved person to comply with all of
the provisions of this chapter shall constitute a waiver of any
rights hereunder. 
   2296.  This chapter shall apply to applications submitted to the
Secretary of State on or after January 1, 2013. 
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.