BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 443 (Alejo) - Forfeiture ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 18, 2015 |Policy Vote: PUB. S. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 443 would permit, until January 1, 2019, prosecutors in a criminal profiteering matter to file a petition of forfeiture of assets and property of individuals associated with transnational criminal organizations up to 60 days prior to the filing of criminal charges, as specified. This bill would require the Attorney General to submit a specified report to the Legislature and Governor by January 1, 2018. Fiscal Impact: One-time minor workload costs likely less than $10,000 (General Fund), to the Department of Justice (DOJ) to gather, compile, and submit the detailed report. Potentially significant increase in trial court costs (General Fund*) to review additional petitions for forfeiture that otherwise would not have been filed and/or filed in conjunction with criminal charges, and for motions for the return of property on grounds of no probable cause. AB 443 (Alejo) Page 1 of ? Potential future increase in state and local revenues to the extent the provisions of this bill result in additional asset forfeiture proceeds that would not have occurred under existing law. *Trial Court Trust Fund Background: Under existing law, property acquired through or proceeds of criminal profiteering (organized crime) activity is subject to forfeiture. Under existing state law, a prosecutor is required to file a petition of forfeiture in conjunction with the criminal proceeding for the underlying offense and provide notice to persons who may have an interest in the property that is alleged to be subject to forfeiture. (Penal Code § 186.4.) When or after charges and a forfeiture petition are filed in a criminal profiteering forfeiture case, existing state law provides that a prosecutor may move the court for orders preserving the defendant's assets that may be subject to forfeiture through the following means: 1) an injunction to restrain all interested parties from transferring, encumbering, or otherwise disposing of property subject to forfeiture, 2) appointment of a receiver to manage the property, or 3) requirement of a surety bond to preserve the interests of interested parties. (Penal Code § 186.6.) In contrast to California law, federal law authorizes a pre-indictment seizure of assets and property with or without prior notice. A prosecutor may request a temporary restraining order without notice if he or she can establish probable cause that, upon conviction, the property will be subject to forfeiture, and that notice will jeopardize the availability of the property for future forfeiture. The temporary restraining order, if granted, expires after 14 days unless extended for good cause shown or unless the party against whom it is entered consents to an extension for a longer period. Alternatively, a federal prosecutor can request a noticed hearing where he or she must demonstrate that there is a substantial probability that the government will prevail on the issue of forfeiture, failure to allow seizure will result in the property being destroyed or removed from the jurisdiction, and the need to preserve the seized property outweighs the hardship on the opposing party. An order so entered is effective for up to 90 days, unless extended by the court for good cause shown or unless an indictment has AB 443 (Alejo) Page 2 of ? been filed. (18 U.S.C. § 1963(d).) The California Attorney General's report, Gangs Beyond Borders: California and the Fight Against Transnational Organized Crime (March 2014), included a recommendation for the Legislature to amend California law to enable prosecutors to temporarily freeze the assets of transnational criminal organizations and their gang associates before the filing of an indictment. In summary, the report stated, "Under current law, transnational criminal organizations are often given the equivalent of advance warning that their criminal proceeds and assets are about to be seized by law enforcement. That is because of a legal void that prevents the seizure of any assets until the filing of a formal criminal indictment. As a result, in cases where illicit assets are discovered before an indictment can be filed, criminals have the chance to remove their assets before they can be taken. This loophole must be eliminated by empowering law enforcement to temporarily freeze an organization's illicit proceeds or property in advance of a formal prosecution." (Executive Summary, vi.) This bill seeks to codify the specified recommendation in the Attorney General report. Proposed Law: This bill would permit, until January 1, 2019, a prosecutor to seize assets and property of individuals associated with transnational criminal organizations, as defined, up to 60 days prior to the filing of criminal charges pursuant to criminal profiteering forfeiture proceedings. Specifically, this bill: Authorizes a prosecuting agency to file a petition for forfeiture in cases of criminal profiteering prior to commencement of criminal proceedings upon the following showing: o The value of the assets to be seized exceeds $100,000. o There is a substantial probability that the prosecuting agency will file a criminal complaint or seek a grand jury indictment against the defendant. AB 443 (Alejo) Page 3 of ? o There is a substantial probability that the prosecuting agency will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture. o The need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered. o There is a substantial probability that the assets subject to forfeiture represent direct or indirect proceeds of criminal activity committed for the benefit of, at the direction of, or in association with, a transnational criminal organization, as defined. Defines, for purposes of criminal profiteering forfeiture, a "transnational criminal organization" as "any ongoing organization, group, or association having leaders, associates, operations, or activities in more than one country, with one of its primary activities being the commission of one or more specified criminal profiteering-related acts. States that if a forfeiture petition is filed prior to the filing of the complaint in a criminal action, the petition and any injunctive order shall be dismissed by operation of law unless a criminal complaint or grand jury indictment is filed within 60 days of the grant of the motion. Provides that if a forfeiture petition is dismissed because criminal charges were not filed within 60 days, the motion shall not be re-filed, except upon the filing of a criminal complaint. Provides that if a forfeiture petition is filed prior to the filing of criminal charges, a person claiming an interest in the property may move for the return of the property on the grounds that there is not probable cause to believe the property is forfeitable and is not otherwise subject to court order of forfeiture or destruction by another specified statute. Provides that a motion for return of property may be made prior to, during, or subsequent to the filing of criminal charges or a grand jury indictment. If the prosecuting agency does not establish a substantial probability that the property is subject to forfeiture, the court shall order the AB 443 (Alejo) Page 4 of ? seized property released to the person it determines is entitled to the property. On or before January 1, 2018, requires the Attorney General to provide a report to specified committees of the Legislature and the Governor. The report is to include, but not be limited to, the following information regarding petitions filed for forfeiture under the provisions of this bill: o The number of cases in which the process authorized by this bill has been used. o The value and kinds of property seized in each case. o The criminal charges filed, if any, in conjunction with each forfeiture action. o The number of cases in which related charges were not filed. o The number of cases in which property was returned because charges were not filed. o The length of time between dismissal, if any, of the forfeiture petition and the return of the property, as specified. o The number of cases in which property was returned pursuant to a motion filed, as specified. Staff Comments: The DOJ has indicated one-time minor workload to gather, compile, and submit the mandated legislative report. The trial courts could incur additional workload to review additional petitions for forfeiture that otherwise would have been filed in conjunction with criminal charges or may not have been filed at all. In the absence of available data to determine the volume of petitions to review, however, the magnitude of the additional court workload is unknown at this time. To the extent the provisions of this measure result in additional asset forfeiture proceeds would result in increased state and local revenue of an unknown but potentially significant amount. -- END -- AB 443 (Alejo) Page 5 of ?