BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING


          AB  
          1395 (Salas)


          As Amended  January 4, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Public Safety   |4-1  |Quirk, Jones-Sawyer,  |Melendez            |
          |                |     |Low, Santiago         |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |16-0 |Gomez, Bigelow,       |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Quirk, Weber,  |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Adds to the list of crimes for which a person can be  
          prosecuted for money laundering.  Specifically, this bill  
          expands the definition of "criminal activity" to include  








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          misdemeanor gambling violations for purposes of money  
          laundering.


          EXISTING LAW:  


          1)States that any person who conducts or attempts to conduct a  
            transaction within a seven-day period involving a monetary  
            instrument or instruments of a total value exceeding $5,000,  
            or a total value exceeding $25,000 within a 30-day period,  
            through one or more financial institutions with the specific  
            intent to promote, manage, establish, carry on, or facilitate  
            the promotion, management, establishment, or carrying on of  
            any criminal activity, or knowing that the monetary instrument  
            represents the proceeds of, or is derived directly or  
            indirectly from the proceeds of, criminal activity, as  
            defined, is guilty of the crime of money laundering.  


          2)Defines "criminal activity" for purposes of money laundering  
            to mean a criminal offense punishable under the laws of this  
            state by death, imprisonment in the state prison, or  
            imprisonment in a county-jail-eligible felony or from a  
            criminal offense committed in another jurisdiction punishable  
            under the laws of that jurisdiction by death or imprisonment  
            for a term exceeding one year.  


          3)Provides that a person convicted of money laundering may be  
            punished by imprisonment in county jail for either a  
            misdemeanor with a maximum of one year or a felony and by a  
            fine of not more than $250,000 or twice the value of the  
            property transacted, whichever is greater. On a second or  
            subsequent conviction, the maximum fine that may be imposed is  
            $500,000 or five times the value of the property transacted,  
            whichever is greater.  










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          4)Enhances the penalty of a person convicted of money laundering  
            as follows:


             a)   A mandatory additional term of one year to be served  
               consecutive to the punishment if the value of the  
               transaction or transactions exceeds $50,000 but is less  
               than $150,000;


             b)   A mandatory additional term of two years to be served  
               consecutive to the punishment if the value of the  
               transaction or transactions exceeds $150,000 but is less  
               than $1,000,000;


             c)   A mandatory additional term of three years to be served  
               consecutive to the punishment if the value of the  
               transaction or transactions exceeds $1,000,000 but is less  
               than $2,500,000; or


             d)   A mandatory additional term of four years to be served  
               consecutive to the punishment if the value of the  
               transaction or transactions exceeds $2,500,000.  


          5)Prohibits lotteries, with exceptions for the California State  
            Lottery, bingo for charitable purposes, and charitable raffles  
            conducted by a non-profit, tax-exempt organization, and makes  
            the violation of those crimes punishable as a misdemeanor.  


          6)Defines a "lottery" as any scheme for the disposal or  
            distribution of property by chance, among persons who have  
            paid or promised to pay any valuable consideration for the  
            chance of obtaining such property or a portion of it, or for  
            any share or any interest in such property, upon agreement,  
            understanding or expectation that it is to be distributed or  








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            disposed of by lot or chance whether called a lottery, raffle,  
            or gift enterprise, or by whatever name the same may be known.  
             


          7)States that every person who deals, plays, or carries on,  
            opens, or causes to be opened, or who conducts either as owner  
            or employee, whether for hire or not, any game of faro, monte,  
            roulette, lansquenet, rouge et noire, rondo, tan, fan-tan,  
            seven-and-a-half, twenty-one, hokey-pokey, or any banking or  
            percentage game played with cards, dice, or any device, for  
            money, checks, credit, or other representative of value, and  
            every person who plays or bets at or against any of those  
            prohibited games is guilty of a misdemeanor punishable by a  
            fine not less than $1,000 or by imprisonment in the county  
            jail not exceeding six months, or by both the fine and  
            imprisonment.  


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, moderate costs to the California Department of  
          Corrections and Rehabilitation (CDCR) of less than $150,000  
          (General Fund), if less than five persons are sentenced to  
          prison per a year, instead of county jail.  According to CDCR,  
          the annual contracted bed rate is $27,000 per inmate.   


          Moderate nonreimbursable local costs for incarceration, offset  
          to a degree by fee revenue.


          COMMENTS:  According to the author, "In 2014, I authored  
          Assembly Bill (AB) 1439 [Chapter 592] to clarify that gambling  
          at sweepstakes cafes is illegal.  Specifically, the bill made  
          internet gambling sweepstakes at these cafes an unfair business  
          practice and gave the Attorney General, district attorneys, and  
          city attorneys the authority to bring civil suit to subject  
          operators to civil penalties for violations.









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          "On June 25, 2015 the California Supreme Court ruled in People  
          ex rel. v. Grewal that computerized sweepstakes found at  
          internet cafes are illegal under state gambling laws.  In a  
          unanimous ruling, the court rejected arguments that the  
          sweepstakes are different from slot machines because they have  
          predetermined outcomes. 


          "Despite AB 1439 and the Grewal decision, new examples of  
          illegal gambling establishments have emerged.  These operators  
          claim they are not offering gambling or sweepstakes, but rather  
          'social gaming and mining.'  While the business model may have  
          changed, the underlying nature of the games these cafes are  
          offering has not. 


          "AB 1395 would provide law enforcement with the ability to use  
          criminal remedies when combatting egregious cases of organized,  
          illegal gambling.  Specifically, the bill incorporates  
          violations of the gambling laws into organized crime and money  
          laundering statutes.  This approach has been used successfully  
          in other states and will give law enforcement the right tools to  
          go after illegal gambling."




          Analysis Prepared by:                                             
                          Stella Choe / PUB. S. / (916) 319-3744  FN:  
          0002576
















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