BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1395 (Salas) - Money laundering: criminal activity:
lotteries and gaming
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|Version: August 1, 2016 |Policy Vote: PUB. S. 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Jolie Onodera |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1395 would add specified misdemeanor gambling
(lottery and gaming) offenses within the money laundering
statutes, thus making the offenses punishable as felonies.
Fiscal
Impact:
State prisons : Potentially significant increase in state
costs (General Fund) to the extent expanding the definition of
"criminal activity" to include misdemeanor gambling offenses
results in additional commitments to state prison for money
laundering that otherwise would have been subject to
misdemeanor charges. For every 10 percent increase in annual
commitments to state prison under the money laundering
statutes (5 commitments), annual costs would increase by
$145,000, based on the estimated contract bed rate of $29,000
per inmate per year.
County jails : Potentially significant to major increase in
local incarceration costs (Local Funds or General Fund*),
offset to a degree by fine revenue, for additional felony
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commitments to county jail, as well as longer lengths of stay
for defendants who otherwise would have served shorter
sentences in county jail under misdemeanor charges. While the
number of new felony charges resulting from this measure is
unknown, for context, for every 25 additional convictions
impacted by this measure, costs to extend jail sentences for
an average of six months could increase costs by $570,000
annually. To the extent the applicable jail terms imposed are
longer and/or the number of persons impacted is greater, costs
could increase substantially.
*Proposition 30 (2012) provides that legislation enacted after
September 30, 2012, that has an overall effect of increasing the
costs already borne by a local agency, as specified, apply to
local agencies only to the extent the State provides annual
funding for the cost increase. Although legislation creating a
new crime or revising the definition of an existing crime is
exempt from Proposition 30 state funding requirements,
legislation that changes the penalty for an existing crime is
not similarly specifically exempt. The misdemeanor gambling
offenses specified in this measure are existing crimes. To the
extent the greater penalties imposed due to the expanded
definition of "criminal activity" is determined to change the
penalty for these crimes, any increase in costs to local
agencies attributable to the provisions of this legislation
could potentially require annual funding from the State.
Background: Existing law provides 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 to
facilitate such conduct, or who knows 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. (Penal Code (PC) §
186.10 (a).)
Existing law provides that a conviction for money laundering may
be punishable as a misdemeanor subject to imprisonment in county
jail for up to one year, or by a felony pursuant to PC § 1170(h)
subject to imprisonment in county jail or state prison for 16
months, two or three years, by a fine of not more than $250,000
AB 1395 (Salas) Page 2 of
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or twice the value of the property transacted, whichever is
greater, or by both the imprisonment and fine. For 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. (PC § 186.10 (a).)
Further, existing law enhances the penalty for money laundering
convictions, as follows:
A mandatory additional term of one year to be served
consecutive to the punishment if the value of the
transaction(s) exceeds $50,000 but is less than $150,000;
A mandatory additional term of two years to be served
consecutive to the punishment if the value of the
transaction(s) exceeds $150,000 but is less than $1
million;
A mandatory additional term of three years to be served
consecutive to the punishment if the value of the
transaction(s) exceeds $1million but is less than $2.5
million; or
A mandatory additional term of four years to be served
consecutive to the punishment if the value of the
transaction(s) exceeds $2.5 million. (PC § 186.10 (c)(1).)
Proposed Law:
This bill would expand the definition of "criminal activity"
under the money laundering statutes to include the following
misdemeanor gambling (lottery and gaming) offenses:
PC § 320 - contriving, preparing, setting up, proposing,
or drawing any lottery.
PC § 321 - selling, giving, furnishing or transferring
to or for any other person any ticket, chance, share, or
interest, or any paper, certificate, or instrument
purporting or understood to be or to represent any ticket,
chance, share, or interest in, or depending upon the event
of any lottery.
PC § 322 - aiding or assisting, either by printing,
writing, advertising, publishing, or otherwise in setting
up, managing, or drawing any lottery, or in selling or
disposing of any ticket, chance, or share.
PC § 323 - opening, setting up, or keeping, by himself,
AB 1395 (Salas) Page 3 of
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herself, or by any other person, any office or other place
for the sale of, or for registering the number of any
ticket in any lottery, or who, by printing, writing, or
otherwise, advertises or publishes the setting up, opening,
or using of any such office.
PC § 326 - letting or permitting to be used, any
building or vessel, or any portion thereof, knowing that it
is to be used for setting up, managing, or drawing any
lottery, or for the purpose of selling or disposing of
lottery tickets.
PC § 330a - every person, who has in his or her
possession or under his or her control, either as owner,
lessee, agent, employee, mortgagee, or otherwise, or who
permits to be placed, maintained, or kept in any room,
space, enclosure, or building owned, leased, or occupied by
him or her, or under his or her management or control, any
slot or card machine, contrivance, appliance or mechanical
device, upon the result of action of which money or other
valuable thing is staked or hazarded, and which is
operated, or played, by placing or depositing therein any
coins, checks, slugs, balls, or other articles or device,
or in any other manner and by means whereof, or as a result
of the operation of which any merchandise, money,
representative or articles of value, checks, or tokens,
redeemable in or exchangeable for money or any other thing
of value, is won or lost, or taken from or obtained from
the machine, when the result of action or operation of the
machine, contrivance, appliance, or mechanical device is
dependent upon hazard or chance.
PC § 330b - to manufacture, repair, own, store, possess,
sell, rent, lease, let on shares, lend or give away,
transport, or expose for sale or lease, or to offer to
repair, sell, rent, lease, let on shares, lend or give
away, or permit the operation, placement, maintenance, or
keeping of, in any place, room, space, or building owned,
leased, or occupied, managed, or controlled by that person,
any slot machine or device, as defined.
PC § 330c - to manufacture, repair, own, store, possess,
sell, rent, lease, lend, offer for sale of a punchboard
which is a slot machine. For the purposes of this section,
a punchboard is any card, board or other device which may
be played or operated by pulling, pressing, punching out or
otherwise removing any slip, tab, paper or other substance
therefrom to disclose any concealed number, name or symbol.
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PC § 330.1 - to manufacture, own, store, keep, possess,
sell, rent, lease, let on shares, lend or give away,
transport, or expose for sale or lease, or offer to sell,
rent, lease, let on shares, lend or give away or who
permits the operation of or permits to be placed,
maintained, used, or kept in any room, space, or building
owned, leased, or occupied by him or her or under his or
her management or control, any slot machine or device as
specified.
PC § 330.4 - mere possession or control, either as
owner, lessee, agent, employee, mortgagor, or otherwise of
any slot machine or device, or permitting to be placed,
maintaining or keeping in any room, space, enclosure, or
building owned, leased or occupied by him/her, or under
his/her management or control, whether for use or operation
or for storage, bailment, safekeeping or deposit only, any
slot machine or device.
This bill specifies that the provisions do not apply to any
controlled game within the scope of Section 19943.5 of the
Business and Professions Code that is approved by the Department
of Justice.
Related
Legislation: AB 1439 (Salas) Chapter 592/2014 prohibits any
person, when conducting a contest or sweepstakes, from using an
electronic video monitor to simulate gambling or play
gambling-themed games that offers the opportunity to win
sweepstakes cash, cash equivalent prizes, or other prizes of
value.
Staff
Comments: By expanding the definition of "criminal activity" to
include specified misdemeanor gaming and lottery offenses, the
provisions of this bill could result in additional felony
charges and subsequent convictions for money laundering, thereby
potentially increasing state and local costs for incarceration.
Statistics from the Department of Justice (DOJ) indicate over
100 arrests annually for each of the past three years for only a
subset of the misdemeanor gambling offenses specified in this
measure. However, to the extent internet cafes engaging in
illegal internet gaming or that possess "slot machines" as
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broadly defined under existing law qualify under the provisions
of this bill, the scope of potential new felony arrests and
convictions could be significant.
CDCR data indicates an average of 45 commitments in each of the
past two years for money laundering (PC § 186.10). The number of
additional commitments to state prison and the associated
lengths of stay cannot be estimated with certainty given the
numerous factors involved in charging and sentencing, including
but not limited to judicial and prosecutorial discretion, the
prior criminal history of the defendant, and the elements
specific to each case. However, for every 10 percent increase in
commitments to state prison (5 commitments) resulting from the
provisions of this bill, state incarceration costs would
increase by $145,000 (General Fund) based on the contract bed
rate of $29,000 per inmate per year.
Staff notes that the gambling offenses specified in this measure
are crimes under existing law. Pursuant to Proposition 30
(2012), legislation enacted after September 30, 2012, that has
an overall effect of increasing the costs already borne by a
local agency for programs or levels of service mandated by the
2011 Realignment Legislation apply to local agencies only to the
extent that the state provides annual funding for the cost
increase. Although Proposition 30 specifies that legislation
defining a new crime or changing the definition of an existing
crime is not subject to this provision, changing the penalty for
a crime is not specifically exempted and could potentially
require a subvention of funds from the state. To the extent
increasing the penalty for violations of the misdemeanor
gambling offenses is determined to change the penalty for these
existing crimes, any increase in costs to local agencies for
county jail incarceration attributable to provisions of this
legislation could potentially require annual funding from the
State.
The Three-Judge Court has ordered the State to reduce its prison
population to 137.5 percent of the prison system's design
capacity by February 28, 2016. Pursuant to its February 10, 2014
order, the Court has ordered the CDCR to implement several
population reduction measures, prohibited an increase in the
population of inmates housed in out-of-state facilities, and
indicated the Court will maintain jurisdiction over the State
for as long as necessary to ensure that the State's compliance
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with the 137.5 percent final benchmark is durable, and that such
durability is firmly established. Any future increases to the
State's prison population challenge the ability of the State to
reach and maintain such a "durable solution," and could require
the State to pursue one of several options, including
contracting-out for additional bed space or releasing current
inmates earlier onto parole.
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