California Legislature—2015–16 Regular Session

Assembly BillNo. 2221


Introduced by Assembly Members Cristina Garcia and Grove

February 18, 2016


An act to amend Section 186.11 of the Penal Code, relating to crimes.

LEGISLATIVE COUNSEL’S DIGEST

AB 2221, as introduced, Cristina Garcia. Crimes: fraud and embezzlement.

Existing law provides for enhanced penalties in the case of a person who commits 2 or more related felonies, a material element of which is fraud or embezzlement, which involve a pattern of related felony conduct, and the pattern of related felony conduct involves the taking or loss of more than $100,000.

This bill would make technical, nonsubstantive changes to that provision.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P1    1

SECTION 1.  

Section 186.11 of the Penal Code is amended to
2read:

3

186.11.  

(a) (1) Any person who commits two or more related
4felonies, a material element of which is fraud or embezzlement,
5which involve a pattern of related felony conduct, and the pattern
6of related felony conduct involves the taking of, or results in the
7loss by another person or entity of, more than one hundred thousand
8dollars ($100,000), shall be punished, upon conviction of two or
P2    1more felonies in a single criminal proceeding, in addition and
2consecutive to the punishment prescribed for the felony offenses
3of which he or she has been convicted, by an additional term of
4imprisonment in the state prison as specified in paragraph (2) or
5(3). This enhancement shall be known as the aggravated white
6collar crime enhancement. The aggravated white collar crime
7enhancement shall only be imposed once in a single criminal
8proceeding. For purposes of this section, “pattern of related felony
9conduct” means engaging in at least two felonies that have the
10same or similar purpose, result, principals, victims, or methods of
11commission, or are otherwise interrelated by distinguishing
12characteristics, and that are not isolated events. For purposes of
13this section, “two or more related felonies” means felonies
14committed against two or more separate victims, or against the
15same victim on two or more separate occasions.

16(2) If the pattern of related felony conduct involves the taking
17of, or results in the loss by another person or entity of, more than
18five hundred thousand dollars ($500,000), the additional term of
19punishment shall be two, three, or five years in the state prison.

20(3) If the pattern of related felony conduct involves the taking
21of, or results in the loss by another person or entity of, more than
22one hundred thousand dollars ($100,000), but not more than five
23hundred thousand dollars ($500,000), the additional term of
24punishment shall be the term specified in paragraph (1) or (2) of
25subdivision (a) of Section 12022.6.

26(b) (1) The additional prison term and penalties provided for
27in subdivisions (a), (c), and (d) shall not be imposed unless the
28facts set forth in subdivision (a) are charged in the accusatory
29pleading and admitted or found to be true by the trier of fact.

30(2) The additional prison term provided in paragraph (2) of
31subdivision (a) shall be in addition to any other punishment
32providedbegin delete byend deletebegin insert underend insert law, including Section 12022.6, and shall not
33be limited by any other provision of law.

34(c) Any person convicted of two or more felonies, as specified
35in subdivision (a), shall also be liable for a fine not to exceed five
36hundred thousand dollars ($500,000) or double the value of the
37taking, whichever is greater, if the existence of facts that would
38make the person subject to the aggravated white collar crime
39enhancement have been admitted or found to be true by the trier
40of fact. However, if the pattern of related felony conduct involves
P3    1the taking of more than one hundred thousand dollars ($100,000),
2but not more than five hundred thousand dollars ($500,000), the
3fine shall not exceed one hundred thousand dollars ($100,000) or
4double the value of the taking, whichever is greater.

5(d) (1) If a person is alleged to have committed two or more
6felonies, as specified in subdivision (a), and the aggravated white
7collar crime enhancement is also charged, or a person is charged
8in an accusatory pleading with a felony, a material element of
9which is fraud or embezzlement, that involves the taking or loss
10of more than one hundred thousand dollars ($100,000), and an
11allegation as to the existence of those facts, any asset or property
12that is in the control of that person, and any asset or property that
13has been transferred by that person to a third party, subsequent to
14the commission of any criminal act alleged pursuant to subdivision
15(a), other than in a bona fide purchase, whether found within or
16outside the state, may be preserved by the superior court in order
17to pay restitution and fines. Upon conviction of two or more
18felonies, as specified in subdivision (a), or a felony, a material
19element of which is fraud or embezzlement, that involves the taking
20or loss of more than one hundred thousand dollars ($100,000), this
21property may be levied upon by the superior court to pay restitution
22and fines if the existence of facts that would make the person
23subject to the aggravated white collar crime enhancement or that
24demonstrate the taking or loss of more than one hundred thousand
25dollars ($100,000) in the commission of a felony, a material
26element of which is fraud or embezzlement, have been charged in
27the accusatory pleading and admitted or found to be true by the
28trier of fact.

29(2) To prevent dissipation or secreting of assets or property, the
30prosecuting agency may, at the same time as or subsequent to the
31filing of a complaint or indictment charging two or more felonies,
32as specified in subdivision (a), and the enhancement specified in
33subdivision (a), or a felony, a material element of which is fraud
34or embezzlement, that involves the taking or loss of more than one
35hundred thousand dollars ($100,000), and an allegation as to the
36existence of those facts, file a petition with the criminal division
37of the superior court of the county in which the accusatory pleading
38was filed, seeking a temporary restraining order, preliminary
39injunction, the appointment of a receiver, or any other protective
40relief necessary to preserve the property or assets. This petition
P4    1shall commence a proceeding that shall be pendent to the criminal
2proceeding and maintained solely to affect the criminal remedies
3provided for in this section. The proceeding shall not be subject
4to or governed by the provisions of the Civil Discovery Act as set
5forth in Title 4 (commencing with Section 2016.010) of Part 4 of
6the Code of Civil Procedure. The petition shall allege that the
7defendant has been charged with two or more felonies, as specified
8in subdivision (a), and is subject to the aggravated white collar
9crime enhancement specified in subdivision (a) or that the
10defendant has been charged with a felony, a material element of
11which is fraud or embezzlement, that involves the taking or loss
12of more than one hundred thousand dollars ($100,000), and an
13allegation as to the existence of those facts. The petition shall
14identify that criminal proceeding and the assets and property to be
15affected by an order issued pursuant to this section.

16(3) A notice regarding the petition shall be provided, by personal
17service or registered mail, to every person who may have an interest
18in the property specified in the petition. Additionally, the notice
19shall be published for at least three successive weeks in a
20newspaper of general circulation in the county where the property
21affected by an order issued pursuant to this section is located. The
22notice shall state that any interested person may file a verified
23claim with the superior court stating the nature and amount of their
24claimed interest. The notice shall set forth the time within which
25a claim of interest in the protected property is required to be filed.

26(4) If the property to be preserved is real property, the
27prosecuting agency shall record, at the time of filing the petition,
28a lis pendens in each county in which the real property is situated
29which specifically identifies the property by legal description, the
30name of the owner of record as shown on the latest equalized
31assessment roll, and the assessor’s parcel number.

32(5) If the property to be preserved are assets under the control
33of a banking or financial institution, the prosecuting agency, at the
34time of the filing of the petition, may obtain an order from the
35court directing the banking or financial institution to immediately
36disclose the account numbers and value of the assets of the accused
37held by the banking or financial institution. The prosecuting agency
38shall file a supplemental petition, specifically identifying which
39banking or financial institution accounts shall be subject to a
P5    1temporary restraining order, preliminary injunction, or other
2protective remedy.

3(6) Any person claiming an interest in the protected property
4may, at any time within 30 days from the date of the first
5publication of the notice of the petition, or within 30 days after
6receipt of actual notice, file with the superior court of the county
7in which the action is pending a verified claim stating the nature
8and amount of his or her interest in the property or assets. A
9verified copy of the claim shall be served by the claimant on the
10Attorney General or district attorney, as appropriate.

11(7) The imposition of fines and restitution pursuant to this
12section shall be determined by the superior court in which the
13underlying criminal offense is sentenced. Any judge who is
14assigned to the criminal division of the superior court in the county
15where the petition is filed may issue a temporary restraining order
16in conjunction with, or subsequent to, the filing of an allegation
17 pursuant to this section. Any subsequent hearing on the petition
18shall also be heard by a judge assigned to the criminal division of
19the superior court in the county in which the petition is filed. At
20the time of the filing of an information or indictment in the
21underlying criminal case, any subsequent hearing on the petition
22shall be heard by the superior court judge assigned to the
23underlying criminal case.

24(e) Concurrent withbegin insert,end insert or subsequent tobegin insert,end insert the filing of the petition,
25the prosecuting agency may move the superior court for, and the
26superior court may issue, the following pendente lite orders to
27preserve the status quo of the property alleged in the petition:

28(1) An injunction to restrain any person from transferring,
29encumbering, hypothecating, or otherwise disposing of that
30property.

31(2) Appointment of a receiver to take possession of, care for,
32manage, and operate the assets and properties so that the property
33may be maintained and preserved. The court may order that a
34receiver appointed pursuant to this section shall be compensated
35for all reasonable expenditures made or incurred by him or her in
36connection with the possession, care, management, and operation
37of any property or assets that are subject to the provisions of this
38section.

P6    1(3) A bond or other undertaking, in lieu of other orders, of a
2value sufficient to ensure the satisfaction of restitution and fines
3imposed pursuant to this section.

4(f) (1) No preliminary injunction may be granted or receiver
5appointed by the court without notice that meets the requirements
6of paragraph (3) of subdivision (d) to all known and reasonably
7ascertainable interested parties and upon a hearing to determine
8that an order is necessary to preserve the property pending the
9outcome of the criminal proceedings. A temporary restraining
10order may be issued by the court, ex parte, pending that hearing
11in conjunction with or subsequent to the filing of the petition upon
12the application of the prosecuting attorney. The temporary
13restraining order may be based upon the sworn declaration of a
14peace officer with personal knowledge of the criminal investigation
15that establishes probable cause to believe that aggravated white
16collar crime or a felony, a material element of which is fraud or
17embezzlement, that involves the taking or loss of more than one
18hundred thousand dollars ($100,000) has taken place and that the
19amount of restitution and fines exceeds or equals the worth of the
20assets subject to the temporary restraining order. The declaration
21may include the hearsay statements of witnesses to establish the
22necessary facts. The temporary restraining order may be issued
23without notice upon a showing of good cause to the court.

24(2) The defendant, or a person who has filed a verified claim
25as provided in paragraph (6) of subdivision (d), shall have the right
26to have the court conduct an order to show cause hearing within
2710 days of the service of the request for hearing upon the
28prosecuting agency, in order to determine whether the temporary
29restraining order should remain in effect, whether relief should be
30granted from any lis pendens recorded pursuant to paragraph (4)
31of subdivision (d), or whether any existing order should be
32modified in the interests of justice. Upon a showing of good cause,
33the hearing shall be held within two days of the service of the
34request for hearing upon the prosecuting agency.

35(3) In determining whether to issue a preliminary injunction or
36temporary restraining order in a proceeding brought by a
37prosecuting agency in conjunction with or subsequent to the filing
38of an allegation pursuant to this section, the court has the discretion
39to consider any matter that it deems reliable and appropriate,
40including hearsay statements, in order to reach a just and equitable
P7    1decision. The court shall weigh the relative degree of certainty of
2the outcome on the merits and the consequences to each of the
3parties of granting the interim relief. If the prosecution is likely to
4prevail on the merits and the risk of the dissipation of assets
5outweighs the potential harm to the defendants and the interested
6parties, the court shall grant injunctive relief. The court shall give
7significant weight to the following factors:

8(A) The public interest in preserving the property or assets
9pendente lite.

10(B) The difficulty of preserving the property or assets pendente
11lite where the underlying alleged crimes involve issues of fraud
12and moral turpitude.

13(C) The fact that the requested relief is being sought by a public
14prosecutor on behalf of alleged victims of white collar crimes.

15(D) The likelihood that substantial public harm has occurred
16where aggravated white collar crime is alleged to have been
17committed.

18(E) The significant public interest involved in compensating
19the victims of white collar crime and paying court-imposed
20restitution and fines.

21(4) The court, in making its orders, may consider a defendant’s
22request for the release of a portion of the property affected by this
23section in order to pay reasonable legal fees in connection with
24the criminal proceeding, any necessary and appropriate living
25expenses pending trial and sentencing, and for the purpose of
26posting bail. The court shall weigh the needs of the public to retain
27the property against the needs of the defendant to a portion of the
28property. The court shall consider the factors listed in paragraph
29(3) prior to making any order releasing property for these purposes.

30(5) The court, in making its orders, shall seek to protect the
31interests of any innocent third persons, including an innocent
32spouse, who were not involved in the commission of any criminal
33activity.

34(6) Any petition filed pursuant to this section is part of the
35criminal proceedings for purposes of appointment of counsel and
36shall be assigned to the criminal division of the superior court of
37the county in which the accusatory pleading was filed.

38(7) Based upon a noticed motion brought by the receiver
39appointed pursuant to paragraph (2) of subdivision (e), the court
40may order an interlocutory sale of property named in the petition
P8    1when the property is liable to perish, to waste, or to be significantly
2reduced in value, or when the expenses of maintaining the property
3are disproportionate to the value thereof. The proceeds of the
4interlocutory sale shall be deposited with the court or as directed
5by the court pending determination of the proceeding pursuant to
6this section.

7(8) The court may make any orders that are necessary to preserve
8the continuing viability of any lawful business enterprise that is
9affected by the issuance of a temporary restraining order or
10preliminary injunction issued pursuant to this action.

11(9) In making its orders, the court shall seek to prevent any asset
12subject to a temporary restraining order or preliminary injunction
13from perishing, spoiling, going to waste, or otherwise being
14significantly reduced in value. Where the potential for diminution
15in value exists, the court shall appoint a receiver to dispose of or
16otherwise protect the value of the property or asset.

17(10) A preservation order shall not be issued against any assets
18of a business that are not likely to be dissipated and that may be
19subject to levy or attachment to meet the purposes of this section.

20(g) If the allegation that the defendant is subject to the
21aggravated white collar crime enhancement or has committed a
22felony, a material element of which is fraud or embezzlement, that
23involves the taking or loss of more than one hundred thousand
24dollars ($100,000) is dismissed or found by the trier of fact to be
25untrue, any preliminary injunction or temporary restraining order
26issued pursuant to this section shall be dissolved. If a jury is the
27trier of fact, and the jury is unable to reach a unanimous verdict,
28the court shall have the discretion to continue or dissolve all or a
29portion of the preliminary injunction or temporary restraining order
30based upon the interests of justice. However, if the prosecuting
31agency elects not to retry the case, any preliminary injunction or
32temporary restraining order issued pursuant to this section shall
33be dissolved.

34(h) (1) (A) If the defendant is convicted of two or more
35felonies, as specified in subdivision (a), and the existence of facts
36that would make the person subject to the aggravated white collar
37crime enhancement have been admitted or found to be true by the
38trier of fact, or the defendant is convicted of a felony, a material
39element of which is fraud or embezzlement, that involves the taking
40or loss of more than one hundred thousand dollars ($100,000), and
P9    1an allegation as to the existence of those facts has been admitted
2or found to be true by the trier of fact, the trial judge shall continue
3the preliminary injunction or temporary restraining order until the
4date of the criminal sentencing and shall make a finding at that
5time as to what portion, if any, of the property or assets subject to
6the preliminary injunction or temporary restraining order shall be
7levied upon to pay fines and restitution to victims of the crime.
8The order imposing fines and restitution may exceed the total worth
9of the property or assets subjected to the preliminary injunction
10or temporary restraining order. The court may order the immediate
11transfer of the property or assets to satisfy any judgment and
12sentence made pursuant to this section. Additionally, upon motion
13of the prosecution, the court may enter an order as part of the
14judgment and sentence making the order imposing fines and
15restitution pursuant to this section enforceable pursuant to Title 9
16(commencing with Section 680.010) of Part 2 of the Code of Civil
17Procedure.

18(B) Additionally, the court shall order the defendant to make
19full restitution to the victim or to make restitution to the victim
20based on his or her ability to pay, as defined in subdivisionbegin delete (b)end deletebegin insert (e)end insert
21 of Section 1203.1b. The payment of the restitution ordered by the
22court pursuant to this section shall be made a condition of any
23probation granted by the court if the existence of facts that would
24make the defendant subject to the aggravated white collar crime
25enhancement or of facts demonstrating the person committed a
26felony, a material element of which is fraud or embezzlement, that
27 involves the taking or loss of more than one hundred thousand
28dollars ($100,000) have been admitted or found to be true by the
29trier of fact. Notwithstanding any other provision of law, the court
30may order that the period of probation continue for up to 10 years
31or until full restitution is made to the victim, whichever is earlier.

32(C) The sentencing court shall retain jurisdiction to enforce the
33order to pay additional fines and restitution and, in appropriate
34cases, may initiate probation violation proceedings or contempt
35of court proceedings against a defendant who is found to have
36willfully failed to comply with any lawful order of the court.

37(D) If the execution of judgment is stayed pending an appeal
38of an order of the superior court pursuant to this section, the
39preliminary injunction or temporary restraining order shall be
P10   1maintained in full force and effect during the pendency of the
2appellate period.

3(2) The order imposing fines and restitution shall not affect the
4interest in real property of any third party that was acquired prior
5to the recording of the lis pendens, unless the property was obtained
6from the defendant other than as a bona fide purchaser for value.
7If any assets or property affected by this section are subject to a
8valid lien, mortgage, security interest, or interest under a
9conditional sales contract and the amount due to the holder of the
10lien, mortgage, interest, or contract is less than the appraised value
11of the property, that person may pay to the state or the local
12government that initiated the proceeding the amount of the
13difference between the appraised value of the property and the
14amount of the lien, mortgage, security interest, or interest under a
15conditional sales contract. Upon that payment, the state or local
16entity shall relinquish all claims to the property. If the holder of
17the interest elects not to make that payment to the state or local
18governmental entity, the interest in the property shall be deemed
19transferred to the state or local governmental entity and any indicia
20of ownership of the property shall be confirmed in the state or
21local governmental entity. The appraised value shall be determined
22as of the date judgment is entered either by agreement between
23the holder of the lien, mortgage, security interest, or interest under
24a conditional sales contract and the governmental entity involved,
25or if they cannot agree, then by a court-appointed appraiser for the
26county in which the action is brought. A person holding a valid
27lien, mortgage, security interest, or interest under a conditional
28sales contract shall be paid the appraised value of his or her interest.

29(3) In making its final order, the court shall seek to protect the
30legitimately acquired interests of any innocent third persons,
31including an innocent spouse, who were not involved in the
32commission of any criminal activity.

33(i) In all cases where property is to be levied upon pursuant to
34this section, a receiver appointed by the court shall be empowered
35to liquidate all property or assets which shall be distributed in the
36following order of priority:

37(1) To the receiver, or court-appointed appraiser, for all
38reasonable expenditures made or incurred by him or her in
39connection with the sale of the property or liquidation of assets,
40including all reasonable expenditures for any necessary repairs,
P11   1storage, or transportation of any property levied upon under this
2section.

3(2) To any holder of a valid lien, mortgage, or security interest
4up to the amount of his or her interest in the property or proceeds.

5(3) To any victim as restitution for any fraudulent or unlawful
6acts alleged in the accusatory pleading that were proven by the
7prosecuting agency as part of the pattern of fraudulent or unlawful
8acts.

9(4) For payment of any fine imposed pursuant to this section.
10The proceeds obtained in payment of a fine shall be paid to the
11treasurer of the county in which the judgment was entered, or if
12the action was undertaken by the Attorney General, to the
13Treasurer. If the payment of any fine imposed pursuant to this
14section involved losses resulting from violation of Section 550 of
15this code or Section 1871.4 of the Insurance Code, one-half of the
16fine collected shall be paid to the treasurer of the county in which
17the judgment was entered, and one-half of the fine collected shall
18be paid to the Department of Insurance for deposit in the
19appropriate account in the Insurance Fund. The proceeds from the
20fine first shall be used by a county to reimburse local prosecutors
21and enforcement agencies for the reasonable costs of investigation
22and prosecution of cases brought pursuant to this section.

23(5) To the Restitution Fund, or in cases involving convictions
24relating to insurance fraud, to the Insurance Fund as restitution for
25crimes not specifically pleaded and proven in the accusatory
26pleading.

27(j) If, after distribution pursuant to paragraphs (1) and (2) of
28subdivision (i), the value of the property to be levied upon pursuant
29to this section is insufficient to pay for restitution and fines, the
30court shall order an equitable sharing of the proceeds of the
31liquidation of the property, and any other recoveries, which shall
32specify the percentage of recoveries to be devoted to each purpose.
33At least 70 percent of the proceeds remaining after distribution
34pursuant to paragraphs (1) and (2) of subdivision (i) shall be
35 devoted to restitution.

36(k) Unless otherwise expressly provided, the remedies or
37penalties provided by this section are cumulative to each other and
38to the remedies or penalties available under all other laws of this
39state, except that two separate actions against the same defendant
40and pertaining to the same fraudulent or unlawful acts may not be
P12   1brought by a district attorney or the Attorney General pursuant to
2this section and Chapter 5 (commencing with Section 17200) of
3Part 2 of Division 7 of the Business and Professions Code. If a
4fine is imposed under this section, it shall be in lieu of all other
5fines that may be imposed pursuant to any other provision of law
6for the crimes for which the defendant has been convicted in the
7action.



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