BILL ANALYSIS Ó
AB 2759
Page 1
ASSEMBLY THIRD READING
AB
2759 (Levine)
As Amended May 27, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Judiciary |10-0 |Mark Stone, Wagner, | |
| | |Alejo, Chau, Chiu, | |
| | |Gallagher, Weber, | |
| | |Holden, Maienschein, | |
| | |Ting | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Banking |11-0 |Dababneh, Travis | |
| | |Allen, Achadjian, | |
| | |Bonilla, Brown, Chau, | |
| | |Gatto, Kim, Low, | |
| | |Ridley-Thomas, Mark | |
| | |Stone | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
AB 2759
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| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Seeks to compensate victims of corporate fraud
committed by corporate officers from the Victims of Corporate
Fraud Compensation Fund (Fund). Specifically, this bill:
1)Allows an individual who is a victim of corporate fraud and
who wins a judgment against a corporate officer, but is unable
to collect the judgment from the officer after diligent
efforts to do so, to collect damages from the Fund as a
similarly situated victim of corporate fraud with a judgment
against a corporation would be able to do.
2)Specifies that attorney fees are not costs that can be
recovered from the Fund and declares that the limitation on
attorney fees is declaratory of existing law.
3)Eliminates the requirement in existing law that the Fund must
pay interest to a claimant on an unpaid claim in the event
that it does not have enough money to pay a claim when it is
initially submitted for payment.
4)Defines relevant terms.
FISCAL EFFECT: According to the Assembly Appropriation
committee, expanding the type of claims eligible against the
AB 2759
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Fund will result in unknown additional expenditures. Estimated
fund expenditures in 2016-17 are $1.5 million. Additional valid
claims would likely increase expenditures by several hundred
thousand dollars annually. According to the Secretary of State
(SOS), the Fund had a balance of $11.9 million as of January
2016.
COMMENTS: According to the Secretary of State's Office, the
Victims of Corporate Fraud Compensation Fund had a balance of
approximately $11,900,000 as of January 2016. According to
information provided by the author:
The Victims of Corporate Fraud Compensation Fund has not
received any applications based upon a criminal
restitution order against AGA Financial Inc. However,
the Victims of Corporate Fraud Compensation Fund has
received numerous claims based upon four criminal
restitution orders naming James Koenig and Asset Real
Estate and Investment Company in a related criminal
proceeding. The first three criminal restitution orders
named victims who testified at trial. Administrative
review has been completed for all of the submitted
Applications based upon the first three restitution
orders and the Victims of Corporate Fraud Compensation
Fund has paid out more than $1.1 million dollars to
victims named in the three orders.
The court issued its fourth restitution order, on June
24, 2015, naming victims who had not testified at trial.
The Victims of Corporate Fraud Compensation Fund received
nearly 300 claims based upon the June 24, 2015 criminal
restitution order. Unfortunately, James Koenig has filed
a Notice of Appeal with respect to the June 24, 2015
criminal restitution order which is still pending.
AB 2759
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California Corporations Code sections 2281(f) and 2282(a)
preclude the payment of claims while an appeal is
pending. Therefore, the Victims of Corporate Fraud Fund
is statutorily precluded from awarding applications based
upon the June 24, 2015 criminal restitution order until
the appeal has run its course.
Statement of the Author. According to the author:
We know that there are victims of corporate fraud that
are unable to access the victims of corporate fraud
compensation fund. That is because to access the fund an
individual must have been a victim of a corporation that
has been convicted. Very rarely are corporations charged
with crimes almost always it is an individual who is
charged with a crime. AB 2759 will correct this problem
and allow many individuals who should have access to the
fund access.
Access to the Victims of Corporate Fraud Compensation Fund. If
a plaintiff successfully obtained a judgment against an officer
of a corporation based upon the tortious act by the officer him
or herself; the act of the officer on behalf of the corporation;
or the act of the officer violated the "Responsible Corporate
Officer Doctrine," the plaintiff's theory of liability would be
based upon misdeeds of the corporation that are attributable to
the officer (and vice versa). It therefore seems reasonable to
provide such a plaintiff with the same remedies available to a
plaintiff who obtains a judgment against the corporation itself.
Analysis Prepared by:
AB 2759
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Alison Merrilees / JUD. / (916) 319-2334 FN:
0003146