BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 298 (Block) - Money laundering:  interception of electronic  
          communications
          
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          |Version: February 23, 2015      |Policy Vote: PUB. S. 6 - 0      |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: April 27, 2015    |Consultant: Jolie Onodera       |
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          This bill meets the criteria for referral to the Suspense File. 

          

          Bill  
          Summary:  SB 298 would add money laundering for criminal  
          profiteering to the list of offenses for which interception of  
          electronic communications may be ordered, as specified. 
          Fiscal Impact:  


           Potential future increase in state costs (General Fund) to the  
            extent expanding the authorization for electronic  
            interceptions to the offense of money laundering leads to  
            additional state prison commitments. Although data from the  
            CDCR indicates fewer than five individuals per year are  
            committed to state prison under the money laundering  
            provisions of law, the cumulative future cost of even one  
            additional commitment per year, assuming an average length of  
            stay in excess of one year, would exceed $50,000 (General  
            Fund).
           Potential increase in non-reimbursable local costs (Local) to  
            the extent expanding the authorization for electronic  







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            interceptions to the offense of money laundering leads to  
            additional felony jail terms.
           Non-reimbursable local law enforcement costs (Local) for  
            additional electronic interception authorizations ordered,  
            potentially offset to a degree by related savings as a result  
            of more efficient law enforcement practices.  
           Minor ongoing costs (General Fund) to the DOJ to include  
            additional data in its detailed annual report on electronic  
            interceptions. 


          Background:  State wiretap law was originally enacted in 1989 and granted  
          law enforcement officers the right to use wiretapping while  
          investigating specific types of crimes. SB 1428 (Pavley) Chapter  
          707/2010 expanded the use of wiretapping to include the  
          interception of modern types of electronic communications. 
          The number of electronic interception orders in California  
          averaged approximately 700 from 2011 to 2013, with an increase  
          of 44 percent in 2014 as reported by the DOJ. According to the  
          DOJ 2013 California Electronic Interceptions Report, 674  
          interception orders were authorized in 22 counties, leading to  
          799 arrests and 85 convictions. The DOJ 2014 California  
          Electronic Interceptions Report indicates 971 interception  
          orders were authorized in 23 counties, leading to 482 arrests.  
          The majority of these arrests are currently pending prosecution,  
          with 41 convictions reported to date. The crimes for which  
          arrests were made vary, but charges were largely narcotics- (73  
          percent) or gang- (23 percent) related.

          Electronic interceptions are used as an investigative tool, one  
          of many at law enforcement's disposal. As one example of the  
          significant impact of electronic intercepts and their importance  
          as a tool for law enforcement agencies to use in investigating  
          crimes involving narcotics transactions, criminal street gangs,  
          and violence, the DOJ 2012 report cites the seizure of over $1.3  
          million, 799 pounds of methamphetamine, and 65 kilograms of  
          cocaine in Imperial County due to the assistance of 15  
          electronic intercept orders.

          Current law authorizes the Attorney General or the district  
          attorney to apply to the Superior Court for an order authorizing  
          interception of a wire or electronic communication under  
          specified circumstances. The crimes for which an electronic  
          interception order may be sought include murder, solicitation to  








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          commit murder, bombing, use or threat to use weapons of mass  
          destruction, criminal gang activity, human trafficking, and  
          importation, possession for sale, transportation, manufacture or  
          sale of heroin, cocaine, PCP, or methamphetamine. Written  
          reports must be submitted at the discretion of the court, but at  
          least every 10 days, to the judge who issues the order. 

          Current law requires the Attorney General to prepare and submit  
          a detailed annual report to the Legislature, the Judicial  
          Council, and the Director of the Administrative Office of the  
          Courts on electronic interceptions conducted during the  
          preceding year. Information for this report is to be provided to  
          the Attorney General by any prosecutorial agency seeking an  
          electronic interception order.


          Proposed Law:  
           This bill would add money laundering to the list of offenses  
          for which interception of electronic communications may be  
          ordered, subject to both of the following circumstances:
                 The offense is committed for the benefit of, at the  
               direction of, or in association with, an ongoing  
               organization, association, or group of three or more  
               persons, whether formal or informal, who collectively  
               engage in or have engaged in a pattern of criminal  
               profiteering activity, as specified.
                 The value of the transaction or transactions exceeds  
               $50,000.


          Prior  
          Legislation:  SB 955 (Mitchell) Chapter 712/2014 added human trafficking to  
          the list of offenses for which interception of electronic  
          communications may be ordered.

          SB 35 (Pavley) Chapter 745/2014 extends the provisions  
          authorizing the use of electronic interceptions from January 1,  
          2015, to January 1, 2020. 
          
          AB 569 (Portantino) Chapter 391/2007 extended the provisions  
          authorizing the use of wiretaps by law enforcement to January 1,  
          2012.
          
          SB 1428 (Pavley) Chapter 707/2010 expanded the scope of  








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          wiretapping provisions to include the interception of modern  
          types of electronic communications. This bill also proposed to  
          extend the sunset on wiretap provisions to January 1, 2014,  
          however, the provision was amended out of the chaptered version  
          of the bill.
          
          SB 61 (Pavley) Chapter 663/2011 extended the sunset on wiretap  
          provisions to January 1, 2015.


          Staff  
          Comments:  It is unknown how many additional electronic interception  
          orders would be authorized under the offense of money laundering  
          for criminal profiteering, or how many arrests, convictions, and  
          jail or prison commitments would result directly from their use.  


          In order to obtain intercept authority, law enforcement must  
          already be investigating specific criminal activity, with  
          electronic interceptions to be used after all other normal  
          investigative procedures have been exhausted. It is unclear how  
          many investigations could have led to successful convictions  
          even in the absence of electronic interceptions. Moreover,  
          electronic interception evidence makes it more difficult to  
          prove a defendant's innocence and could ultimately result in an  
          indeterminable level of reduced trial and incarceration costs to  
          the extent that a defendant is more likely to plea bargain due  
          to the existence of electronic interception evidence of his or  
          her guilt. Nonetheless, if even one or two additional defendants  
          are sentenced to state prison directly attributable to an  
          electronic interception ordered under the expanded authority  
          provided by this bill, the annual costs would exceed the  
          threshold for referral to the Suspense File.

          Because sentence lengths for money laundering offenses are  
          dependent on the value of the transactions involved, it is also  
          unknown how long each additional commitment to jail or prison  
          would remain incarcerated. Money laundering is punishable by  
          imprisonment in a county jail for not more than one year, or in  
          county jail/state prison for 16 months, two or three years (PC   
          1170(h)), by a fine of not more than $250,000 or twice the value  
          of the property transacted, whichever is greater, or by both  
          that imprisonment and fine. Each individual transaction in  
          excess of $5,000, each series of transactions conducted within a  








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          seven-day period that total in excess of $5,000, or each series  
          of transactions conducted within a 30-day period that total in  
          excess of $25,000, constitute a separate, punishable offense. 

          A person punished under PC  1170(h) is also subject to an  
          additional term of imprisonment based on the value of the  
          transactions, with additional terms ranging from one year to  
          four years in addition to and consecutive to the felony  
          punishment otherwise imposed.


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