BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair
2015 - 2016 Regular
Bill No: SB 298 Hearing Date: April 14, 2015
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|Author: |Block |
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|Version: |February 23, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|MK |
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Subject: Money Laundering: Interception of Electronic
Communications
HISTORY
Source: California Attorney General
Prior Legislation:SB 955 (Mitchell) Ch.712, Stats. 2014
SB 61 (Pavley) Ch. 663, Stats. 2011
SB 1428 (Pavley) - Ch. 707 Stats. 2010
AB 569 (Portantino) - Ch. 307, Stats. 2007
AB 74 (Washington) - Ch. 605, Stats. 2002
Proposition 21 - approved March 7, 2000
SB 1016 (Boatwright) - Ch. 971, Stats.
1995
SB 800 (Presley) - Ch. 548, Stats. 1993
SB 1120 (Presley) - 1991
SB 83 - amended out in part and
chaptered in part as SB 1499 (1988)
SB 1499 - Ch. 111, Stats. 1988
Support: Alameda County District Attorney; California Police
Chiefs Association; California State Sheriffs'
Association; California Statewide Law Enforcement
Association; Peace Officers Research Association of
California; San Diego County District Attorney
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Opposition:American Civil Liberties Union; California Public
Defenders Association
PURPOSE
The purpose of this bill is to add money laundering for criminal
profiteering to the crimes for which a wiretap may be sought.
Existing law authorizes the Attorney General, chief deputy
attorney general, chief assistant attorney general, district
attorney or the district attorney's designee to apply to the
presiding judge of the superior court for an order authorizing
the interception of wire or electronic communications under
specified circumstances. (Penal Code §§ 629.50 et. seq.)
Existing law provides that the court may grant oral approval for
an emergency interception of wire, electronic pager or
electronic cellular telephone communications without an order as
specified. Approval for an oral interception shall be
conditioned upon filing with the court, within 48 hours of the
oral approval, a written application for an order. Approval of
the ex parte order shall be conditioned upon filing with the
judge within 48 hours of the oral approval. (Penal Code §
629.56.)
Existing law provides that no order entered under this chapter
shall authorize the interception of any wire, electronic pager
or electronic cellular telephone or electronic communication for
any period longer than is necessary to achieve the objective of
the authorization, nor in any event longer than 30 days. (Penal
Code §629.58.)
Existing law requires that written reports showing what progress
has been made toward the achievement of the authorized
objective, including the number of intercepted communications,
be submitted at least every 10 days to the judge who issued the
order allowing the interception. (Penal Code § 629.60.)
Existing law requires the Attorney General to prepare and submit
an annual report to the Legislature, the Judicial Council and
the Director of the Administrative Office of the United States
Court on interceptions conducted under the authority of the
wiretap provisions and specifies what the report shall include.
(Penal Code § 629.62.)
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Existing law provides that applications made and orders granted
shall be sealed by the judge. Custody of the applications and
orders shall be where the judge orders. The applications and
orders shall be disclosed only upon a showing of good cause
before a judge and shall not be destroyed except on order of the
issuing or denying judge, and in any event shall be kept for 10
years. (Penal Code § 629.66.)
Existing law provides that a defendant shall be notified that he
or she was identified as the result of an interception prior to
the entry of a plea of guilty or nolo contendere, or at least 10
days, prior to any trial, hearing or proceedings in the case
other than an arraignment or grand jury proceeding. Within 10
days prior to trial, hearing or proceeding the prosecution shall
provide to the defendant a copy of all recorded interceptions
from which evidence against the defendant was derived, including
a copy of the court order, accompanying application and monitory
logs. (Penal Code § 629.70.)
Existing law provides that any person may move to suppress
intercepted communications on the basis that the contents or
evidence were obtained in violation of the Fourth Amendment to
the United States Constitution or of California electronic
surveillance provisions. (Penal Code § 629.72.)
Existing law provides that the Attorney General, any deputy
attorney general, district attorney or deputy district attorney
or any peace officer who, by any means authorized by this
chapter has obtained knowledge of the contents of any wire,
electronic pager, or electronic communication or evidence
derived therefrom, may disclose the contents to one of the
individuals referred to in this section and to any investigative
or law enforcement officer as defined in subdivision (7) of
Section 2510 of Title 18 of the United State Code to the extent
that the disclosure is permitted pursuant to Section 629.82 and
is appropriate to the proper performance of the official duties
of the individual making or receiving the disclosure. No other
disclosure, except to a grand jury, of intercepted information
is permitted prior to a public court hearing by any person
regardless of how the person may have come into possession
thereof.. (Penal Code § 629.74.)
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Existing law provides that if a law enforcement officer
overhears a communication relating to a crime that is not
specified in the wiretap order, but is a crime for which a
wiretap order could have been issued, the officer may only
disclose the information and thereafter use the evidence, if, as
soon as practical, he or she applies to the court for permission
to use the information.
If an officer overhears a communication relating to a crime that
is not specified in the order, and not one for which a wiretap
order could have been issued or any violent felony, the
information may not be disclosed or used except to prevent the
commission of a crime. No evidence derived from the wiretap can
be used unless the officers can establish that the evidence was
obtained through an independent source or inevitably would have
been discovered. In all instances, the court may only authorize
use of the information if it reviews the procedures used and
determines that the interception was in accordance with state
wiretap laws. (Penal Code § 629.82 (b).)
Existing law specifies the crimes for which an interception
order may be sought: murder, kidnapping, bombing, criminal
gangs, and possession for sale, sale, transportation, or
manufacturing of more than three pounds of cocaine, heroin, PCP,
methamphetamine or its precursors, possession of a destructive
device, weapons of mass destruction or restricted biological
agents, human trafficking. (Penal Code § 629.52.)
This bill adds to the list of crimes for which a wiretap may be
sought money laundering for the benefit of or in association
with an ongoing organization that has engaged in criminal
profiteering and if the values of the transactions exceed
$50,000.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the past eight years, this Committee has scrutinized
legislation referred to its jurisdiction for any potential
impact on prison overcrowding. Mindful of the United States
Supreme Court ruling and federal court orders relating to the
state's ability to provide a constitutional level of health care
to its inmate population and the related issue of prison
overcrowding, this Committee has applied its "ROCA" policy as a
content-neutral, provisional measure necessary to ensure that
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the Legislature does not erode progress in reducing prison
overcrowding.
On February 10, 2014, the federal court ordered California to
reduce its in-state adult institution population to 137.5% of
design capacity by February 28, 2016, as follows:
143% of design bed capacity by June 30, 2014;
141.5% of design bed capacity by February 28, 2015; and,
137.5% of design bed capacity by February 28, 2016.
In February of this year the administration reported that as "of
February 11, 2015, 112,993 inmates were housed in the State's 34
adult institutions, which amounts to 136.6% of design bed
capacity, and 8,828 inmates were housed in out-of-state
facilities. This current population is now below the
court-ordered reduction to 137.5% of design bed capacity."(
Defendants' February 2015 Status Report In Response To February
10, 2014 Order, 2:90-cv-00520 KJM DAD PC, 3-Judge Court, Coleman
v. Brown, Plata v. Brown (fn. omitted).
While significant gains have been made in reducing the prison
population, the state now must stabilize these advances and
demonstrate to the federal court that California has in place
the "durable solution" to prison overcrowding "consistently
demanded" by the court. (Opinion Re: Order Granting in Part and
Denying in Part Defendants' Request For Extension of December
31, 2013 Deadline, NO. 2:90-cv-0520 LKK DAD (PC), 3-Judge Court,
Coleman v. Brown, Plata v. Brown (2-10-14). The Committee's
consideration of bills that may impact the prison population
therefore will be informed by the following questions:
Whether a proposal erodes a measure which has contributed
to reducing the prison population;
Whether a proposal addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy;
Whether a proposal addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
Whether a proposal corrects a constitutional problem or
legislative drafting error; and
Whether a proposal proposes penalties which are
proportionate, and cannot be achieved through any other
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reasonably appropriate remedy.
COMMENTS
1. Need for This Bill
According to the author:
Transnational criminal organizations situated outside
the country, such as Mexican drug cartels, are able to
thrive only when they can access the proceeds of their
illicit activities. By helping them hide and
transport illicit proceeds across state lines
undetected, money laundering permits these
organizations to reap the lucrative rewards of
trafficking humans, drugs, and weapons.
As an international hub at the center of global
commerce, California is an epicenter of money
laundering activities. According to the El Paso
Intelligence Center, a federal clearinghouse of data
on currency and narcotics seizures, California is one
of the top two states through which drug money flows
and in which such money is seized.<1> In 2012, as
much as $40 billion-or 2 percent of California's gross
domestic product-may have been laundered in the
state.<2> These funds not only fuel the ongoing
operations of criminal organizations around the world,
but also supply those organizations with the means to
expand and extend their global influence.
To shut off this unprecedented flow of illicit funds
into and out of California, state and local law
enforcement urgently need the kind of tools that law
----------------------
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<1> Money Laundering Threat Assessment Working Group, U.S. Money
Laundering Threat Assessment (Dec. 2005), p. 38 (Tables 8 & 9),
accessible at
http://www.treasury.gov/resource-center/terrorist-illicit-finance
/Documents/mlta.pdf .
<2> Office of the Attorney General, Gangs Beyond Borders:
California and the Fight Against Transnational Organized Crime
(Mar. 2014), p. 24.
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enforcement at the federal level<3> and in other
states (such as Hawaii,<4> New York,<5> and Oregon<6>)
have. One such tool that law enforcement in
California currently lack is authority to use wiretaps
to investigate large-scale money laundering
activities.
While the existing wiretap statute, Penal Code section
629.52, authorizes wiretaps to investigate trafficking
activities and street gang felonies, it fails to
address the sophisticated money laundering operations
that often go along with these crimes. SB 298 would
offer state and local law enforcement a strictly
regulated avenue for using wiretaps to investigate
large-scale money laundering activities, and thereby
directly target the financial pipeline that sustains
transnational organized crime. In particular, SB 298
would add money laundering by organized crime groups
to the list of predicate offenses for which wiretaps
may be authorized. This new authority would be
limited only to cases where the value of the money
laundered exceeds $50,000.
2. Federal Wiretapping Law
a. The Fourth Amendment Protects Telephone
Communications
The United States Supreme Court ruled in Katz v. United
States (1967) 389 U.S. 347, 88 S.CT. 507, 19 L.ED.2D 576,
that telephone conversations were protected by the Fourth
Amendment to the United States Constitution. Intercepting a
conversation is a search and seizure similar to the search
of a citizen's home. Thus, law enforcement is
constitutionally required to obtain a warrant based on
probable cause and to give notice and inventory of the
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<3> 18 U.S.C. § 2516(c).
<4> Haw. Rev. Stat. § 803-44.
<5> N.Y. CPL § 700.05(8)(o).
<6> Or. Rev. Stat. §§ 133.74, 166.720.
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search.
b. Title III Allows Wiretapping Under Strict
Conditions
In 1968, Congress authorized wiretapping by enacting Title
III of the Omnibus Crime Control and Safe Streets Act. (See
18 USC Section 2510 et seq.) Out of concern that telephonic
interceptions do not limit the search and seizure to only
the party named in the warrant, federal law prohibits
electronic surveillance except under carefully defined
circumstances. The procedural steps provided in the Act
require "strict adherence." (United States v. Kalustian,
529 F.2d 585, 588 (9th Cir. 1976)), and "utmost scrutiny
must be exercised to determine whether wiretap orders
conform to Title III.") Several of the relevant statutory
requirements may be summarized as follows:
i. Unlawfully intercepted communications or
non-conformity with the order of authorization may
result in the suppression of evidence.
ii. Civil and criminal penalties for statutory
violations.
iii. Wiretapping is limited to enumerated
serious felonies.
iv. Only the highest ranking prosecutor may
apply for a wiretap order.
v. Notice and inventory of a wiretap shall be
served on specified persons within a reasonable time
but not later than 90 days after the expiration of the
order or denial of the application.
vi. Judges are required to report each
individual interception. Prosecutors are required to
report interceptions and statistics to allow public
monitoring of government wiretapping.
c. The Necessity Requirement - Have Other
Investigative Techniques Been Tried Before Applying to
the Court for a Wiretap Order?
3. Wire or Electronic Communication
Under existing law, the Attorney General or a district attorney
may make an application to a judge of the superior court for an
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application authorizing the interception of a wire, electronic
pager or electronic cellular telephone. The law regulates the
issuance, duration and monitoring of these orders and imposes
safeguards to protect the public from unreasonable
interceptions. The law also limits the crimes for which an
interception may be sought to the following:
Importation, possession for sale, transportation or sale
of controlled substances;
Murder or solicitation of murder or commission of a
felony involving a destructive device;
A felony in violation of prohibitions on criminal street
gangs;
Possession or use of a weapon of mass destruction;
Human trafficking; or
An attempt or conspiracy to commit any of the above.
4. Money Laundering
This bill would add money laundering in support of criminal
profiteering activity in an amount greater than $50,000 to the
crimes for which a wiretap may be sought. The sponsor believes
this bill is necessary to assist in the prosecution of
transnational criminal organizations.
5. Are These Activities Already Covered?
It is unclear that the expansion of the wiretap provisions to
money laundering is necessary since many of the crimes
associated with organizations that also launder money are
covered and many of the offenses are international and thus
would be prosecuted by the Federal government. The Office of the
Attorney General's report Gangs beyond Borders: California and
the Fight Against Transnational Organized Crime (Mar 2014)
investigated the harm done by transnational organizations in
California. In the report the money laundering seems to be
mostly associated with transnational gangs that also import
drugs and/or participate in human trafficking, both crimes of
which a search warrant can already be sought. Since these are
international crimes, if federal law enforcement officials are
involved they have the ability to get a wiretap if an
organization is solely involved in money laundering with no
other related offenses.
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6. Opposition
The ACLU opposes this bill stating:
The ACLU of California has consistently opposed
expansion of the state's wiretap law. Our objections
are based on our ongoing concern that wiretapping
violates basic privacy rights. Because it picks up
both sides of all conversations of all calls made by
or to all persons using the telephone under
surveillance, a wiretap by definition constitutes a
general search-committed not only against the person
under suspicion but against countless other callers
connected with the suspect, often only remotely or not
at all.
California's current wiretap statute already grants
broad parents to law enforcement to intercept wire or
electronic communications of individuals they suspect
of committing money laundering as part of a pattern of
a criminal profiteering, thus exposing countless
individuals to privacy invasions described above.
[footnotes admitted] Given law enforcement's current
wiretap capabilities, further expansion of the statute
is unnecessary, and will only needlessly expose
additional innocent parties to the inevitable privacy
violations that come with this practice.
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