BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair A
2011-2012 Regular Session B
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AB 364 (Bonilla)
As Introduced February 14, 2011
Hearing date: June 7, 2011
Penal Code
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ASSET PRESERVATION IN LARGE-SCALE THEFT CASES
HISTORY
Source: California District Attorneys Association
Prior Legislation: AB 1199 (Richardson) - Ch. 408, Stats. 2007
AB 2827 (Escutia) - Ch. 431, Stats. 1996
SB 950 (Killea) - Ch. 794, Stats. 1995
Support: American Federation of State, County, and Municipal
Employees; California State Sheriffs' Association;
Crime Victims United of California
Opposition:None known
Assembly Floor Vote: Ayes 73 - Noes 0
KEY ISSUES
WHERE A DEFENDANT IS CHARGED WITH A SINGLE CRIME INVOLVING FRAUD OR
EMBEZZLEMENT IN WHICH OVER $100,000 WAS TAKEN OR LOST, SHOULD THE
PROSECUTION BE AUTHORIZED TO SEEK AN ORDER SEIZING AND HOLDING THE
DEFENDANT'S ASSETS?
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SHOULD A STAND-ALONE RESTITUTION PROVISION IN THE WHITE COLLAR CRIME
LAW BE REPEALED IN FAVOR OF MANDATORY RESTITUTION PROVISIONS IN THE
CALIFORNIA CONSTITUTION AND APPLICABLE STATUTES?
PURPOSE
The purposes of this bill are to 1) allow the seizing and
preservation of assets of a criminal defendant charged with a
single large-scale financial crime; and 2) repeal a stand-alone
restitution provision in the white collar crime law and to
thereby ensure that constitutional and statutory mandatory
restitution apply in such cases, as specified.
Existing law (Pen. Code � 186.11) provides that where a
defendant is convicted of two or more related felonies involving
fraud or embezzlement, and the pattern of conduct involves the
taking or loss of more than $100,000, the defendant shall be
punished by an "aggravated white collar crime enhancement" of
specified prison enhancement term. The following applies to
such cases:
The enhancement imposed only once in a criminal
proceeding.
A "pattern of related felony conduct" means engaging in
at least two felonies that have the same or similar
purpose, result, principals, victims, or methods of
commission, or are otherwise interrelated and are not
isolated events. "Two or more related felonies" are
felonies committed against two or more separate victims or
against the same victim on two or more occasions.
If the crimes involved taking or loss of more than
$500,000, the additional prison term shall be two, three,
or five years.
If the crimes involved taking or loss of between
$100,000 and 500,000, the additional prison term shall be
one or two years, as specified. (Pen. Code �� 186.11,
subd. (a)(1)-(3) and 12022.6, subd. (a)(1)-(2).)
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Existing law allows the prosecution in a case involving an
aggravated white collar crime enhancement to obtain an order for
the seizing and holding of the defendant's assets in order to
prevent the defendant from hiding or dissipating the assets.
(Pen. Code � 186.11, subd. (e).)
Existing law provides that a person who claims an interest in
the protected property may file a claim concerning his or her
interest in seized property, as specified. (Pen. Code � 186.11,
subd. (e)(6).)
Existing law provides that the court shall order a defendant
subject to punishment under the white collar crime provisions to
make full restitution to victims. The court can order the
defendant to remain on probation for up to 10 years in order to
ensure payment of restitution. The provisions for protection of
assets seized from defendants shall remain in effect through
sentencing in order to satisfy fines and restitution orders.
(Pen. Code � 186.11, subds. (d) and (i)(1)(A)-(B).)
This bill provides for the preservation of assets and property
by the court of any person charged with a single act of fraud or
embezzlement if that conduct involves the taking or loss of
$100,000 or more.
This bill strikes a provision concerning restitution in white
collar crime cases that requires proof or admissions of
specified facts, while such findings or admissions are not
required in other kinds of cases before the victim is entitled
to restitution.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
As these cases have progressed, prison conditions have
continued to be assailed, and the scrutiny of the federal courts
over California's prisons has intensified.
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On June 30, 2005, in a class action lawsuit filed four years
earlier, the United States District Court for the Northern
District of California established a Receivership to take
control of the delivery of medical services to all California
state prisoners confined by the California Department of
Corrections and Rehabilitation ("CDCR"). In December of 2006,
plaintiffs in two federal lawsuits against CDCR sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
three-judge federal panel issued an order requiring California
to reduce its inmate population to 137.5 percent of design
capacity -- a reduction at that time of roughly 40,000 inmates
-- within two years. The court stayed implementation of its
ruling pending the state's appeal to the U.S. Supreme Court.
On May 23, 2011, the United States Supreme Court upheld the
decision of the three-judge panel in its entirety, giving
California two years from the date of its ruling to reduce its
prison population to 137.5 percent of design capacity, subject
to the right of the state to seek modifications in appropriate
circumstances.
In response to the unresolved prison capacity crisis, in early
2007 the Senate Committee on Public Safety began holding
legislative proposals which could further exacerbate prison
overcrowding through new or expanded felony prosecutions.
This bill does not appear to aggravate the prison overcrowding
crisis described above.
COMMENTS
1. Need for This Bill
According to the author:
AB 364 allows the state to "freeze and seize" on
behalf of one victim, or as the result of one felony.
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This bill provides greater protection than the current
law. It is not reasonable that a victim's assets
should be insecure simply because they are the only
victim or that the accused only committed one felony.
One victim or twenty, this bill provides equal
protection in the preservation of assets and property.
Because of AB 364, victims of aggravated white collar
crime will no longer watch their assets dissipate
simply because they were the only victim.
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AB 364 provides further protection and better access
to just restitution for victims of white collar crimes
involving fraud and embezzlement. By decreasing the
requirements on the number of victims and felonies,
this bill will increase the availability for victims -
like middle class families and seniors - to recover
their losses from fraud or embezzlement.
2. History of the White Collar Crime Law
The white collar punishment law was enacted in 1995 by SB 950
(Killea). The law provided for sentence enhancements of 2, 3 or
5 years where the value of fraud or embezzlement exceeded
$500,000. The bill also authorized the court to impose a fine
of up to $500,000, or double the value of the property taken in
the crime, whichever was greater. The law includes detailed
procedures for the preservation of the property or assets of a
defendant subject to the white collar crime enhancements and for
a levy against the defendant's assets and property upon
conviction. Seize and freeze procedures cannot be used in cases
involving a single felony or two felonies that were committed
against the same victim on one occasion.
Senator Killea explained her intent in authoring the bill: "It
is in the public interest to prevent the secretion and
dissipation of assets that have been taken from the victims of
crimes. It is against public policy for persons convicted of
criminal activity to enjoy the benefits of their crimes, even if
a term of incarceration is imposed. Justice suffers when
persons sentenced to state prison are able to live off the
proceeds of crime. Therefore, it is in the public interest to
protect the property or assets of persons alleged to have
engaged in a pattern of fraudulent or unlawful activities in
order to obtain restitution for the victims of crime, pay the
costs of investigation and prosecution of those persons, and
recover fines ordered by the court."
In 1996, the Legislature lowered the monetary threshold of the
aggravated white collar crime enhancement from $500,000 to
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$100,000.<1> The California Court of Appeal stated in People v.
Green (2004) 125 Cal. App.4th 360, 363, the Legislature lowered
the threshold of the seize and freeze law because "the prior
level of $500,000 exempted too many fraud cases to be truly
effective."
AB 1199 (Richardson), Ch. Stats. 2007, clarified that the "seize
and freeze" law applied in cases where the "loss" suffered by
the victim met statutory criteria. Prior to enactment of AB
1199, the statute narrowly referred only to the "taking" of the
victim's property. It was argued that the harm suffered by the
victim was the same whether or not the defendant took property,
or caused its destruction or loss.
SHOULD THE PROSECUTION BE AUTHORIZED TO SEEK A COURT ORDER
PRESERVING THE DEFENDANT'S ASSETS IN A CASE INVOLVING A SINGLE
CRIME OF FRAUD OR EMBEZZLEMENT WHERE THE AMOUNT TAKEN FROM OR
LOST BY THE VICTIM WAS AT LEAST $100,000?
3. Restitution Provision Repealed by This Bill Appears to be
Redundant or Confusing
The California Constitution (Art. I, � 28) and Penal Code
Section 1202.4 unequivocally state that a defendant shall pay
full restitution to his or her crime victim. A provision of the
aggravated white collar crime enhancement (Pen. Code � 186.11,
subd. (d)) states that a defendant shall pay restitution to the
victim if the elements of the enhancement are admitted or proved
to a jury or the court. It appears that this provision does no
more than state that the defendant shall pay restitution if he
or she is guilty of the underlying crime and the prosecution has
proved the amount of the victim's losses. Arguably, this
provision is, at best, redundant of other restitution laws and
can be confusing. (See, People v. Lai (2006) 138 Cal.App.4th
1227. 1246-1250.)
This bill repeals subdivision (d) of Section 186.11. It appears
that repealing the subdivision would not limit a victim's right
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<1> AB 2827 (Escutia) Ch. 431, Stats. 1996
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to restitution and a defendant's right to due process that are
set out in more general laws. The bill would likely reduce
confusion and litigation on restitution issues in aggravated
white collar crime cases.
SHOULD AN ARGUABLY UNNECESSARY OR CONFUSING RESTITUION PROVISION
IN THE WHITE COLLAR ENHANCEMENT LAW BE REPEALED?
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