BILL ANALYSIS �
AB 1796
Page 1
Date of Hearing: April 24, 2012
Counsel: Stella Choe
ASSEMBLY COMMITTEE ON PUBLIC SAFETY
Tom Ammiano, Chair
AB 1796 (Galgiani) - As Amended: March 29, 2012
As Proposed to be Amended in Committee
SUMMARY : Makes it a misdemeanor to engage in the business as a
secondhand dealer, as defined, without being licensed.
Specifically, this bill :
1)Deletes the requirement that a person engaged in business as a
secondhand dealer must knowingly violate the requirement to be
licensed in order to be guilty of a misdemeanor.
2)Includes within the definition of "criminal profiteering
activity" the sale of tangible personal property or other
secondhand goods, including, but not limited to, gold and
other precious metals, excluding "coin dealers" as defined,
without a license.
EXISTING LAW :
1)Provides that it is unlawful for any person to engage in the
business of secondhand dealer, as defined, without being
licensed. (Business and Professions Code Section 21640.)
2)Defines a "secondhand dealer" as any person, copartnership,
firm, or corporation whose business includes buying, selling,
trading, taking in pawn, accepting for sale on consignment,
accepting for auctioning, or auctioning secondhand tangible
personal property. A "secondhand dealer" does not include a
"coin dealer" or participants at a gun show as defined.
�Business and Professions Code Section 21626(a).]
3)Defines a "coin dealer" as any person, firm, partnership, or
corporation whose principal business is the buying, selling,
and trading of coins, monetized bullion, or commercial grade
ingots of gold, or silver, or other precious metals.
�Business and Professions Code Section 21626(b).]
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4)Excludes from the meaning of "secondhand dealers" the
following:
a) Any person who performs the services of an auctioneer
for a fee or salary;
b) Any person whose business is limited to the
reconditioning and selling of major household appliances,
provided all the following conditions are met:
i) The person does not trade, take in pawn, accept for
drop-off, accept as a trade-in, accept for sale on
consignment, accept for auction, auction, or buy, except
in bulk, the appliances;
ii) The person does not perform repair services for
owners of appliances unless the appliance was purchased
from the person; and
iii) The person has never been convicted of the crime of
attempting to receive or receiving stolen property or any
other theft-related crime. (Business and Professions
Code Section 21626.5.)
5)Requires every secondhand dealer or coin dealer to report
daily, or on the first working day after receipt or purchase
of the property, on forms either approved or provided at
actual cost by the Department of Justice, all tangible
personal property, except for firearms, which he or she has
purchased, taken in trade, taken in pawn, accepted for sale on
consignment, or accepted for auctioning, to the chief of
police or to the sheriff. The report shall include certain
specified information. (Business and Professions Code Section
21628.)
6)Requires every pawnbroker to report daily or on the first
working day after receipt or purchase, all descriptions of all
property received in pledge or purchased as tangible personal
property, as defined, in whatever quantity received, including
property purchased as tangible personal property at wholesale,
tangible personal property taken in for sale or possessed on
consignment for sale, and tangible personal property taken in
trade. The report shall be submitted to the police chief
executive or the sheriff depending on where the transaction
took place. All reports shall be on forms approved or
AB 1796
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provided at actual cost by the Department of Justice. The
police chief executive or sheriff who receives a report on a
form filed pursuant to the provisions of this section shall
daily submit a legible copy of the transactions to the
Department of Justice. (Financial Code Section 21208.)
7)States that a violation of the existing laws related to
secondhand dealers and tangible personal property, including
the failure to obtain a license as required, under
circumstances where a person knows or should have known that a
violation was being committed is a misdemeanor punishable as
follows:
a) For the first offense, a fine of up to $1,500 or
imprisonment in the county jail up to two months, or both;
b) For the second offense, a fine of up to $5,000 or
imprisonment in the county jail up to four months, or both;
and,
c) For the third offense, a fine of up to $25,000 or
imprisonment in the county jail up to six months, or both.
(Business and Professions Code Section 21645.)
8)Requires a license to be subject to forfeiture by the
licensing authority and the licensee's activities as a
secondhand dealer to be subject to being enjoined for breach
of any of the following conditions:
a) The business shall be carried on only at the location
designated on the license. The license shall designate all
locations where property belonging to the business is
stored. Property of the business may be stored at locations
not designated on the license only with the written consent
of the local licensing authority;
b) The license or a copy thereof, certified by the
licensing authority, shall be displayed on the premises in
plain view of the public;
c) The licensee shall not engage in any act which the
licensee knows to be in violation of this article; or
d) The licensee shall not be convicted of an attempt to
receive stolen property or any other offense involving
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stolen property. �Business and Professions Code Section
21642(b).]
9)States that "criminal profiteering activity" is any act
committed or attempted or any threat made for financial gain
or advantage which act or threat may be charged as a crime
under any of the specified crimes. �Penal Code Section
186.2(a).]
10)Defines a "pattern of criminal activity" as engaging in at
least two incidents of criminal profiteering that have the
same of similar purpose, result, or principals, victims, or
methods of commission, or otherwise interrelated by
distinguishing characteristics; are not isolated events; and
were not committed as a criminal activity of organized crime.
�Penal Code Section 186.2(b)(1).]
11)States that in any case in which a person is alleged to have
been engaged in a pattern of criminal profiteering activity,
upon a conviction of the underlying offense, the following
assets shall be subject to forfeiture after a forfeiture
hearing:
a) Any property interest whether tangible or intangible,
acquired through a pattern of criminal profiteering
activity.
b) All proceeds of a pattern of criminal profiteering
activity which property shall include all things of value
that may have been received in exchange for the proceeds
immediately derived from the pattern of criminal
profiteering activity. (Penal Code Section 186.3.)
12)Requires the prosecuting agency at a forfeiture hearing to
have the burden of establishing beyond a reasonable doubt that
the defendant was engaged in a pattern of criminal
profiteering activity and that the property alleged in the
petition comes within the provisions of law related to which
assets may be subject to forfeiture. �Penal Code Section
186.5(d).]
FISCAL EFFECT : Unknown
COMMENTS :
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1)Author's Statement : According to the author, "Illegal gold
buying and selling has become a significant problem in recent
years. Consumers are defrauded daily in California by illegal
gold buyers, using uncertified scales, and preying on
uninformed sellers who are often paid a fraction of their
item's actual value. Additionally, gold items stolen from
individuals are often sold to these unlicensed buyers who, as
a result of being under the radar so to speak, immediately
melt the gold jewelry and do not adhere to the requirement to
hold such merchandise for 30 days so that law enforcement
agencies can investigate and search for known stolen items.
If these transactions were with a licensed pawn or secondhand
dealer, each item would be reported on a "JUS 123 -
Pawnbrokers/Secondhand Dealer Report" and transmitted daily to
the local Police Chief or Sheriff in that jurisdiction and to
the Department of Justice.
"Assuming the enactment of AB 391 (Pan) as amended in the Senate
this year, these transactions would be reported electronically
on a statewide basis so that all California law enforcement
agencies will have access to all JUS 123 reports. �See SB 1520
(Schiff) Chapter 994 Statutes of 2000.]
"AB 1796 will provide an additional tool for law enforcement to
detect unlicensed gold trade, and also can be a companion
measure to AB 391."
2)Attorney General Opinion No. 04-1001 : Bakersfield City
Attorney Virginia Gennaro requested an opinion as to which
persons are required to hold a license as a "secondhand
dealer" under the Secondhand Goods Law. (Business &
Professions Code Section 21500 to 21672.) In response, the
California Attorney General issued an opinion finding that
"�a] person is required to hold a license as a "secondhand
dealer" if: (a) he or she owns a "drop-off" store located
within the state where secondhand tangible personal property
is accepted for sale to be conducted on an Internet auction
Web site, (b) the property is held for display or in storage
at the store or off the premises, (c) the property is
advertised and sold by an Internet auction Web site, (d) the
store owner arranges for payment and delivery of the property
sold, and (e) he or she charges the seller a fee for services
rendered. �88 Ops.Cal.Atty.Gen. 41 (April 6, 2005).]
3)Criminal Profiteering Asset Forfeiture : Criminal profiteering
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asset forfeiture is a criminal proceeding held in conjunction
with the trial of the underlying criminal offense. Often, the
same jury who heard the criminal charges also determines
whether the defendant's assets were the ill-gotten gains of
criminal profiteering. As a practical matter, the prosecution
must assemble its evidence for the forfeiture matter
simultaneously with the evidence of the crime.
Under Penal Code Section 186.2, asset forfeiture for is allowed
upon conviction of more than thirty crimes under specified
circumstances.
"Criminal profiteering activity means any act committed or
attempted or any threat made for financial gain or advantage,
which act or threat may be charged as a crime �under various
criminal statutes]. Those crimes include: arson; bribery,
child pornography or exploitation, which may be prosecuted as
a felony; felonious assault, embezzlement; extortion, forgery,
gambling, kidnapping, mayhem, murder, pimping and pandering,
receiving stolen property, robbery, solicitation of crimes,
grand theft, trafficking in controlled substances, violation
of the laws governing corporate securities, crimes related to
possession and distribution of obscene or harmful matter,
presentation of a false or fraudulent claim, false or
fraudulent activities, schemes, or artifices, money
laundering, offenses relating to the counterfeit of a
registered mark, offenses relating to the unauthorized access
to computers, computer systems, and computer data, conspiracy
to commit any of the crimes listed above, felony gang
activity, as specified, any offenses related to fraud or theft
against the state's beverage container recycling program,
including, but not limited to, those offenses specified in
this subdivision and those criminal offenses specified in the
California Beverage Container Recycling and Litter Reduction
Act, human trafficking, any crime in which the perpetrator
induces, encourages or persuades a person under 18 years of
age to engage in a commercial sex act, any crime in which the
perpetrator, through force, fear, or coercion, deceit
violence, duress, menace, or threat of unlawful injury to the
victim or to another person, causes a person under 18 years of
age to engage in a commercial sex act, theft of personal
identifying information, motor vehicle theft, and abduction or
procurement by fraudulent inducement for prostitution".
�Penal Code Section 186.2(a)(1) to (33).]
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This bill includes within the definition of criminal
profiteering activity the sale of tangible personal property
or other secondhand goods, including gold and other precious
metals, without a license. The crimes currently listed in the
definition of criminal profiteering generally involve fraud,
theft, gang activity, or crimes involving the exploitation of
minors, and other more serious crimes such as murder or
mayhem. The failure to obtain a license for the sale of
secondhand goods does not fit into this overall scheme. There
is no element of theft, fraud, or other inherently criminal
act that would justify forfeiture of assets.
4)Knowledge Requirement in Existing Law : Existing law states
that a person who engages in the sale of secondhand goods
without a license is guilty of a misdemeanor if he or she knew
or should have known that a violation was being committed.
Existing law also provides penalties for a violation of this
requirement, which includes jail time and a fine up to $25,000
for a third offense. (Business and Professions Code Section
21645.) This bill deletes the requirement that the person had
knowledge that he or she needed a license in order to sell
secondhand goods.
In order to convict a person under the current law for failing
to have a secondhand dealer license, the prosecuting agency
must show that a person knew of should have known that he or
she needed a license. This only requires that a defendant had
actual knowledge or, in the alternative, that a reasonable
person in the same or similar circumstance as the defendant
would have known that he or she was engaging in activity that
would require a secondhand dealer license. There has been no
showing that prosecutors have difficulty establishing this
requirement.
5)Argument in Support : According to the California Pawnbrokers
Association , "The problem of illegal and unlicensed gold
buyers is affecting every community in California. This
activity takes advantage of the public, and is an impediment
to the rightful return of stolen property, and makes effective
law enforcement and prosecution of any tangible personal
property crimes nearly impossible. This bill will provide the
means for more vigorous prosecution of these crimes that are
afflicted upon California citizenry."
6)Related Legislation :
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a) AB 391 (Pan) requires secondhand dealers and coin
dealers to report certain information using the electronic
reporting system developed by the Department of Justice on
and after the date that the system is implemented. AB 391
is pending hearing by the Senate Public Safety Committee.
b) AB 704 (Ma) would have required a person conducting
business as a secondhand dealer to provide a valid
secondhand dealer's license to any peace officer upon
demand and would authorize a peace officer to impound all
tangible personal property found in the possession or
control of the person if a secondhand dealer's license is
not provided to the peace officer and the peace officer has
probable cause to believe the property was acquired while
the person was operating as a secondhand dealer without
being licensed. AB 704 was never heard by the Assembly
Committee on Judiciary.
c) AB 90 (Swanson), Chapter 457, Statutes of 2011, includes
any crime in which the perpetrator induces, encourages, or
persuades, or causes through force, fear, coercion, deceit,
violence, duress, menace, or threat of unlawful injury to
the victim or to another person, a person under 18 years of
age to engage in a commercial sex act within the definition
of criminal profiteering activity.
7)Previous Legislation :
a) AB 17 (Swanson), Chapter 211, Statutes of 2009, included
abduction or procurement by fraudulent inducement for
prostitution within the definition of criminal profiteering
activity.
b) AB 924 (Emerson), Chapter 111, Statutes of 2007,
included vehicle theft within the definition of criminal
profiteering activity.
c) AB 988 (Bogh), Chapter 53, Statutes of 2005, included
identity theft within the definition of criminal
profiteering activity.
d) AB 22 (Lieber), Chapter 240, Statutes of 2005, included
human trafficking within the definition of criminal
profiteering activity.
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e) SB 968 (Bowen), Chapter 125, Statutes of 2003, included
Beverage Act fraud within the definition of criminal
profiteering activity.
f) SB 1520 (Schiff), Chapter 994, Statutes of 2000,
requires that secondhand dealers make reports
electronically to local law enforcement, of pawned
property, and requires DOJ, in consultation with law
enforcement agencies, to develop clear descriptive
categories of personal property that a secondhand dealer
must report to local law enforcement agencies.
REGISTERED SUPPORT / OPPOSITION :
Support
California Pawnbrokers Association (Sponsor)
Opposition
None
Analysis Prepared by : Stella Choe / PUB. S. / (916) 319-3744