BILL ANALYSIS �
AB 2327
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Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2327 (Feuer) - As Amended: April 16, 2012
Policy Committee: JudiciaryVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides the Attorney General (AG) with authority to
issue a cease and desist order or seek civil penalties against
any person or entity violating the Supervision of Trustees and
Fundraisers for Charitable Purposes Act. Specifically, this
bill:
1)Permits the AG to:
a) Issue a cease and desist order upon finding that an
entity or person subject to the provisions of the Act has
committed an act that constitutes a violation of the Act.
b) After giving at least five days notice, impose a civil
penalty not to exceed $1,000 per act or omission, for any
act or omission in violation of the Act. The penalty
accrues at the rate of $100 per day for each day of
noncompliance, commencing on the fifth day after notice.
c) Suspend the registration, under the Act, of any person
or entity assessed penalties under the Act.
2)Grants any person or entity, for which the AG has filed an
action pursuant to the above, to a hearing to review the
action, as specified, if requested within 30 days of receipt
of notice of the AG's action.
3)Permits the AG to seek an injunction, order of receivership,
restitution or order of accounting to ensure due application
of charitable funds.
FISCAL EFFECT
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1)Any costs to the AG's office would be absorbable within
existing resources and would be offset to some extent by
revenue from civil penalties.
2)Minor ongoing costs to the courts associated with additional
civil actions.
COMMENTS
Background and Purpose . Several recent media reports have
chronicled the loss of millions of dollars in charitable
revenues as the result of charitable fundraisers improperly
using millions of dollars in donations (Los Angeles Times
"Nonprofits Fear Money in Center's Care Vanished" February 14,
2012). In several cases, concerns were expressed about an
organization prior to the eventual loss of charitable funds. The
current law only permits the AG to seek fines after an act or
omission has occurred, or to pursue common law remedies in
court. The AG lacks clear power to prevent fraud from occurring.
AB 2327 permits the AG to issue a cease and desist order before
an act or omission has occurred, so that as soon as the AG
learns of concerns regarding a fundraiser's practices, or
notices inconsistences, irregularities or omissions from a
charitable organization mandating filings, the AG can step in to
stop fraud or deceit. If the AG believes action beyond a cease
and desist order is necessary, this bill permits the AG to seek
an injunction.
Existing law imposes a tiered penalty scheme for violations of
the act, a $1,000 fine for a first violation and a $2,500 fine
for subsequent violations. This bill replaces the existing
scheme with a $1,000 penalty for each act and omission that
violates the Act, and permits penalties to accrue at the rate of
$100 per day for each day a charitable organization is not in
compliance with the Act. The bill also permits the AG to suspend
the registration of any entity in violation of the Act that the
AG had previously fined.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
AB 2327
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