BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair A
2011-2012 Regular Session B
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AB 2466 (Blumenfield) 6
As Amended June 26, 2012
Hearing date: July 3, 2012
Penal Code
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SEIZING AND PRESERVING ASSETS OF HUMAN TRAFFICKING:
DEFENDANTS PAYMENT OF FINES AND RESTITUTION
HISTORY
Source: Author
Prior Legislation: AB 364 (Bonilla) - Ch. 182, Stats. 2011
AB 1293 (Blumenfield) - Ch. 371 Stats. 2011
AB 1199 (Richardson) - Ch. 408, Stats. 2007
Support: Attorney General of California; California Catholic
Conference; California Narcotics Officers'
Association; California Police Chiefs Association;
Coalition to Abolish Slavery and Trafficking; District
Attorney, City and County of San Francisco; National
Association of Social Workers - California Chapter;
Partnership to End Domestic Violence; California State
Sheriffs' Association; Los Angeles County Probation
Officers Union; Association for Los Angeles Deputy
Sheriffs; Junior Leagues of California; City of Los
Angeles; Standing Against Global Exploitation;
National Organization for Women, Los Angeles Miracle
Mile Chapter; California Probation, Parole and
Correctional Association; Crime Victims United of
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California; California Against Slavery; National
Council of Jewish Women, San Francisco Section
Opposition:None known
Assembly Floor Vote: Ayes 73 - Noes 0
KEY ISSUE
SHOULD THE ASSETS OF HUMAN TRAFFICKING DEFENDANTS BE SUBJECT TO A
JUDICIAL ORDER PREVENTING TRANSFER, HIDING OR DISSIPATION OF THE
ASSETS SO THAT FINES AND RESTITUTION WILL BE PAID?
PURPOSE
The purposes of this bill are to 1) provide that a prosecutor
may obtain an injunction and a restraining order to prevent a
human trafficking defendant from transferring, hiding or
dissipating assets, thus preserving those assets for payment of
fines and restitution; and 2) specify a comprehensive process
for preserving the assets and levying upon the assets if the
defendant is convicted of the underlying crime.
Existing law provides that any person who deprives or violates
the personal liberty of another is guilty of human trafficking
if the person specifically intends one of the following: 1) to
effect or maintain a specified felony prostitution related
offense; 2) commit extortion; 3) use a minor to produce or
distribute obscene material or child pornography; or 4) obtain
forced labor or services. (Pen. Code � 236.1, subd. (a).)
Existing law defines "unlawful deprivation of liberty" as
sustained and substantial restriction of another's liberty
accomplished through fraud, deceit, coercion, violence, duress,
menace or a credible threat of injury to the victim or another
person. (Pen. Code � 186.22, subd. (d).)
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Existing law provides that a victim of human trafficking may
bring a civil lawsuit for actual damages, compensatory damages,
punitive damages, injunctive relief, any combination of those,
or any other appropriate relief. (Civ. Code � 52.5.)
Existing law provides that where the victim of human trafficking
is an adult, the offense is punishable by a prison term of 3, 4
or 5 years in prison and a fine of up to $10,000. (Pen. Code �
236.1, subd. (b).)
Existing law provides that if the person trafficked is a minor,
the offense is punishable by 4, 6 or 8 years in prison and a
fine of up to $10,000. Where the minor was trafficked for a
commercial sex act, the maximum fine is $100,000. (Pen. Code �
236.1, subd. (g).)
Existing law provides that all fines imposed for human
trafficking shall be deposited in the Victim-Witness Assistance
to fund services for human trafficking victims. At least 50
percent of such fines shall be granted to community-based
organizations. (Pen. Code � 236.1, subd. (h).)
Existing law includes the criminal profiteering asset forfeiture
law. Criminal profiteering forfeiture applies where the
defendant is convicted of a specified offense, including human
trafficking, and the defendant has engaged in a pattern of
criminal profiteering activity, as specified. Any property or
assets acquired through criminal profiteering is subject to
forfeiture. (Pen. Code �� 186.2-186.3.)
Existing law states that forfeited cash and proceeds of the sale
of forfeited property in a human trafficking case shall be
distributed to the Victim Witness Assistance Fund for child
sexual exploitation and abuse counseling and prevention
programs. Fifty percent of the funds shall be granted to
community-based organizations that serve minor victims of human
trafficking.
Existing law provides that in a criminal profiteering forfeiture
case, the prosecutor may move the superior court for orders
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preserving the defendant's assets that may be subject to
forfeiture. The orders may include the following:
an injunction to prevent transfer, encumbrance, or
disposition of the property.
appointment of a receiver to take possession of, manage,
and care for the property. (Pen. Code � 186.6.)
Existing law 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 �prison term] enhancement." (Pen. Code �
186.11.)
Existing law provides the following in white collar enhancement
and large-scale fraud cases: "To prevent dissipation or
secreting of assets or property, the �prosecutor] may, at the
same time as or subsequent to the filing of �the applicable
charges] seek a temporary restraining order ? or any other
protective relief necessary to preserve the property or assets."
(Pen. Code �� 186.11, subd. (e).)
Existing law can order a white collar crime 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).)
Existing law sets out detailed procedures and rules that apply
to a petition for preserving property in a white collar crime
cases. These include, but are not limited to, the following:
The orders (preliminary injunction and temporary
restraining order) must be issued solely to preserve
property so that restitution and fines will be paid.
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The prosecutor shall file a lis pendens (notice of a
lawsuit affecting real property) as to all real property
subject to the orders.
The prosecutor may obtain an order that any financial
institution to disclose specified information about
relevant accounts.
The court may issue a temporary restraining order (TRO)
supported by an affidavit by a peace officer with personal
knowledge about the case. The TRO may be issued without
notice to the defendant upon a showing of good cause.
A person who claims an interest in the protected
property may file a claim concerning his or her interest in
seized property, as specified.
The defendant or a person who has filed a verified
property claim may seek modification of any orders,
including relief from a lis pendens.
The court may appoint a receiver to manage property.
The defendant may be ordered to post a bond.
The court may order sale of a property that is liable to
perish or substantially drop in value.
The court shall weigh the relative certainty of the
outcome of the prosecution and the consequences to
interested parties if property preservation orders are
issued. The court shall give significant weight to the
following factors:
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o The public interest in preserving the
property.
o The difficult of preserving the assets.
o The purpose for the preservation orders.
o The likelihood that the charged crime caused
substantial public harm.
The court shall seek to protect the interests of
innocent parties, including an innocent spouse.
The court may consider a defendant's request to release
property to pay bail, legal fees, and living expenses, but
must consider the public interest, the nature of the crime
and the purpose for the preservation orders.
The court may issue orders to preserve the continuing
viability of any lawful business. (Pen. Code �� 186.11,
subds. (d)-(f).)
Existing law provides that where the jury finds the defendant
not guilty of the underlying fraud crime, or it finds the
white-collar enhancement allegation untrue, any preliminary
injunction or TRO shall be dissolved. (Pen. Code � 186.11,
subd. (g).)
Existing law provides that if the jury is unable to reach a
verdict on the underlying charge or a decision on the
enhancement allegations, the court may continue all or a portion
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of the asset preservation orders. If the prosecutor elects not
to retry the case, the orders shall be dissolved. (Pen. Code �
186.11, subds. (g).)
Existing law provides that where the defendant is convicted of
the underlying offense and necessary allegations are found to be
true, the court shall continue the injunction or TRO until
sentencing. At sentencing, the court shall determine which
portion of the preserved assets shall be levied upon to pay
restitution and fines and may order immediate transfer of
property or assets to satisfy the ordered restitution and fines.
(Pen. Code � 186.11, subd. (h).)
Existing law provides that if execution of judgment is stayed
pending appeal, the preliminary injunction and TRO shall remain
in effect pending resolution of the case. (Pen. Code � 186.11,
subd. (h)(1)(D).)
Existing law provides that the court shall, in making its final
orders, seek to protect the rights of innocent third parties.
Priority of payment from preserved assets shall be as follows:
To the receiver or appraiser for all reasonable
expenses.
To any holder of a valid lien or security interest.
To the victim.
For the payment of any fine, as specified.
To the Restitution Fund or Insurance Fund, as specified.
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(Pen. Code � 186.11, subd. (i).)
Existing law provides that in cases involving felony financial
abuse of an elder or dependent person in which the value of the
property taken or lost exceeds $100,000, the prosecutor may
obtain injunctions and restraining orders to preserve the
defendant's assets and property. With certain exceptions, the
asset preservation provisions for cases of financial abuse of an
elder or dependent person are essentially the same as the white
collar crime provisions. (Pen. Code �� 186.12 and 368, subd.
(d)-(e); Welf. & Inst. Code � 15656, subd. (c).)
Existing law provides that the purpose of asset preservation in
cases of financial abuse of an elder or dependent person is to
ensure that restitution shall be paid. Unlike in the white
collar crime asset preservation statute, fines are not mentioned
in the statute and the priority for payment does not include
fines or payments to the Restitution Fund. (Pen. Code �
186.12, subd. (a)(2) and (g).)
This bill authorizes prosecuting agencies, at the same time as
the filing of a complaint or indictment charging human
trafficking, to file a petition for protective relief necessary
to preserve property or assets that could be used to pay for
remedies relating to human trafficking, including, but not
limited to, restitution and fines.
This bill specifies the process by which a preliminary
injunction, temporary restraining order, or sale of property or
assets may be ordered. The process is essentially the same as
the process set out in Penal Code Section 186.11 - preservation
of assets in white collar crime cases, and 186.12 - preservation
of assets in large-scale elder and dependent abuse financial
cases.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
("ROCA")
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In response to the unresolved prison capacity crisis, since
early 2007 it has been the policy of the chair of the Senate
Committee on Public Safety and the Senate President pro Tem to
hold legislative proposals which could further aggravate prison
overcrowding through new or expanded felony prosecutions. Under
the resulting policy known as "ROCA" (which stands for
"Receivership/Overcrowding Crisis Aggravation"), the Committee
has held measures which create a new felony, expand the scope or
penalty of an existing felony, or otherwise increase the
application of a felony in a manner which could exacerbate the
prison overcrowding crisis by expanding the availability or
length of prison terms (such as extending the statute of
limitations for felonies or constricting statutory parole
standards). In addition, proposed expansions to the
classification of felonies enacted last year by AB 109 (the 2011
Public Safety Realignment) which may be punishable in jail and
not prison (Penal Code section 1170(h)) would be subject to ROCA
because an offender's criminal record could make the offender
ineligible for jail and therefore subject to state prison.
Under these principles, ROCA has been applied as a
content-neutral, provisional measure necessary to ensure that
the Legislature does not erode progress towards reducing prison
overcrowding by passing legislation which could increase the
prison population. ROCA will continue until prison overcrowding
is resolved.
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
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
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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. Design capacity is the number of inmates a
prison can house based on one inmate per cell, single-level
bunks in dormitories, and no beds in places not designed for
housing. Current design capacity in CDCR's 33 institutions is
79,650.
On January 6, 2012, CDCR announced that California had cut
prison overcrowding by more than 11,000 inmates over the last
six months, a reduction largely accomplished by the passage of
Assembly Bill 109. Under the prisoner-reduction order, the
inmate population in California's 33 prisons must be no more
than the following:
167 percent of design capacity by December 27, 2011
(133,016 inmates);
155 percent by June 27, 2012;
147 percent by December 27, 2012; and
137.5 percent by June 27, 2013.
This bill does not aggravate the prison overcrowding crisis
described above under ROCA.
COMMENTS
1. Need for this Bill
According to the author:
Human trafficking is one of the fastest-growing
criminal activities in California. People are being
bought, sold and smuggled like modern-day slaves in an
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illegal multi-billion-dollar industry. Victims of
human trafficking often are trapped in lives of
misery. Prosecutors currently have the ability to
seize profits and property that were directly
connected to the tragic crime of human trafficking,
but only after the defendant has been convicted. This
bill would give prosecutors another important tool to
prevent human traffickers from further profiting from
and exploiting their victims, and help victims secure
the restitution they are due.
2. History of Seize and Freeze Statute - Excessive Takings in
White Collar Crime and Large-Scale Elder and Financial Abuse
This bill creates a procedure for seizing and holding the assets
of a defendant charged with human trafficking. Upon conviction,
the assets can be used to pay victim restitution and fines. The
"seize and freeze" process is taken directly from the process
used in existing law for large-scale white collar crime and
elder or dependent financial abuse.
In 1995, SB 950 (Killea) created a special sentencing scheme for
defendants convicted of relatively egregious forms of white
collar crime. The law provided for prison sentence enhancements
and high fines. The law included a procedure for the
preservation of the property or assets of any person alleged to
be subject to this punishment enhancement. The law authorized
the court to levy upon the assets upon the defendant's
conviction, in order to pay restitution and fines.
The author of the white collar crime asset preservation law
stated:
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
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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 2011, the white collar crime asset preservation law was
extended to any case involving white collar financial fraud over
$100,000. (AB 364 (Bonilla) Ch. 182, Stats. 2011.) Also in
2011, the asset preservation provisions were adapted to cases of
large-scale elder and dependent abuse. (AB 1293 (Blumenfield)
Ch. 371 Stats. 2011.) The process in each kind of cases is
essentially the same, except that the elder and dependent abuse
asset preservation provisions are stated only in terms of
ensuring payment of restitution, not restitution and fines.
3. Contrast between White Collar Crime or Financial Abuse of
Elders and Human Trafficking
This bill effectively applies so-called seize and freeze
provisions in the white collar crime and elder financial abuse
laws (Pen. Code �� 186.11 and 186.12) to human trafficking
cases. The seize and freeze provisions in Sections 186.11 and
186.12 apply to crimes that necessarily or typically involve the
taking or loss of large amounts of money or property. The
property involved in such crimes can involve securities and
other financial instruments. In many cases, a company's
viability could be affected or an elderly person's life savings
could be lost. A victim's right to restitution would be of
little value if the defendant can hide or transfer the assets.
In contrast, the essence of human trafficking is the violation
of a person's liberty in order to compel the victim to perform
services, including sexual commerce. The defendant may, or may
not, realize substantial profits from the crime. The victim
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may, or may not, be entitled to substantial restitution.<1> A
court might have difficulty determining restitution for coerced
sexual commerce, as there is no legitimate market in California
to set the value of such services.
Defendants convicted of human trafficking are, however, subject
to severe fines. These include a special fine of up to
$100,000, in addition to the maximum felony fine of $10,000, if
the crime if the crime involved trafficking of a minor for a
commercial sex act.<2> All fines imposed for human trafficking
must be deposited in the Victim Witness Assistance Fund to be
available for appropriation for services for trafficking
victims. Further, 50 percent of the funds shall be granted to
community-based organizations who serve human trafficking
victims.
The fines authorized in the human trafficking statute will be of
no practical effect if the fines cannot be collected from a
defendant. Defendants who face severe fines would likely seek
to transfer or hide the assets, convert the assets to cash or
other property, or simply spend criminally-derived profits. In
a case where the defendant has substantial assets, this bill
could be used to preserve the assets. However, despite
receiving a great deal of attention, human trafficking is not a
commonly prosecuted crime. The Assembly Appropriations
Committee analysis of this bill states that 35 people have been
committed to prison.
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<1> There appear to be no guides or precedents on how a court
could calculate restitution for sex commerce, as there is no
legitimate market for such services, especially as concerns sex
commerce with minors.
<2> An initiative on the November 2012 ballot would increase the
human trafficking maximum fine to $1 million.
4. Bill Authorizing Forfeiture of Property Used in Human
Trafficking - SB 1133 (Leno)
Under SB 1133<3> (Leno), a prosecutor can obtain forfeiture of
the property used to commit human trafficking, in addition to
any profits derived from the crime. Defendants convicted of
human trafficking are subject to criminal profiteering asset
forfeiture under existing law. (Pen. Code � 186.2 et seq.)
Criminal profiteering asset forfeiture is used to take the
ill-gotten gains of organized crime. A prosecutor in criminal
profiteering asset forfeiture matter can seek orders preserving
a defendant's assets. However, the asset preservation
provisions in criminal asset forfeiture are not as detailed or
extensive as the seize and freeze provisions in this bill.<4>
SB 1133 is pending hearing in Assembly Appropriations.
5. Property Subject to Injunctions and Preservation under this
Bill - Concerns About Using Seized Assets as Leverage and
Harming Parties not Involved in the Case
The property subject to preservation and prohibitions on
transfer under this bill would not be limited to the criminal
proceeds of human trafficking. Virtually any and all of a
defendant's assets and property could be subject to seizure and
control by the court or a receiver.
A prosecutor's very broad power to obtain an order seizing a
defendant's assets could be abused. The defendant and others,
including holders of security interests in vehicles and real
property, could be seriously harmed. It would appear to be
unethical for a prosecutor to seize assets in order to coerce a
guilty plea or to otherwise to obtain leverage over the
defendant or others. Where a defendant's assets have been
frozen such that he or she would have difficulty paying bills,
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<3> SB 1133 is currently pending in Assembly Appropriations.
<4> Committee counsel was unable to find any appellate decisions
on the asset preservation provisions of the criminal
profiteering asset forfeiture law. This could mean that the law
has not been successfully challenged.
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running a business and providing for his or her family, the
defendant could be induced to seek a plea bargain, regardless of
the strength of the prosecution's case. Further, if a
defendant's ability to pay his or her bills is compromised, this
could harm landlords, mortgage holders, security interest
holders in vehicles, and other third parties. For example, even
where the court has appointed a property manager, seizing and
holding assets could place a cloud on title that could
negatively affect property interests.
6. Suggested Amendment to Correct a Redundant or Erroneous
Reference to Restitution
As amended on June 26, 2012, the bill states on page 7, lines
27-30, that the court shall order a defendant convicted of human
trafficking "to make full restitution or to make restitution to
a victim based on his or her ability to pay, as defined in
subdivision (b) of Section 1203.1b." Section 1203.1b concerns
the authority of a court to order a defendant to pay the costs
of probation, if the person has the ability to do so.
Subdivision (b) of that section prescribes the hearing process
for determining the defendant's ability to pay.
Article 1, Sec. 28, subdivision (b) (13(A) of the California
Constitution and Penal Code Section 1202.4 require the court to
order a defendant to pay full restitution to the victim. The
Constitution requires that restitution shall be paid before
fines and other fees. Penal Code Section 1202.4 provides that
the court shall order a defendant to pay full restitution,
except in extraordinary circumstances. Inability to pay does
not constitute extraordinary circumstances.
The provision in this bill directing the court to order a
defendant to pay restitution is redundant of constitutional and
other statutory provisions. The provision that authorizes a
court to order a defendant to pay full restitution if the
defendant has the ability to do so appears to be in conflict
with governing law. It is suggested that the provisions on
lines 27-30, on page 7, of the bill be stricken.
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SHOULD ERRONEOUS OR REDUNDANT PROVISIONS IN THE BILL CONCERNING
VICTIM RESITUTION BE STRICKEN?
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