Legislature(2009 - 2010)CAPITOL 120
03/11/2010 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HJR35 | |
| HB355 | |
| HB289 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 287 | TELECONFERENCED | |
| + | HJR 35 | TELECONFERENCED | |
| + | HB 289 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 355 | TELECONFERENCED | |
HB 355 - CRIMINAL FINES FOR ORGANIZATIONS
2:31:13 PM
CHAIR RAMRAS announced that the next order of business would be
HOUSE BILL NO. 355, "An Act relating to criminal fines for
organizations."
2:32:11 PM
REPRESENTATIVE GRUENBERG, speaking as the sponsor, explained
that HB 355 [and a proposed amendment are] designed to bring
Alaska's criminal fines for organizations - corporations,
partnerships, and the like - up to date, and to close a
potential loophole in the law; the amendment, labeled 26-
LS1385\E.1, Luckhaupt, 3/9/10, [which later became known as
Amendment 1] read:
Page 1, line 7:
Delete "$1,000,000"
Insert "$2,000,000 [$1,000,000]"
Page 1, line 9:
Delete "$200,000"
Insert "$400,000 [$200,000]"
Page 1, line 11:
Delete "$25,000"
Insert "$50,000 [$25,000]"
Page 1, line 13:
Delete "$10,000"
Insert "$20,000 [$10,000]"
REPRESENTATIVE GRUENBERG said that although the officers of a
corporation could be imprisoned for wrongdoing, the corporation
itself couldn't be imprisoned; however, a corporation could have
criminal fines levied against it. Currently, an organization
could be sentenced to pay a fine not to exceed the greater of:
the existing fine amounts - currently listed on page 1, lines
[7-13]; three times the pecuniary gain realized by the defendant
as a result of the offense; or three times the pecuniary damage
or loss caused by the defendant to another or to the property of
another as a result of the offense. He also mentioned that
members' packets contain an Alaska Law Review article dated
December 2008 that addresses the issue of criminal liability as
it pertains to organizations.
REPRESENTATIVE GRUENBERG, to illustrate the loophole in existing
law, referred to the federal corruption case involving the VECO
Corporation, wherein although the company didn't realize any
pecuniary gain - and the State of Alaska didn't realize any loss
or damage - the company was certainly seeking pecuniary gain -
and pecuniary loss or damage to the State - when it bribed
certain Alaska lawmakers to defeat a tax that would have
affected the oil and gas industry. House Bill 355 would close
that loophole by stipulating that an organization may be
sentenced to pay a fine of three times the pecuniary gain - or
loss or damage to another - sought by the defendant via the
commission of the offense.
2:35:59 PM
REPRESENTATIVE LYNN asked how a potential gain, or potential
loss or damage, could be calculated. For example, in the
aforementioned case, under the bill, what would the criminal
fines have amounted to?
REPRESENTATIVE GRUENBERG acknowledged that in some cases, it
could be difficult to determine the potential gain, or potential
loss or damage. In those cases, the court could simply choose
to sentence the organization to pay the appropriate fine as set
out in AS 12.55.035(c)(1). In other cases, however, the
potential gain, or potential loss or damage, could be calculated
as being the amount sought by the organization via the
commission of the offense. In the situation involving the VECO
Corporation, for example, under the bill, the court could have
calculated the potential loss of tax revenues to the State of
Alaska, particularly given that there was evidence and witnesses
in that case. Both existing statute and the proposed statute
provide the court options with regard to what the maximum
criminal fine could amount to, on a case-by-case basis, thereby
addressing the fact that the amount of gain, or the amount of
loss or damage, can sometimes be hard to calculate.
REPRESENTATIVE GRUENBERG, in response to a question regarding
the language of proposed AS 12.55.035(c)(2)(B) - which says in
part, "sought by the defendant for the defendant or for others"
- explained that an organization could be committing the offense
on behalf of its clients. With regard to the situation
involving the VECO Corporation, for example, under the bill, any
pecuniary gain to its clients - either realized or sought - as a
result of the commission of the offense would probably have been
too speculative to determine and thus the court could simply
have chosen an appropriate fine as set out in
AS 12.55.035(c)(1).
REPRESENTATIVE GRUENBERG, in response to questions, explained
that any criminal fines received under the bill's provisions
would go into the general fund (GF); that HB 355 is merely
amending existing statutes pertaining to criminal fines for
organizations; that the aforementioned Alaska Law Review article
mentions specific Alaska cases involving the criminal liability
of an organization - State v. ABC Towing and State v.
Greenpeace, Inc. being just a couple of examples; and that he
does not know why the VECO Corporation was not prosecuted under
existing AS 12.55.035(c).
2:46:45 PM
ANNE CARPENETI, Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law (DOL), in response
to questions, said that the DOL doesn't prosecute corporations
very often under Title 11; that she would research why the VECO
Corporation itself was not prosecuted; that some who work in the
Office of Special Prosecutions & Appeals are in support of HB
355 and the proposed amendment increasing the fines, because in
those situations where they can prosecute an organization for a
criminal act, there is often a pecuniary gain realized by the
corporation as a result of the offense it commits; and that such
prosecutions don't take place very often.
REPRESENTATIVE GRUENBERG, in response to questions, reiterated
his opening remarks; noted that the largest of the existing set
fines is $1 million, and that the aforementioned proposed
amendment [would double that amount]; and ventured his
understanding of some of the factors involved in the
aforementioned legal cases, and what might have occurred had
HB 355 been in place when those cases were heard in court.
CHAIR RAMRAS noted that the last paragraph on page 6 of the
aforementioned Alaska Law Review article says in part [original
punctuation provided]:
Collectively, ABC Towing and Greenpeace, Inc. confirm
the existence of organizational criminal liability
under state law. These decisions do little, however,
to define the contours and limitations of that
liability and, in fact, highlight problems with the
existing laws. ABC Towing carves out an exemption for
sole proprietorships. ... Greenpeace is also
problematic in that it illustrates the ease with which
organizations might compartmentalize their operations
or duplicate themselves and thereby thwart criminal
prosecution. ... These are shortcomings legislators
need to address if the prosecution of organizations is
to be effectively and consistently utilized.
2:51:50 PM
REPRESENTATIVE GRUENBERG added that although HB 355 would be
closing a loophole regarding unrealized gains, or unrealized
losses or damages, sought by an organization via the commission
of an offense, the Alaska Law Review article indicates that
there are other changes to the "criminal corporate liability
statutes" that might be warranted. In response to questions, he
explained that the proposed amounts outlined in the
aforementioned amendment were suggested by the DOL; that the
existing fine amounts for misdemeanors have remained unchanged
since they were first included in statute 20 years ago; that the
existing maximum fine amount for a felony was enacted in statute
in 2002; and that inflation since that time has been
significant.
CHAIR RAMRAS expressed interest in receiving information
regarding how often existing AS 12.55.035(c) has been utilized
over the last 10 years; what criminal-fine amounts were ordered;
and whether such fines could be dedicated to specific purposes
or governmental entities.
REPRESENTATIVE GRUENBERG, in response to a question, indicated
that although the DOL did not ask him to introduce HB 355, the
DOL did provide input on the bill when he asked for it. He
further indicated that the DOL suggested increasing the set
criminal-fine amounts for misdemeanors and he'd simply included
a new set criminal fine amount for felonies.
2:56:32 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division (Anchorage),
Department of Law (DOL), acknowledged that he had suggested the
new amounts now listed in the proposed amendment, but indicated
that HB 355 would not impact cases involving antitrust
violations, which fall under the purview of his section. In
response to a question, he said that he himself has not
prosecuted anyone under AS 12.55.035(c).
MS. CARPENETI added her understanding that the DOL has
prosecuted [organizations] under AS 12.55.035(c), and agreed to
research the specific details.
CHAIR RAMRAS relayed that HB 355 would be held over.