Legislature(2005 - 2006)BUTROVICH 205

03/01/2005 08:30 AM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 87 Out of Committee
Moved CSSB 95(JUD) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
              SB 104-PERMANENT FUND DIVIDEND FRAUD                                                                          
9:50:54 AM                                                                                                                    
MR. BRIAN HOVE,  staff to Senator Seekins, introduced  SB 104. SB                                                               
104  establishes a  Permanent Fund  Dividend (PFD)  investigation                                                               
unit.  SB  104   would  make  submission  of   a  fraudulent  PFD                                                               
application a class  C felony. In 2004 the  Department of Revenue                                                               
(DOR) examined over  1,600 fraud tips and audited  over 1,700 PFD                                                               
applications  suspected of  being  fraudulent.  This resulted  in                                                               
$1.4 million  in denied or  assessed dividends. There  were three                                                               
federal indictments  and one conviction for  crimes involving PFD                                                               
The  most common  PFD fraud  offense involves  persons who  forge                                                               
signatures with  the intent to  receive a dividend to  which they                                                               
are not entitled.  SB 104 is not intended to  capture cases where                                                               
spouses  sign  for each  other.  Current  law (AS  11.46.500-510)                                                               
describes  three  separate degrees  of  forgery  - the  two  most                                                               
serious offenses  are punishable as  class B and C  felonies, but                                                               
are  limited  to  cases  involving  various  types  of  financial                                                               
Forgery  in the  third  degree covers  instances  where a  person                                                               
intentionally  makes a  false statement  on a  written instrument                                                               
such as a PFD application. This  offense is punishable as a class                                                               
A misdemeanor.  The DOR's  proposal to elevate  PFD fraud  from a                                                               
misdemeanor to  a Class C  felony is  expected to provide  a more                                                               
effective deterrent  for theft.  SB 104  aids in  identifying and                                                               
curing instances  of PFD  fraud by codifying  in statute  a fraud                                                               
investigation  unit within  the DOR.  This unit  will assist  the                                                               
Department of Law (DOL) in investigating instances of PFD fraud.                                                                
9:53:37 AM                                                                                                                    
SENATOR THERRIAULT  said that Section 1  separates dividend fraud                                                               
out of  the statute. By doing  so it creates too  many categories                                                               
of  fraud.   He  suggested  the  committee   rework  the  overall                                                               
9:55:50 AM                                                                                                                    
SENATOR FRENCH  asked Senator Therriault  if he was  suggesting a                                                               
list of fraudulent activities and  the punishment that relates to                                                               
SENATOR  THERRIAULT replied  yes.  It  would make  it  more of  a                                                               
standard format.                                                                                                                
CHAIR SEEKINS agreed.                                                                                                           
SENATOR   THERRIAULT  added   that  if   one  were   looking  for                                                               
falsification it would be all in one section.                                                                                   
9:57:01 AM                                                                                                                    
CHAIR SEEKINS announced that committee  substitute version \Y was                                                               
before the  committee as  the working  document. He  asked Sharon                                                               
Barton to clarify the changes.                                                                                                  
MS.  SHARON BARTON,  director, Permanent  Fund Dividend  Division                                                               
agreed that  Senator Therriault's proposal had  merit. To explain                                                               
the \Y draft, it made the  language simpler. The PFD division was                                                               
looking  at going  after falsification  written  and orally.  The                                                               
drafters trimmed  three sections down  to two and  identified the                                                               
class C felony.                                                                                                                 
9:59:55 AM                                                                                                                    
CHAIR SEEKINS  suggested SB 104  might have a title  change since                                                               
it would be setting up new section of law.                                                                                      
SENATOR THERRIAULT disagreed saying  it would be putting together                                                               
a framework.                                                                                                                    
CHAIR SEEKINS liked Senator Therriault's suggestion.                                                                            
SENATOR FRENCH did as well.                                                                                                     
CHAIR  SEEKINS said  he  would ask  his staff  to  meet with  the                                                               
drafters to accommodate Senator Therriault's suggestion.                                                                        
10:02:11 AM                                                                                                                   
SENATOR THERRIAULT  said page  1, line 14,  which is  the section                                                               
title, would be lost in the new draft.                                                                                          
CHAIR SEEKINS  offered it wouldn't  impact the  functionality. He                                                               
said he  would refer the  issue to the  drafters and hold  SB 104                                                               
over to the next committee meeting.                                                                                             

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