04/02/2010 01:30 PM House FINANCE

HOUSE BILL NO. 355                                                                                                            
                                                                                                                                
     "An Act relating to criminal fines for organizations."                                                                     
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  MAX GRUENBERG  talked about  Version P,  the                                                                    
House Judiciary version  of HB 355, which  raises the amount                                                                    
of fines for corporations  and other criminal organizations,                                                                    
as shown  on lines  7-13, page  1. It has  been a  number of                                                                    
years since those  fines were raised. The  size of necessary                                                                    
deterrents  has not  kept pace  with the  crimes, which  are                                                                    
often   large.  Under   AS  11.16.130,   a  corporation   or                                                                    
partnership is  legally accountable in a  criminal sense for                                                                    
the  operations  or conduct  of  an  agent employed  by  the                                                                    
company.  The  criminal fine  section  is  key in  deterring                                                                    
organizational crime.                                                                                                           
                                                                                                                                
Representative  Gruenberg addressed  the  second purpose  of                                                                    
the bill,  which begins on page  2, lines 1-7, and  closes a                                                                    
loophole. He  gave an example  of a bribe whose  purpose was                                                                    
to stop  a tax. The tax  went through any way,  resulting in                                                                    
no  gain to  the defendant  and no  loss to  the victim.  He                                                                    
termed the  example a  conspiracy -  a criminal  contract to                                                                    
commit a crime.                                                                                                                 
                                                                                                                                
Representative  Gruenberg   described  the   third  category                                                                    
covered in the  bill, criminal solicitation -  a request for                                                                    
someone else  to commit a  crime. The statute is  crafted so                                                                    
that the maximum  a judge can order is three  times the gain                                                                    
to the  defendant, or  three times the  loss to  the victim.                                                                    
This provides for a reasonable deterrent.                                                                                       
                                                                                                                                
Representative  Gruenberg  added  that there  is  no  fiscal                                                                    
impact from the bill. All  fines collected would go into the                                                                    
general fund.                                                                                                                   
                                                                                                                                
Co-Chair   Stoltze   questioned   the   inclusion   of   the                                                                    
applicability    section   on    page   2,    lines   10-11.                                                                    
Representative Gruenberg  responded that  it is in  the bill                                                                    
so  there's no  question  that  it would  be  applied in  an                                                                    
unconstitutional ex post facto manner.                                                                                          
                                                                                                                                
3:56:36 PM                                                                                                                    
                                                                                                                                
RICK  SVOBODNY,  DEPUTY  COMMISSIONER,  DEPARTMENT  OF  LAW,                                                                    
introduced  himself. He  noted  that the  Department of  Law                                                                    
supports the bill.                                                                                                              
                                                                                                                                
Representative Fairclough inquired when  the fines were last                                                                    
raised or  adjusted. Mr. Svobodny  replied that there  was a                                                                    
raise  in the  penalty provisions  for non-corporate  crimes                                                                    
three years  ago, but  he did not  know if  corporate crimes                                                                    
were included.                                                                                                                  
                                                                                                                                
GRETCHEN STAFT,  STAFF, REPRESENTATIVE GRUENBERG,  noted the                                                                    
fines on  page 1,  lines 9-13,  were last  set in  1990. The                                                                    
amount on page 1, line 7, was set in 2002.                                                                                      
                                                                                                                                
Representative Fairclough  asked what the increase  prior to                                                                    
2002 was.  Ms. Staff  said she would  have to  research that                                                                    
information. She  believe it increased  from $500,000  to $1                                                                    
million.                                                                                                                        
                                                                                                                                
Representative Foster inquired how  these amounts compare to                                                                    
other  states. Ms.  Staff replied  that  they were  slightly                                                                    
higher  than other  states, but  they are  maximums and  the                                                                    
court can set a lower fine.                                                                                                     
                                                                                                                                
4:00:11 PM                                                                                                                    
                                                                                                                                
Ms. Staff read  that the fines depend on the  type and level                                                                    
of  the crimes.  Some  states do  not  separate felony  from                                                                    
misdemeanor crimes.  She gave examples  of fines  in various                                                                    
states.                                                                                                                         
                                                                                                                                
Co-Chair   Stoltze   requested    the   data   in   writing.                                                                    
Representative Gruenberg  pointed out that the  numbers were                                                                    
suggestions. He left the decisions up to the committee.                                                                         
                                                                                                                                
Representative Fairclough  wanted further  justification for                                                                    
increasing the fines.                                                                                                           
                                                                                                                                
4:02:43 PM                                                                                                                    
                                                                                                                                
Mr. Svobodny gave an example of  a fine. Three years ago the                                                                    
state was in a process  of investigating BP for the shutdown                                                                    
of the North  Slope oil fields based on  BP's negligence. At                                                                    
that time  the maximum  fine would  have been  $500,000. The                                                                    
state ultimately agreed to join  with the federal government                                                                    
in a resolution of that case  which resulted in a penalty of                                                                    
$4 million.  Some corporations have conduct  that can result                                                                    
in fairly large penalties.                                                                                                      
                                                                                                                                
Co-Chair Stoltze spoke in support of the bill.                                                                                  
                                                                                                                                
4:04:41 PM                                                                                                                    
                                                                                                                                
Representative Kelly  commented that  it looked like  a huge                                                                    
disparity compared  with other states. He  thought it wasn't                                                                    
business friendly.                                                                                                              
                                                                                                                                
Co-Chair Stoltze  maintained that  the state was  only being                                                                    
unfriendly to businesses that commit a crime.                                                                                   
                                                                                                                                
Representative  Doogan  thought  the  amount  might  not  be                                                                    
enough for some of the kinds of crimes imagined.                                                                                
                                                                                                                                
4:05:59 PM                                                                                                                    
                                                                                                                                
Representative Gara  commended the closing of  a loophole in                                                                    
the bill.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze referred to a zero fiscal note.                                                                                
                                                                                                                                
Vice-Chair  Thomas  MOVED to  report  CSHB  355(JUD) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 355(JUD) was REPORTED out of Committee with a "do                                                                          
pass" recommendation and with previously published zero                                                                         
fiscal note: FN1 (LAW)