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)