Legislature(2009 - 2010)CAPITOL 120

03/11/2010 01:00 PM JUDICIARY


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 1:30 pm Today --
+ HB 287 UNIFORM ACT: PROPERTY INTEREST DISCLAIMER TELECONFERENCED
<Bill Hearing Canceled>
+ HJR 35 CONST AM: HEALTH CARE TELECONFERENCED
Moved Out of Committee
+ HB 289 EXEC ETHICS: LEGAL FEES/FAMILY TRAVEL TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 355 CRIMINAL FINES FOR ORGANIZATIONS TELECONFERENCED
Heard & Held
           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.                                                                            
                                                                                                                                

Document Name Date/Time Subjects
01 HB287 Sponsor Statement.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
02 HB287 ver R.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
03 HB287 Sectional Analisys.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
04 HB287 Fiscal Note-LAW-CIV-02-26-10.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
05 HB287 Supporting Documents-Shaftel 11-30-09.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
06 HB287 Supporting Documents States of Adoption.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
07 HB287 Supporting Documents LaPiana Article.pdf HJUD 3/11/2010 1:00:00 PM
HB 287
01 HJR35 Sponsor Statement.pdf HJUD 3/11/2010 1:00:00 PM
02 HJR35 Bill v. R.pdf HJUD 3/11/2010 1:00:00 PM
03 HJR35 Sectional.pdf HJUD 3/11/2010 1:00:00 PM
04 HJR35-OOG-DOE-2-9-10.pdf HJUD 3/11/2010 1:00:00 PM
05 HJR35 Answer to HSS Questions 2.9.10.pdf HJUD 3/11/2010 1:00:00 PM
06 HJR35 Goldwater Institute Q-A.pdf HJUD 3/11/2010 1:00:00 PM
07 HJR35 ALEC's Freedom of Choice in Health Care Act.pdf HJUD 3/11/2010 1:00:00 PM
08 HJR35 Governor's letter 1.13.10.pdf HJUD 3/11/2010 1:00:00 PM
09 HJR35 Parnell letter 1.13.10.pdf HJUD 3/11/2010 1:00:00 PM
10 HJR35 Testimony of Dave Roland.pdf HJUD 3/11/2010 1:00:00 PM
11 HJR35 HealthCareReformLetter_Jan13-2010.pdf HJUD 3/11/2010 1:00:00 PM
01 HB289 Sponsor Statement.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
12 HJR35 NFIB Ltr.pdf HJUD 3/11/2010 1:00:00 PM
02 HB289 Bill HSSCS v. T.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
03 HB289 Sectional.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
04 HB289-GOV-EO-02-19-10.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
05 HB289 Bill v. S.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
06 HB289 Proposed Reg changes.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
07 HB289 Legal opinion 2.12.10.pdf HJUD 3/11/2010 1:00:00 PM
HB 289
12 HB327-LAW-CRIM-03-08-10.pdf HJUD 3/11/2010 1:00:00 PM
HB 327
13 HB327 Controlled Substance Chart.pdf HJUD 3/11/2010 1:00:00 PM
HB 327
14 HB327 Leg Research re Salvia laws.pdf HJUD 3/11/2010 1:00:00 PM
HB 327
15 HB327 APOA Support letter.pdf HJUD 3/11/2010 1:00:00 PM
HB 327
16 HB327 NACDS Testimony.pdf HJUD 3/11/2010 1:00:00 PM
HB 327