Legislature(2003 - 2004)

04/07/2003 01:31 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              HB  23-RESTITUTION FOR CRIME VICTIMS                                                                          
CHAIR SEEKINS announced HB 23 to be up for consideration.                                                                       
REPRESENTATIVE  BRUCE  WEYHRAUCH,  sponsor  of  HB  23,  said  he                                                               
introduced  the  legislation  to  overturn  a  Court  of  Appeals                                                               
decision.  He explained  that the  treasurer of  the Alaska  Folk                                                               
Festival embezzled  money from  the non-profit  corporation. When                                                               
the new treasurer went to the  police, they told him they did not                                                               
have  the  resources  to investigate.  The  Folk  Festival  spent                                                               
hundreds of hours  and dollars to follow the paper  trail for the                                                               
police,  who then  submitted  it to  the  district attorney.  The                                                               
treasurer was convicted of theft  and during sentencing the judge                                                               
said he  would have to pay  back the time and  effort expended by                                                               
the volunteers.  On appeal, the  Court of Appeals  indicated that                                                               
the Legislature  did not  intend the  restitution statutes  to be                                                               
read broadly  enough to compensate volunteers  of non-profits for                                                               
their  time,  money  and  effort  in  uncovering  a  crime.  They                                                               
appealed  to  the Alaska  Supreme  Court  and the  divided  court                                                               
wanted to hear  the appeal. Part of the ruling  by the dissenting                                                               
judges indicated that many other  citizens and organizations will                                                               
be affected by this ruling.  The District Attorney indicated that                                                               
they wanted legislation to address this appeal's court decision.                                                                
HB 23 would allow  a non-profit to come to a  court as the victim                                                               
and specify  the value  of the  time and  effort incurred  so the                                                               
court could  direct the  defendant to  reimburse the  victim. The                                                               
bold-faced language in  the amended version of the  bill makes it                                                               
clear  that the  non-profit  is the  victim,  not the  individual                                                               
volunteers that did  the service. This language  was developed by                                                               
the  Department of  Law,  the Public  Defender's  Office and  the                                                               
court system.                                                                                                                   
     If  the volunteer  presents a  reasonable  bill to  the                                                                    
     non-profit for  reimbursement, that  can go in  turn to                                                                    
     the sentencing judge, so that  the sentencing judge has                                                                    
     a rational basis for providing  the compensation to the                                                                    
     non-profit  to make  its  compensation decisions  later                                                                    
SENATOR  FRENCH  asked  if  volunteer   labor  and  services  are                                                               
generally a subject of restitution in law.                                                                                      
REPRESENTATIVE  WEYHRAUCH replied  that wasn't  intended in  this                                                               
bill. "This bill  was meant to be narrow to  address the specific                                                               
facts of the Demers case where  you have a non-profit that is the                                                               
SENATOR  THERRIAULT asked  if he  is limited  to damages  or loss                                                               
(page 2, line11) as an individual  if he expends hours of time to                                                               
provide information to the court.                                                                                               
REPRESENTATIVE WEYHRAUCH  replied that would  be the case,  if he                                                               
were a victim of  a crime. "There is no intent  to change that at                                                               
SENATOR  FRENCH said  that judges  are often  reluctant to  grant                                                               
restitution for the  hours anyone spends taking their  car to the                                                               
body shop  and picking it up  or lost wages, for  instance. "They                                                               
usually want to see a receipt."                                                                                                 
1:55 p.m.                                                                                                                     
MR.  RILEY   WOODFORD,  former  president  of   the  Alaska  Folk                                                               
Festival, reiterated  the story.  The police  made it  clear that                                                               
their focus was violent crime and public protection. White-                                                                     
collar  crime  tends  to  be   a  fairly  low  priority.  So,  in                                                               
situations like this,  it falls upon the board  of the non-profit                                                               
to do most  of the investigative work, which takes  away from the                                                               
mission and the  reason the people volunteered. In  the end, they                                                               
tallied up  the amount of  time they  spent and picked  what they                                                               
thought  was  fair  compensation  to the  festival,  not  to  the                                                               
individuals to help  make right some of the impact  of the crime.                                                               
He thought this  was a fair bill that would  help compensate non-                                                               
profits that  are victimized  by this  same kind  of white-collar                                                               
SENATOR  THERRIAULT asked  if the  group hired  an accountant  to                                                               
quantify  the  amount   of  the  embezzlement  and   was  that  a                                                               
compensatable expense or would that come under loss.                                                                            
CHAIR  SEEKINS  responded  that,   if  his  company's  accounting                                                               
department  quantified  an  amount  of  embezzlement,  more  than                                                               
likely he wouldn't be able to  recover that internal time, but if                                                               
he hired  an accounting  firm to  do it, that  would be  a direct                                                               
expense related to the crime and  he would be able to claim that.                                                               
He asked Senator French's opinion.                                                                                              
SENATOR FRENCH  said this was  a fuzzy  area. In a  $100,000 bank                                                               
embezzlement  that he  was  familiar with,  he  doubted that  the                                                               
person  would be  charged with  all the  investigative costs.  He                                                               
asked  if the  festival  was  receiving any  money  from the  Mr.                                                               
MR.  WOODFORD replied  they  were receiving  money  and it  would                                                               
probably  be paid  back over  a five-year  period. He  added that                                                               
Judge  Collins said  she would  have  included the  costs if  the                                                               
statute were more clear-cut.                                                                                                    
Non-profits are in  a little different situation  than a business                                                               
in that they  are completely volunteer and there  is a tremendous                                                               
amount of  trust and  cooperation involved  in the  board members                                                               
who sometimes handle  quite a bit of money. Most  of the time the                                                               
checks and balances are very easy to subvert.                                                                                   
SENATOR FRENCH said  they could change a few words  on page 2 and                                                               
treat everyone  the same. You could  say, "including compensation                                                               
to a  victim for the  value of labor and  goods if the  labor and                                                               
goods were necessary to alleviate  or mitigate the effects of the                                                               
REPRESENTATIVE WEYHRAUCH  said he originally wanted  this bill to                                                               
be broad, but the court has  the ability under (2) to address the                                                               
financial  burden placed  on  the victim  and  those who  provide                                                               
services to the victim and other persons...                                                                                     
The reason this language was put  in specific to a non-profit was                                                               
to address this  particular issue and, two, without  it, it loses                                                               
a broader  base of  support from  the administration  and creates                                                               
all kinds of legal issues.                                                                                                      
     It is  intended to  allow the individuals  that Senator                                                                    
     Therriault is  talking about to already  be compensated                                                                    
     under  this   provision  of  the  statute.   This  just                                                                    
     reverses the Court of Appeals to make sure that a non-                                                                     
     profit that has volunteer effort and expenses expended                                                                     
      can recover, which right now is prohibited under our                                                                      
     case law.                                                                                                                  
SENATOR  FRENCH  asked  if  anyone suggested  that  it  would  be                                                               
illegal  or  unconstitutional  to  have  volunteer  labor  repaid                                                               
through a restitution award.                                                                                                    
REPRESENTATIVE  WEYHRAUCH replied  no, because  the intent  is to                                                               
make sure  that a court can  order it if it  can be substantiated                                                               
by a preponderance of evidence.                                                                                                 
MS.  PAM LABOLLE,  President, Alaska  State Chamber  of Commerce,                                                               
said  they recently  suffered embezzlement  and  didn't have  the                                                               
ability to determine  the extent of their  loss through volunteer                                                               
efforts. They hired an accountant,  which will cost an additional                                                               
$10,000. The chamber sees the  value of this legislation for non-                                                               
profits, because they know what the expense is.                                                                                 
CHAIR SEEKINS  said that a  lot of  non-profits are too  small to                                                               
have many  checks and balances  and he can  see why they  want to                                                               
have  volunteer time  counted.  It has  intrinsic  value and  the                                                               
court should  be able to make  a value determination in  terms of                                                               
restitution. The  question now is  do they  want to bring  a not-                                                               
for-profit organization under the same bill.                                                                                    
MS.  ANNE  CARPENETI,  Department  of Law,  said  she  wasn't  as                                                               
familiar with the  bill as she would like to  be, but restitution                                                               
is hard for judges, prosecutors  and defense lawyers. Limiting it                                                               
to non-profits was a beginning point.                                                                                           
SENATOR THERRIAULT wanted to know  if this bill gives non-profits                                                               
something   that  private   individuals   and  businesses   don't                                                               
currently enjoy.                                                                                                                
MS.  CARPENETI  replied  she  thought they  were  and  asked  the                                                               
REPRESENTATIVE WEYHRAUCH responded that wasn't what he said.                                                                    
CHAIR SEEKINS said that would need to be clarified.                                                                             
SENATOR THERRIAULT said  that perhaps the policy  call is whether                                                               
the benefit society gets out  of non-profits matches that special                                                               
TAPE 03-19, SIDE B                                                                                                            
CHAIR SEEKINS  closed testimony and  said he would hold  the bill                                                               
for further work.                                                                                                               

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