Financial Exploitation of Crime 1996

APPENDIX C

U.S. LEGISLATION DEALING WITH INDIRECT PROFITS FROM CRIME


The following is a brief review of the way the various states in the United States prevent criminals from profiting from their crimes. Where a reference is made to a particular state, the reference only indicates that the state mentioned has one example of the type of legislation indicated and not that it is the only example.

United States

There are three types of legislation in the United States.the majority model, New York model and the California model. Although each of these models will be briefly outlined below, it is worth pointing out at this stage that all three models have one thing in common.they rely upon the fact that victims of crime can and do sue the criminals for damage caused.

(1) Majority Model

At the outset it must be noted that almost every enactment in the various states of the United States dealing with proceeds of crime can be characterize according to four criteria. First, it always requires every "person, firm, corporation, partnership, association or other legal entity" (or words of that type) contracting with any criminal to pay money owing on the contract to a board. Second, the board holds the money in escrow until it can be distributed to the victims. Third, there is a limitation period beyond which the board will not hold the money.

Based on these characteristics, it is clear that the legislation in the United States was the mould for the existing legislation in Ontario.

Despite this general relationship, there are some differences in this model among the various states and between those states and Ontario. The most important of these differences are listed below.

1.Many states (California, Florida, Arizona) of this type only cover people who have been convicted of a crime, including pleas of nolo contendere (Florida). The lien thus attaches (as was expressly provided in the Florida legislation) at the time of the conviction. In many other states, (Idaho, Kansas, Kentucky), however, the legislation will also cover an accused. Surprisingly, in Connecticut the legislation only deals with an accused.

2. Some states (California, Iowa) expressly limit the effect of the legislation to felonies. It is equally likely, however, that the legislation will simply refer to "a crime in this state" without limiting it to a felony.

3. Some states expressly provide that a person who is acquitted on grounds of insanity (California) or is unfit to proceed as a result of mental disease (Missouri), is still liable to lose his or her profits. Missouri expressly provides that a guardian shall be appointed for criminals under this category.

4. A few states (Nevada) only take a percentage.for example three-fourths.of the money received by the accused or convicted person.

5. Some states (Montana), in addition to defining a victim as a person who suffers bodily injury or death as a result of criminally injurious conduct, also include people who suffers injury or death as a result of "good faith efforts to prevent criminally injurious conduct" and "good faith efforts to apprehend a person reasonably suspected of engaging in criminally injurious conduct."

6. Most states have legislation that defines profits from crime in a similar manner to the Ontario Act, that is a "reenactment of such crime, by way of a movie, book, magazine article, radio or televisions presentation, live entertainment of any kind, or from the expression of such person’s thoughts, feelings, opinions, or emotions regarding such crime". One exception, however, is the Iowa Code that describes fruits of the crime as "any profit which, were it not for the commission of the felony, would not have been realized."

7.In Maryland, even though the legislation sets out what a notoriety of crimes contract is, the Attorney General is given authority to determine whether a contract comes within the terms of the legislation. In Michigan the money is not paid automatically to the board, but is only paid when an attorney or the attorney general makes an application to have profits held in escrow.

8.Many statutes provide that the costs of notice, and the costs of administering the fund, shall be paid out of the funds held.

9.Most states require that the money be paid to a board upon the making of a contract that is covered by the Act. Legislation in Iowa decrees instead that the Attorney General can bring an action to require all proceeds to be held in an escrow account.

10.Many states (Idaho) have a provision that advertising takes place "at least once very six months for five years from the date it receives such moneys".

11.The limitation period is usually five years (Alabama, Georgia, Arizona). In Louisiana, though, the period is three years. Kansas has an interesting way of dealing with limitation problems. Instead than creating a five year period, which ensures that

claims are not lost merely because the victim did not want to bring an action against an impecunious criminal, the legislation keeps the normal two year period for torts but says that it is extended for six months from the time that the victim has received notice that funds are being held by the board.

12.In some legislation the proceeds are apportioned among various groups. For example, in Florida the felon’s dependants get 25%, victims get 25%, and the remainder is used to pay for such things as court costs (including cost of prosecution) and any damages caused while fleeing, and cost of incarceration. In Minnesota 10% of the money is allocated to the criminal’s minor children.

13.In some states (Alabama, Arizona, Georgia, Arkansas), escrow money reverts to the state after the limitation period if there are no actions pending. In other states (Colorado), the legislation provides that if there are funds remaining after the limitation period with no actions pending, the state shall calculate the cost of maintenance of the person in the state correctional institutions and deduct that cost from the funds held. Louisiana distributes the money between the victims (75%) and crime victim reparations fund (25%).

14. In some states the legislation expressly states that upon a dismissal of charges or an acquittal, the monies revert to the accused person (Georgia, Kansas, Mississippi). In other states (Idaho, Mississippi) criminals are entitled to their money back if they are acquitted or if there is money in the account after five years and there are no actions pending.

15.In some states the legislation deals with the situation of an accused being found unfit to proceed to trial (Georgia, Arizona)

16.Some states expressly state that the accused or convicted person can make an application for some of the monies held by the state for the purpose of retaining legal counsel (Arkansas, Iowa, Hawaii)

17. In Louisiana the legislation expressly provides that if the escrow account contains insufficient funds to meet the needs of the judgments, the victims who have received judgment can be paid out on a pro-rata basis. Other states make it clear that this pro-rate amount is based on the amount of their judgments.

18. Some states (Maryland), expressly state that the Attorney General has authority to ask for an injunction to prevent people from violating the Act.

19.Minnesota limits the application of its act to instances where crimes have been committed in that state. Where crimes have been committed in another state, its legislation expressly provides that the law in that other state shall apply.

20.In addition to having the power to request and obtain information from attorneys and law enforcement officers, Montana legislation gives its board the power to subpoena witnesses and administer oaths.

(2) New York Model

Probably as a result of the fact that the United States Supreme Court in Simon & Schuster, Inc. v. New State Crime Victims Board Members, 112 S.Ct. 501 invalidated the first New York enactment dealing with profits from crime, the New York statute now in effect seems to be motivated almost purely for compensatory reasons. Thus, rather than requiring money to be paid to the board, the legislation merely requires that the board be informed of contracts allowing criminals to profit from crime. Once informed, the board seeks to notify all known victims of the crime. Victims then have three years from the discovery of any profits from the crime to bring an action, but can only recover the value of the profits of the crime. It appears that one of the main functions of the board, after victims have been notified that profits from crime might exist, is to assist victims in applying for various remedies.

(3) California Model

This model creates an involuntary trust of the proceeds of the sale. The beneficiary of the trust are people who are entitled to recover damages from the felon for physical , mental or emotional injury or pecuniary loss or, if they have died as a result of a criminal act, people who are entitled to receive at least 25% of the value of their estate. Beneficiaries still must bring an action to recover their interest in the trust, which is held for five years. The legislation expressly states that if there are two or more beneficiaries, they share the proceeds equitably taking into account the impact of the crime upon them. Payment of fines to the state are paid in priority to beneficiaries, except that 10% of profits are reserved for them. The legislation also states that the remedies provided in the legislation are in addition to any other legal remedies that may be available to victims.

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018