BILL ANALYSIS C.S.H.B. 73 By: Delisi 02-15-95 Committee Report (Substituted) BACKGROUND In recent months, a nationwide campaign has taken place to file fraudulent liens against numerous judges, attorneys, and bankers to retaliate or intimidate for their part in bankruptcy proceedings. In order to place these liens on land, false financing statements had to be filed by the person wanting to place the lien. Currently, under Section 37.10 of the Penal Code, a person commits a Class A misdemeanor if he or she knowingly makes a false entry on a "governmental record". This act becomes a third degree felony if it is intended to defraud another. However, the broad definition of a "governmental record" is ambiguous to whether a financing statement is included in this category of documents. Therefore, legislation is needed to remedy this ambiguity. PURPOSE HB 73 would place the filing of fraudulent financing statements under Section 37.10 of the Penal Code and create a civil liability to the owner of the property of which the lien is placed against. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter D, Chapter 9, Business & Commerce Code, by adding Section 9.412, as follows: Sec. 9.412. FRAUDULENT FILING. (a) Restricts a person from filing or presenting for filing a financing statement if it is (1) forged, (2) contains a false statement, (3) is groundless, or (4) is invalid. (b) Sets the liability of person filing statement to the owner of the property for (1) $5,000 or the owner's actual damages, (2) court costs, (3) reasonable attorney's fees. (c) Specifies that a person who violates Subsection (a) commits an offense under Section 37.10, Penal Code. SECTION 2. Effective Date: September 1, 1995. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The bill prohibits the fraudulent filing of a financing statement. In the original bill, a person filing a financing statement that was invalid, or contained a mistake, could have been punished. The substitute deletes this language to ensure that a person filing a financing statement which contains a mistake is not guilty of a crime if they were not aware of the mistake. The language of the bill states that no person should file a financing statement which they know contains a material false statement. SUMMARY OF COMMITTEE ACTION The committee convened in a public hearing on February 20, 1995 to consider HB 73. The following people testified in favor of the bill: Rep. Delisi, James O. Boyd, L. George Ellis, Karen M. Neeley. The bill was referred to subcommittee with the following members: Grusendorf (Chair), Gutierrez, and Patterson. The committee convened in a public hearing on March 13, 1995 to consider HB 73. The chair recalled the bill from subcommittee. Rep. Grusendorf offered a committee substitute which was adopted without objection. The motion to report HB 73 favorably as substituted with the recommendation that it do pass and be printed prevailed by the following record vote: 7 Ayes, 0 Nays, 0 PNV, 2 Absent.