BILL ANALYSIS

 

 

 

C.S.H.B. 3138

By: Sheets

Criminal Jurisprudence

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

In Texas, increasingly sophisticated criminal organizations use advanced tactics to integrate into mainstream circulation the proceeds from criminal activity. Many of these organizations have used a method commonly referred to as "structuring," or depositing money in small increments in order to avoid reporting the transaction as required by the federal Bank Secrecy Act. Interested parties note that the current Texas money laundering statute does not allow for the prosecution of structuring, because it merely criminalizes the possession or transfer of money that is the proceeds of criminal activity.  Demonstrating that money is the proceeds of a crime is difficult in a structuring case because the crime occurs contemporaneously with the possession or transfer, thus precluding the use of proceeds in the act. C.S.H.B. 3138 seeks to close this loophole.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

 

ANALYSIS

 

C.S.H.B. 3138 amends the Code of Criminal Procedure to authorize a district court to issue a search warrant authorizing a peace officer to seize as substitute property that is not contraband any property of a person who is or was the owner or who has or had an interest in contraband with an aggregate value of $200,000 or more if the officer submits an affidavit that states probable cause for the commission of an offense giving rise to forfeiture of contraband; a description of the contraband involved and the estimated current fair market value of the substitute property to be seized; the reasons the contraband is unavailable for forfeiture; probable cause to believe that the owner of the substitute property owned or had an interest in contraband with an aggregate value of $200,000 or more in connection with the commission of an underlying offense giving rise to the forfeiture; and that due diligence has been exercised in identifying the minimum amount of substitute property necessary to approximate the estimated highest fair market value of the contraband during the period in which the owner of the substitute property owned, or had an interest in, the contraband. The bill requires the disposition after seizure of the substitute property to proceed as other cases except that the attorney representing the state must prove by a preponderance of the evidence that the contraband was subject to seizure and forfeiture; the highest fair market value of that contraband during the period in which the owner of the substitute property owned, or had an interest in, the contraband; the fair market value of the substitute property at the time it was seized; and that the owner of the substitute property owned or had an interest in contraband with an aggregate value of $200,000 or more in connection with the commission of an underlying offense giving rise to the forfeiture.

 

C.S.H.B. 3138 expressly does not require the owner or interest holder, for the purposes of determining the aggregate value of contraband, to have simultaneously owned or had an interest in all of the property constituting contraband. The bill requires the court, if the fair market value of the substitute property seized exceeds the highest fair market value of the contraband during the period in which the owner of the substitute property owned, or had an interest in, the contraband, to make appropriate orders to ensure that property equal in value to the excess is returned to the person or persons from whom the substitute property was seized. The bill's provisions regarding substitute property and contraband apply if contraband can no longer be located after the exercise of reasonable diligence; has been transferred, conveyed, sold to, or deposited with a person other than the owner or interest holder; is not within the court's jurisdiction; has substantially diminished in value; has been commingled with other property and cannot be readily distinguished or separated; or is proceeds gained from the commission of certain specified felony and misdemeanor offenses and was used to acquire other property that is not within the court's jurisdiction.

 

C.S.H.B. 3138 requires a peace officer who identifies contraband, other than real property, that is determined to be located outside of Texas to provide the attorney representing the state a sworn statement that identifies the contraband and the reasons the contraband is subject to seizure. The bill authorizes the attorney representing the state, on receiving the sworn statement, to file in the name of the state a notice of intended forfeiture in a district court in a certain specified county or in Travis County. The bill requires the attorney representing the state to request that citation be served on any person who owns or is in possession or control of the contraband and authorizes the attorney, on service in accordance with the Texas Rules of Civil Procedure, to move to have the court order that the contraband be returned or brought to the court's jurisdiction or delivered to an agent of this state for transportation to the court's jurisdiction.

 

C.S.H.B. 3138 entitles the attorney representing the state to all reasonable discovery in accordance with the Texas Rules of Civil Procedure to assist in identifying and locating such contraband and subjects the contraband to seizure and forfeiture if the court orders the return of the contraband. The bill authorizes the court, if it is found that any person after being served with a citation has transported, concealed, disposed of, or otherwise acted to prevent the seizure and forfeiture of such contraband, to order the payment to the attorney representing the state of costs incurred in investigating and identifying the location of the contraband; to enter a judgment for civil contempt and impose a fine, confinement in jail, or both fine and confinement; to enter a judgment of forfeiture of the person's interest in the contraband; to enter a judgment in the amount of the fair market value of the contraband; to impose a civil penalty for each item of contraband, or each separate fund, of which the person transported, concealed, disposed, or otherwise acted to prevent the seizure and forfeiture; or to order any combination of such remedies.

 

C.S.H.B. 3138 requires a peace officer who identifies proceeds that are gained from the commission of certain specified offenses to provide the attorney representing the state with an affidavit that identifies the amount of the proceeds and that states probable cause that the proceeds are contraband subject to forfeiture. The bill authorizes the attorney representing the state, on receiving the affidavit, to file for a judgment in the amount of the proceeds in a district court in a certain specified county or in Travis County. The bill requires the court, if the court determines that based on an examination of the affidavit probable cause exists for the suit to proceed, to order that citation be served on all defendants named in the suit in accordance with the Texas Rules of Civil Procedure. The bill makes each person who is shown to have been a party to an underlying offense for which the proceeds are subject to forfeiture jointly and severally liable in a suit for proceeds, regardless of whether the person has been charged for the offense.

 

C.S.H.B. 3138 authorizes the attorney representing the state to proceed under statutory provisions regarding contraband forfeiture, any of the bill's provisions relating to contraband, or any combination of those provisions. The bill prohibits a court, if property or proceeds are awarded or forfeited to the state for an underlying offense, from awarding or forfeiting additional property or proceeds that would exceed the highest fair market value of the contraband subject to forfeiture for that offense. The bill authorizes the highest fair market value, for purposes of that prohibition, to be calculated at any time during the period in which the applicable person owned, possessed, or had an interest in the contraband.

 

C.S.H.B. 3138 amends the Penal Code to expand the conduct that constitutes the offense of money laundering to include knowingly conducting, supervising, or facilitating a transaction in violation of the federal Bank Secrecy Act or its implementing regulations set forth in federal regulations.

 

EFFECTIVE DATE

 

September 1, 2013.

 

COMPARISON OF ORIGINAL AND SUBSTITUTE

 

While C.S.H.B. 3138 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.

 

INTRODUCED

HOUSE COMMITTEE SUBSTITUTE

SECTION 1.  Articles 59.01(1) and (2), Code of Criminal Procedure, are amended.

SECTION 1. Same as introduced version.

 

SECTION 2.  Article 59.011, Code of Criminal Procedure, is amended.

SECTION 2. Same as introduced version.

 

SECTION 3.  Chapter 59, Code of Criminal Procedure, is amended by adding Articles 59.021, 59.022, 59.023, and 59.024 to read as follows:

Art. 59.021.  SUBSTITUTE PROPERTY.  (a)  In this article, "substitute property" means property:

 

(1)  that is not contraband;

(2)  that is owned by a person who is the owner of, or has an interest in, property that is contraband; and

 

(3)  for which a search warrant is issued under Subsection (c).

 

 

(b)  This article applies to contraband that:

(1)  can no longer be located after the exercise of reasonable diligence;

(2)  has been transferred, conveyed, sold to, or deposited with a person other than the owner;

(3)  is not within the jurisdiction of the court;

(4)  has substantially diminished in value;

(5)  has been commingled with other property and cannot be readily distinguished or separated; or

(6)  if the contraband is proceeds described by Article 59.01(2)(C), was used to acquire other property that is not within the jurisdiction  of the court.

(c)  A district court may issue a search warrant authorizing a peace officer to seize as substitute property any property of a person who is the owner or who has an interest in property that is contraband described by Subsection (b), if the officer submits an affidavit that states:

(1)  probable cause for the commission of an offense giving rise to forfeiture of contraband;

(2)  the nature of the contraband involved and the fair market value of the substitute property to be seized;

(3)  the reasons the contraband is unavailable for forfeiture; and

 

 

 

 

 

 

(4)  that due diligence has been exercised in identifying the minimum amount of substitute property necessary to approximate the fair market value of the contraband described by Subsection (b).

 

 

(d)  After seizure of the substitute property, the disposition shall proceed as other cases in this chapter except that the attorney representing the state must prove by a preponderance of the evidence:

(1)  that the contraband described by Subsection (b) was subject to seizure and forfeiture under this chapter; and

(2)  the fair market value of that contraband.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(e)  If the fair market value of the substitute property seized exceeds the fair market value of the contraband described by Subsection (b), the court shall make appropriate orders to ensure that property equal in value to the excess is returned to the person or persons from whom the substitute property was seized.

 

 

Art. 59.022.  PROPERTY REMOVED FROM THIS STATE. 

Art. 59.023.  SUIT FOR PROCEEDS.   (a)  A peace officer who identifies proceeds that are gained from the commission of an offense listed in Article 59.01(2)(A) or (B) shall provide the attorney representing the state with a sworn statement that identifies the amount of the proceeds. On receiving the sworn statement, the attorney representing the state may file for a judgment in the amount of the proceeds in a district court in:

 

(1)  the county in which the proceeds were gained;

(2)  the county in which any owner or possessor of the property was prosecuted for an underlying offense for which the property is subject to forfeiture;

(3)  the county in which venue existed for prosecution of an underlying offense for which the property is subject to forfeiture; or

 

(4)  Travis County.

 

 

 

 

 

 

 

(b)  Each person who is shown to have been a party to an underlying offense for which the proceeds are subject to forfeiture are jointly and severally liable in a suit under this article, regardless of whether the person has been charged for the offense.

Art. 59.024.  MULTIPLE RECOVERY PROHIBITED.  The attorney representing the state may proceed under Article 59.021, 59.022, or 59.023, or any combination of those articles.  The attorney representing the state may not obtain multiple recoveries with respect to the same conduct or proceeds.  If the attorney representing the state seeks recovery in more than one suit, the attorney shall notify each court that other litigation concerning the same subject matter or conduct is proceeding in other cases.

 

SECTION 3.  Chapter 59, Code of Criminal Procedure, is amended by adding Articles 59.021, 59.022, 59.023, and 59.024 to read as follows:

Art. 59.021.  FORFEITURE OF SUBSTITUTE PROPERTY.  (a)  In this article, "substitute property" means property:

 

(1)  that is not contraband; and

(2)  that is owned by a person who is or was the owner of, or has or had an interest in, contraband with an aggregate value of $200,000 or more.

 

 

(b)  Substitute property may be seized under authority of a search warrant issued under Subsection (c) if property that is contraband:

(1)  can no longer be located after the exercise of reasonable diligence;

(2)  has been transferred, conveyed, sold to, or deposited with a person other than the owner or interest holder;

(3)  is not within the jurisdiction of the court;

(4)  has substantially diminished in value;

(5)  has been commingled with other property and cannot be readily distinguished or separated; or

 

(6)  is proceeds described by Article 59.01(2)(C) and was used to acquire other property that is not within the jurisdiction  of the court.

(c)  A district court may issue a search warrant authorizing a peace officer to seize substitute property

 

 

if the officer submits an affidavit that states:

 

(1)  probable cause for the commission of an offense giving rise to forfeiture of contraband;

(2)  a description of the contraband involved and the estimated current fair market value of the substitute property to be seized;

(3)  the reasons the contraband is unavailable for forfeiture;

(4)  probable cause to believe that the owner of the substitute property owned or had an interest in contraband with an aggregate value of $200,000 or more in connection with the commission of an underlying offense giving rise to the forfeiture; and

(5)  that due diligence has been exercised in identifying the minimum amount of substitute property necessary to approximate the estimated highest fair market value of the contraband during the period in which the owner of the substitute property owned, or had an interest in, the contraband.

(d)  After seizure of the substitute property, the disposition shall proceed as other cases in this chapter except that the attorney representing the state must prove by a preponderance of the evidence:

(1)  that the contraband described by Subsection (b) was subject to seizure and forfeiture under this chapter;

(2)  the highest fair market value of that contraband during the period in which the owner of the substitute property owned, or had an interest in, the contraband;

(3)  the fair market value of the substitute property at the time it was seized; and

(4)  that the owner of the substitute property owned or had an interest in contraband with an aggregate value of $200,000 or more in connection with the commission of an underlying offense giving rise to the forfeiture.

(e)  For purposes of determining the aggregate value of contraband under Subsection (c) or (d), the owner or interest holder is not required to have simultaneously owned or had an interest in all of the property constituting contraband.

(f)  If the fair market value of the substitute property seized exceeds the highest fair market value of the contraband described by Subsection (b) during the period in which the owner of the substitute property owned, or had an interest in, the contraband, the court shall make appropriate orders to ensure that property equal in value to the excess is returned to the person or persons from whom the substitute property was seized.

Art. 59.022.  PROPERTY REMOVED FROM THIS STATE. 

Art. 59.023.  SUIT FOR PROCEEDS.   (a)  A peace officer who identifies proceeds that are gained from the commission of an offense listed in Article 59.01(2)(A) or (B) shall provide the attorney representing the state with an affidavit that identifies the amount of the proceeds and that states probable cause that the proceeds are contraband subject to forfeiture. On receiving the affidavit, the attorney representing the state may file for a judgment in the amount of the proceeds in a district court in:

(1)  the county in which the proceeds were gained;

(2)  the county in which any owner or possessor of the property was prosecuted for an underlying offense for which the property is subject to forfeiture;

(3)  the county in which venue existed for prosecution of an underlying offense for which the property is subject to forfeiture;

(4)  the county in which the proceeds were seized; or

(5)  Travis County.

(b)  If the court determines that, based on an examination of the affidavit described by Subsection (a), probable cause exists for the suit to proceed, the court shall order that citation be served on all defendants named in the suit in accordance with the Texas Rules of Civil Procedure.

(c)  Each person who is shown to have been a party to an underlying offense for which the proceeds are subject to forfeiture is jointly and severally liable in a suit under this article, regardless of whether the person has been charged for the offense.

Art. 59.024.  MULTIPLE RECOVERY PROHIBITED.  The attorney representing the state may proceed under Article 59.02, 59.021, 59.022, or 59.023, or any combination of those articles.  If property or proceeds are awarded or forfeited to the state under this chapter for an underlying offense, a court may not award or forfeit additional property or proceeds that would exceed the highest fair market value of the contraband subject to forfeiture for that offense. For purposes of this article, the highest fair market value may be calculated at any time during the period in which the applicable person owned, possessed, or had an interest in the contraband.

SECTION 4.  Article 59.06(p), Code of Criminal Procedure, is amended.

SECTION 4. Same as introduced version.

SECTION 5.  Section 34.01, Penal Code, is amended.

SECTION 5. Same as introduced version.

 

SECTION 6.  Section 34.02(a), Penal Code, is amended.

SECTION 6. Same as introduced version.

SECTION 7.  (a)  The change in law made by this Act to Chapter 59, Code of Criminal Procedure, applies only to the forfeiture of property in relation to an offense committed on or after the effective date of this Act.  Forfeiture of property in relation to an offense committed before the effective date of this Act is governed by the law in effect when the offense was committed, and the former law is continued in effect for that purpose.

(b)  The change in law made by this Act to Chapter 34, Penal Code, applies only to an offense committed on or after the effective date of this Act.  An offense committed before the effective date of this Act is governed by the law in effect on the date the offense was committed, and the former law is continued in effect for that purpose.

(c)  For purposes of this section, an offense was committed before the effective date of this Act if any element of the offense occurred before that date.

SECTION 7. Same as introduced version.

 

 

SECTION 8.  This Act takes effect September 1, 2013.

SECTION 8. Same as introduced version.