BILL ANALYSIS
SENATE RULES COMMITTEE AB 976
Office of Senate Floor Analyses
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THIRD READING
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Bill No: AB 976
Author: Papan (D), et al
Amended: 7/8/98 in Senate
Vote: 21
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SENATE PUBLIC SAFETY COMMITTEE : 4-2, 5/12/98
AYES: Vasconcellos, Rainey, Kopp, McPherson, Polanco,
Schiff, Watson
NOT VOTING: Burton
SENATE PUBLIC SAFETY COMMITTEE : 7-0, 6/30/98
AYES: Vasconcellos, Rainey, Kopp, McPherson, Polanco,
Schiff, Watson
NOT VOTING: Burton
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 57-17, 6/3/98 - See last page for vote
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SUBJECT : Money laundering
SOURCE : Attorney General's Office
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DIGEST : This bill allows a peace officer:
1.To testify in front of the grand jury as to hearsay
statements regarding the foundation for the admissibility
into evidence of physical evidence.
2.To obtain financial records of an individual upon an ex
parte showing to a judge that there are reasonable
grounds to believe that the records or information sought
are relevant to a criminal investigation.
3.To obtain utility records of an individual upon an ex
parte showing to a judge that there are reasonable
grounds to believe that the records or information sought
are relevant to a criminal investigation.
ANALYSIS : Existing law allows a peace officer to
testify to hearsay evidence at a preliminary hearing.
This bill allows a peace officer to testify to hearsay
evidence at a grand jury proceeding as to evidence relating
to the foundation for admissibility into evidence of
documents, exhibits, records, and other items of physical
evidence.
The California Right to Financial Privacy Act generally
provides for the confidential relationship between
financial institutions and their customers and provides for
procedures when a governmental agency can get access to the
financial records of an individual.
This bill exempts from the confidentiality provisions of
the California Right to Financial Privacy Act the
dissemination of financial information and records pursuant
to an order by a judge upon an ex parte application of a
peace officer showing specific and articulable facts that
there are reasonable grounds to believe that the records or
information sought are relevant and material to an ongoing
felony criminal investigation.
This bill also allows a peace officer to make an ex parte
application for the production of utility record or the
production of escrow or title records upon showing specific
and articulable facts that there are reasonable grounds to
believe that the records or information sought are relevant
and material to an ongoing criminal investigation.
Existing law provides that the court may order the
financial institution and the grand jury to withhold
notification to the customer for thirty days from the
receipt of the judicial subpoena upon a finding that
notification will hamper the investigation.
This bill provides that the notification can be withheld
for additional thirty-day period up to the end of the term
of the grand jury or the filing of a criminal complaint or
the after the criminal investigation is terminated.
The bill is double-joined with AB 2452 (Oller).
Subpoena Power
1.Definitions:
Subpoena duces tecum -- A process by which the court, at
the instances of a party, commands a witness who has in
his possession or control some document or paper that is
pertinent to the issues of a pending controversy, to
produce it. (Black's Law Dictionary 5th ed.)
Customer -- Any person who has transacted business with
or has used the services of a financial institution or
for whom a financial institution has acted as a
fiduciary.
Financial records - Any original or any copy of any
record or document held by a financial institution
pertaining to a customer of the financial institution.
2.Subpoena for Return to Grand Jury
Existing law gives the grand jury the authority to obtain
financial records pursuant to a subpoena duces tecum upon
a showing to a superior court judge that there exists a
reasonable inference that a crime has been committed and
the financial records sought are reasonably necessary to
the jury's investigation of the crime.
This bill removes this power from the grand jury and
gives it to a deputy district attorney, deputy attorney
general or any other person authorized to present
evidence to the grand jury to seek the subpoena duces
tecum to obtain financial records for return to the grand
jury.
3.Notice to Customer
Existing law provides that a court may order the
financial institution and grand jury not to notify the
customer of a subpoena duces tecum until thirty days from
receipt of the subpoena if the court finds that
notification will hamper an investigation. The court may
also extend the order for additional thirty-day periods
until the termination of the grand jury.
This bill provides that if notification is withheld, the
grand jury must notify the customer after the criminal
investigation is terminated without an indictment. This
bill also clarifies that the thirty-day periods should
not extend beyond the filing of the criminal complaint.
This bill has been substantially amended since it failed
passage in the Senate Public Safety Committee on May 12,
1998. The following is a quick summary of the primary
amendments:
1.The provisions regarding the hearsay exception for
adopted admissions have been deleted.
2.The expansion of subpoena power for financial records to
any case where a complaint has been filed has been
deleted.
3.The shortening of the time for a motion to quash a
subpoena has been deleted.
4.The provisions allowing access to certain Franchise Tax
Board documents by the AG has been deleted.
5.Notice provisions following the close of investigation
have been added to the provisions providing for ex parte
applications to access utility, escrow or title records.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 7/29/98)
Attorney General's Office (source)
Los Angeles District Attorneys Office
OPPOSITION : (Verified 7/29/98)
California Attorneys for Criminal Justice
ARGUMENTS IN SUPPORT : According to the author's office,
"Assembly Bill 976 provides California financial
investigators and prosecutors with the necessary tools to
effectively investigate and prosecute financial crimes.
"Financial schemes in the areas of fraud, money laundering,
tax evasion and other financial crimes are becoming more
and more sophisticated. The antiquated framework of laws
pertaining to financial investigations and the presentation
of documentary evidence does not take into account the
increased sophistication of financial schemes and fails to
provide adequate law enforcement access to certain types of
documentary evidence during the investigative phase of the
case. AB 976 addresses these concerns as well certain of
the unnecessary impediments to the investigation and
prosecution of financial crimes imposed by the existing
statutory framework.
"AB 976 more closely aligns California's statutory scheme
in the area of financial crime investigation and
prosecution to corresponding federal law. AB 976 gives
California law enforcement the ability to effectively
prosecute complex financial crimes in lieu of attempting to
have the case investigated and prosecuted federally or
often not being able to prosecute at all."
ARGUMENTS IN OPPOSITION : Opponents point out that this
bill would allow a peace officer to testify to hearsay
statements before the grand jury as to evidence relating to
the foundation for admissibility into evidence of
documents, exhibits, records, and other items of physical
evidence. As with officers who testify at a preliminary
hearing, this bill requires that an officer meet specified
training requirements in order to testify.
The opponents note that even with the availability of
cross-examination of the officer at a preliminary hearing,
testimony by peace officers is problematic since there can
be no cross-examination of the actual person who made the
statement. There is no cross-examination at all in front
of a grand jury so the grand jury would not only not have
the opportunity to witness the demeanor of the person who
actually made the statement but they would also not hear
any questions regarding the statements. There is not even
a judge present, the prosecutor controls the questioning.
ASSEMBLY FLOOR :
AYES: Aguiar, Alby, Alquist, Aroner, Ashburn, Baca,
Baldwin, Battin, Bordonaro, Bowen, Bowler, Brown,
Caldera, Cardoza, Cunneen, Davis, Escutia, Figueroa,
Firestone, Frusetta, Gallegos, Goldsmith, Havice,
Hertzberg, Honda, House, Keeley, Kuykendall, Leach,
Lempert, Machado, Mazzoni, Migden, Miller, Morrissey,
Murray, Napolitano, Ortiz, Pacheco, Papan, Perata,
Prenter, Richter, Runner, Scott, Shelley, Strom-Martin,
Sweeney, Takasugi, Thompson, Thomson, Torlakson, Vincent,
Washington, Wayne, Wildman, Bustamante
NOES: Ackerman, Baugh, Brewer, Campbell, Floyd, Granlund,
Kaloogian, Leonard, Margett, Martinez, McClintock,
Morrow, Olberg, Oller, Pringle, Villaraigosa, Woods
NOT VOTING: Cardenas, Ducheny, Knox, Kuehl, Poochigian,
Wright
RJG:ctl 7/29/98 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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