BILL NUMBER: AB 556 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 19, 2015
INTRODUCED BY Assembly Member Irwin
FEBRUARY 23, 2015
An act to amend Section 17510.85 of the Business and Professions
Code, to amend Section 2225 of, and to add Section
2226 to, 2224.5 to the Civil Code,
to add Sections 6816 and 8818 to the Corporations Code,
and to amend Section 12596 of the Government Code,
relating to trusts.
LEGISLATIVE COUNSEL'S DIGEST
AB 556, as amended, Irwin. Trusts: regulation and enforcement.
Existing law requires an individual or entity who for compensation
solicits funds or property for charitable purposes to disclose that
the solicitation is being conducted by a commercial fundraiser for a
charitable purpose and the registered name of the commercial
fundraiser.
This bill would also require an individual or entity who solicits
funds or property for charitable purposes with the participation of a
fundraising counsel for charitable purposes to make specified
disclosures regarding the fundraising counsel. The bill would require
the disclosures, if printed or if presented electronically, to be in
at least 12-point type. type, and be clear
and conspicuous .
Existing law, the Supervision of Trustees and Fundraisers for
Charitable Purposes Act, generally regulates charitable corporations,
trustees, and other legal entities holding property for charitable
purposes, commercial fundraisers for charitable purposes, and
fundraising counsel for charitable purposes, among others, over which
the state or the Attorney General has enforcement or supervisory
powers. Existing law requires the Attorney General to establish and
maintain a register of charitable corporations, unincorporated
associations, and trustees subject to these provisions and of the
particular trust or other relationship under which they hold property
for charitable purposes. Existing law authorizes the Attorney
General to bring any action against trustees or against any
charitable corporation or director or officer thereof, to enforce a
charitable trust, to impress property with a trust for charitable
purposes, or to recover property or the proceeds thereof at any time
within 10 years after the cause of action accrued.
This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued. The bill would also authorize the
Attorney General to bring an action for civil liability against a
person who aids or abets a violation of these provisions at any time
within 10 years after the cause of action accrued.
Existing law provides that one who wrongfully detains a thing is
an involuntary trustee thereof for the benefit of the owner, and that
one who gains a thing by fraud, or other wrongful act is an
involuntary trustee of the thing gained for the benefit of the owner.
This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued.
This bill would also authorize the Attorney General to
bring an action for civil liability against a person who aids or
abets a violation of these provisions at any time within 10 years
after the cause of action accrued.
Existing law also imposes an involuntary trust for a period of 5
years upon the proceeds and profits from the sale or transfer of any
thing or right of a felon, the value of which is enhanced by the
notoriety gained from the commission of the felony, and specifies
procedures whereby the beneficiaries of the trust, as defined, are
authorized to enforce their rights under the trust. Existing law
authorizes the Attorney General to bring an action to require
proceeds or profits by a convicted felon to be held in an express
trust within one year after the receipt of proceeds or profits, or
one year after the date of the conviction, whichever is later.
This bill would extend the period of the involuntary trust imposed
upon the proceeds and profits of a felon to 10 years. The bill would
authorize the Attorney General to bring an action to require the
proceeds or profits of a felon to be held in an express trust within
10 years after the receipt of the proceeds or profits, or 10 years
after the date of conviction, whichever is later. The bill would also
authorize the Attorney General to bring an action for a violation of
these provisions at any time within 10 years after the cause of
action accrued.
Existing law, the Nonprofit Corporation Law, set forth standards
of conduct for directors and officers of nonprofit public benefit
corporations and provides that it is a crime for any director or
officer of any corporation among other things, to knowingly engage in
specified acts relating to fraud, to make materially false reports,
to receive or acquire possession of the property of the corporation,
or to falsify the books or accounts of the corporation.
This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued. The bill would also authorize the
Attorney General to bring an action for civil liability against a
person who aids or abets a violation of the standards of conduct for
directors and officers of nonprofit public benefit corporations at
any time within 10 years after the cause of action accrued.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17510.85 of the Business and Professions Code
is amended to read:
17510.85. (a) An individual, corporation, or other legal entity
who for compensation solicits funds or other property in this state
for charitable purposes shall disclose prior to an oral solicitation
or sales solicitation made by direct personal contact, radio,
television, telephone, or over the Internet, or at the same time as a
written solicitation or sales solicitation:
(1) That the solicitation or sales solicitation is being conducted
by a commercial fundraiser for charitable purposes.
(2) The name of the commercial fundraiser for charitable purposes
as registered with the Attorney General pursuant to Section 12599 of
the Government Code.
(b) An individual, corporation, or other legal entity who solicits
funds or other property in this state for charitable purposes with
the participation of a fundraising counsel for charitable purposes,
as defined in Section 12599.1 of the Government Code, shall disclose
prior to an oral solicitation or sales solicitation made by direct
personal contact, radio, television, telephone, or via the Internet,
or at the same time as a written solicitation or sales solicitation:
(1) That the solicitation or sales solicitation is being conducted
with the participation of a fundraising counsel for charitable
purposes.
(2) The name of the fundraising counsel for charitable purposes as
registered with the Attorney General pursuant to Section 12599.1 of
the Government Code.
(c) The disclosures required pursuant to this section, if printed
or if presented electronically, shall be in at least 12-point
type. type, and shall be clear and
conspicuous, as defined in Section 17601.
SEC. 2. Section 2225 of the Civil Code is
amended to read:
2225. (a) As used in this section:
(1) "Convicted felon" means any person convicted of a felony, or
found not guilty by reason of insanity of a felony committed in
California, either by a court or jury trial or by entry of a plea in
court.
(2) "Felony" means a felony defined by any California or United
States statute.
(3) (A) "Representative of the felon" means any person or entity
receiving proceeds or profits by designation of that felon, on behalf
of that felon, or in the stead of that felon, whether by the felon's
designation or by operation of law.
(B) "Profiteer of the felony" means any person who sells or
transfers for profit any memorabilia or other property or thing of
the felon, the value of which is enhanced by the notoriety gained
from the commission of the felony for which the felon was convicted.
This subparagraph shall not apply to any media entity reporting on
the felon's story or on the sale of the materials, memorabilia, or
other property or thing of the felon. Nor shall it apply to the sale
of the materials, as the term is defined in paragraph (6), if the
seller is exercising his or her first amendment rights. This
subparagraph also shall not apply to the sale or transfer by a
profiteer of any other expressive work protected by the First
Amendment unless the sale or transfer is primarily for a commercial
or speculative purpose.
(4) (A) "Beneficiary" means a person who, under applicable law,
other than the provisions of this section, has or had a right to
recover damages from the convicted felon for physical, mental, or
emotional injury, or pecuniary loss proximately caused by the
convicted felon as a result of the crime for which the felon was
convicted.
(B) If a beneficiary described in subparagraph (A) has died,
"beneficiary" also includes a person or estate entitled to recover
damages pursuant to Chapter 4 (commencing with Section 377.10) of
Title 3 of Part 2 of the Code of Civil Procedure.
(C) If a person has died and the death was proximately caused by
the convicted felon as a result of the crime for which the felon was
convicted, "beneficiary" also includes a person described in Section
377.60 of the Code of Civil Procedure and any beneficiary of a will
of the decedent who had a right under that will to receive more than
25 percent of the value of the estate of the decedent.
(5) "Beneficiary's interest" means that portion of the proceeds or
profits necessary to pay the following:
(A) In the case of a beneficiary described in subparagraph (A) or
(B) of paragraph (4), those damages that, under applicable law, other
than the provisions of this section, the beneficiary has or had a
right to recover from the convicted felon for injuries proximately
caused by the convicted felon as a result of the crime for which the
felon was convicted.
(B) In the case of a beneficiary described in subparagraph (C) of
paragraph (4), those damages that, under all the circumstances of the
case, may be just.
(C) A beneficiary's interest shall be reduced by the following
amount:
(i) Money paid to the beneficiary from the Restitution Fund
because of the crime for which the felon was convicted.
(ii) Money paid to the beneficiary by the convicted felon because
of a requirement of restitution imposed by a court in connection with
the crime for which the felon was convicted.
(iii) Money paid to the beneficiary because of a judgment against
the convicted felon based upon the crime for which the felon was
convicted.
(D) In the case of an unsatisfied existing judgment or order of
restitution against the convicted felon and in favor of a
beneficiary, any money paid to the beneficiary pursuant to this
section shall be applied to reduce the amount of the unsatisfied
judgment or order.
(6) "Materials" means books, magazine or newspaper articles,
movies, films, videotapes, sound recordings, interviews or
appearances on television and radio stations, and live presentations
of any kind.
(7) "Story" means a depiction, portrayal, or reenactment of a
felony and shall not be taken to mean a passing mention of the
felony, as in a footnote or bibliography.
(8) "Sale" includes lease, license, or any other transfer or
alienation taking place in California or elsewhere.
(9) "Proceeds" means all fees, royalties, real property, or other
consideration of any and every kind or nature received by or owing to
a felon or his or her representatives for the preparation for the
purpose of sale of materials, for the sale of the rights to
materials, or the sale or distribution by the convicted felon of
materials whether earned, accrued, or paid before or after the
conviction. It includes any interest, earnings, or accretions upon
proceeds, and any property received in exchange for proceeds.
(10) "Profits" means all income from anything sold or transferred
by the felon, a representative of the felon, or a profiteer of the
felony, including any right, the value of which thing or right is
enhanced by the notoriety gained from the commission of a felony for
which a convicted felon was convicted. This income may have been
accrued, earned, or paid before or after the conviction. However,
voluntary donations or contributions to a defendant to assist in the
defense of criminal charges shall not be deemed to be "profits,"
provided the donation or contribution to that defense is not given in
exchange for some material of value.
(b) (1) All proceeds from the preparation for the purpose of sale,
the sale of the rights to, or the sale of materials that include or
are based on the story of a felony for which a convicted felon was
convicted, shall be subject to an involuntary trust for the benefit
of the beneficiaries set forth in this section. That trust shall
continue until 10 years after the time of payment of the proceeds to
the felon or 10 years after the date of conviction, whichever is
later. If an action is filed by a beneficiary to recover his or her
interest in a trust within those time limitations, the trust
character of the property shall continue until the conclusion of the
action. At the end of the 10-year trust period, any proceeds that
remain in trust that have not been claimed by a beneficiary shall be
transferred to the Controller, to be allocated to the Restitution
Fund.
(2) All profits shall be subject to an involuntary trust for the
benefit of the beneficiaries set forth in this section. That trust
shall continue until 10 years after the time of payment of the
profits to the felon or 10 years after the date of conviction,
whichever is later. If an action is filed by a beneficiary to recover
his or her interest in a trust within those time limitations, the
trust character of the property shall continue until the conclusion
of the action. At the end of the 10-year trust period, any profits
that remain in trust that have not been claimed by a beneficiary
shall be transferred to the Controller, to be allocated to the
Restitution Fund.
(3) Notwithstanding paragraph (2), in the case of a sale or
transfer by a profiteer of the felony, the court in an action under
subdivision (c) shall, upon an adequate showing by the profiteer of
the felony, exclude from the involuntary trust that portion of the
profits that represents the inherent value of the memorabilia,
property, or thing sold or transferred and exclusive of the amount of
the enhancement to the value due to the notoriety of the convicted
felon.
(c) (1) Any beneficiary may bring an action against a convicted
felon, representative of the felon, or a profiteer of a felony to
recover his or her interest in the trust established by this section.
(2) That action may be brought in the superior court of the county
in which the beneficiary resides, or of the county in which the
convicted felon resides, or of the county in which proceeds or
profits are located.
(3) If the court determines that a beneficiary is entitled to
proceeds or profits pursuant to this section, the court shall order
the payment from proceeds or profits that have been received, and, if
that is insufficient, from proceeds or profits that may be received
in the future.
(d) If there are two or more beneficiaries and if the available
proceeds or profits are insufficient to pay all beneficiaries, the
proceeds or profits shall be equitably apportioned among the
beneficiaries taking into account the impact of the crime upon them.
Prior to any distribution of any proceeds to a beneficiary, the
court shall determine whether the convicted felon has failed to pay
any portion of a restitution fine or penalty fine imposed by a court,
or any restitution imposed as a condition of probation. The court
shall also determine whether the felon is obligated to reimburse a
governmental entity for the costs of his or her defense and whether a
portion of the proceeds is needed to cover his or her reasonable
attorney's fees incurred in the criminal proceeding related to the
felony, or any appeal or other related proceeding, or in the defense
of the action brought under this section. The court shall order
payment of these obligations prior to any payment to a beneficiary,
except that 60 percent of the proceeds or profits shall be reserved
for payment to the beneficiaries.
(e) (1) The Attorney General may bring an action to require
proceeds or profits received by a convicted felon to be held in an
express trust in a bank authorized to act as a trustee.
(2) An action may be brought under this subdivision within 10
years after the receipt of proceeds or profits by a convicted felon
or 10 years after the date of conviction, whichever is later.
That action may be brought in the superior court of any county in
which the Attorney General has an office.
(3) If the Attorney General proves that the proceeds or profits
are proceeds or profits from the sale of a story or thing of value
that are subject to an involuntary trust pursuant to this section,
and that it is more probable than not that there are beneficiaries
within the meaning of this section, the court shall order that all
proceeds or profits be deposited in a bank and held by the bank as
trustee of the trust until an order of disposition is made by a court
pursuant to subdivision (d), or until the expiration of the period
specified in subdivision (b).
(4) If the Attorney General prevails in an action under this
subdivision, the court shall order the payment from the proceeds or
profits to the Attorney General of reasonable costs and attorney's
fees.
(f) (1) In any action brought pursuant to this section, upon
motion of a party the court shall grant a preliminary injunction to
prevent any waste of proceeds or profits if it appears that the
proceeds or profits are subject to the provisions of this section,
and that they may be subject to waste.
(2) Upon motion of the Attorney General or any potential
beneficiary, the court shall grant a preliminary injunction against a
person against whom an indictment or information for a felony has
been filed in superior court to prevent any waste of proceeds or
profits if there is probable cause to believe that the proceeds or
profits would be subject to an involuntary trust pursuant to this
section upon conviction of this person, and that they may be subject
to waste.
(g) Any violation of an order of a court made pursuant to this
section shall be punishable as contempt.
(h) The remedies provided by this section are in addition to other
remedies provided by law.
No period of limitations, except those provided by this section,
shall limit the right of recovery under this section.
SEC. 3. SEC . 2. Section
2226 2224.5 is added to the Civil Code,
to read:
2226. 2224.5. An action brought by
the Attorney General pursuant to Section 2223 or 2224
this title may be brought at any time within 10
years after the cause of action accrued.
SEC. 4. Section 6816 is added to the
Corporations Code, to read:
6816. An action brought by the Attorney General for a violation
of this chapter may be brought at any time within 10 years after the
cause of the action accrued.
SEC. 5. Section 8818 is added to the
Corporations Code, to read:
8818. An action brought by the Attorney General for a violation
of this chapter may be brought at any time within 10 years after the
cause of the action accrued.
SEC. 6. SEC. 3. Section 12596 of the
Government Code is amended to read:
12596. (a) An A civil action
brought by the Attorney General against trustees or other persons
holding property in trust for charitable purposes or against any
charitable corporation or any director or officer thereof to enforce
a charitable trust or to impress property with a trust for charitable
purposes or to recover property or the proceeds thereof for and on
behalf of any charitable trust or corporation, may be brought at any
time within 10 years after the cause of action accrued.
(b) An A civil action
brought by the Attorney General for a violation of this article,
pursuant to Title 8 (commencing with Section 2223) of Part 4
of Division 3 Section 2223 or 2224 of the Civil
Code, or pursuant to Division 2 (commencing with Section 5000) of
Title 1 of the Corporations Code, may be brought at any time within
10 years after the cause of action accrued.
(c) Notwithstanding Section 12581, the Attorney General may bring
an action for civil liability a civil action
against a person who aids or abets a violation of this article,
Section 2223 or 2224 of the Civil Code, or Article 3 (commencing
with Section 5230) of Chapter 2 of Division 2 of Title 1 of the
Corporations Code, at any time within 10 years after the cause of
action accrued.