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The Aggravated White Collar Crime Enhancement: the Freeze and Seize Power of the Government

In 1995, the California Legislature enacted Penal Code §186.11 to add two arrows to the quiver of prosecuting attorneys. Penal Code §186.11 can sting a defendant in two ways:

  • The first holds additional incarceration and fines over a defendant’s head.
  • The second arrow of this section is potentially more damaging to a defendant and his family: all of the defendant’s assets can be frozen without notice before a conviction is obtained.

The following summarizes an article originally written to introduce criminal practitioners to the dangers their clients can face if they fall into the reach of a prosecutor stringing his bow according to this power.

The statue, referred to as the Aggravated White Collar Crime Enhancement, applies to anyone involved in such crimes as fraud schemes, market manipulation, and unfair business practices. An example of this may be an automobile repair shop owner accused of insurance fraud.

Unfortunately, there is minimal evidence to reveal the Legislature’s specific intent in establishing this statue. It appears that it was enacted and then amended to be tough on criminals. It doles out fines and more incarceration time and lets a prosecutor perform self-help in pursuing restitution for victims.

However, the section wreaks more havoc than intended because of the “freeze and seize” power given to prosecutors. A prosecutor simply files a motion, makes a probable cause showing, and the defendant’s assets are frozen, including property shared with an innocent spouse or party not privy to the crime. Furthermore, there is no limit to the type of asset subject to this freeze. A defendant’s house and real property, as well as personal property – including money in a bank, retirement account, and all other assets – can be preserved pending the sentencing.

In some cases, innocent spouses and other innocent parties can obtain relief. The court must “seek to protect the interests of these innocent parties,” and of course Family Code §1000(a) helps in some cases to protect an innocent spouse and dependents from debts incurred by the defendant. Yet Penal Code §186.11 remains a powerful and harmful tool in the hands of the government and prosecutors.

Penal Code §186.11 cannot be overlooked as a problem for defendants in larger white-collar crime cases. If it appears, it must be applied, and often in lieu of other penalty/assessment provisions of other statues that would otherwise be applicable to a defendant’s case; a dangerous precedent for the legislature to preserve.

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