By: Williams, Van de Putte S.B. No. 1065
(In the Senate - Filed February 23, 2009; March 13, 2009, read
first time and referred to Committee on State Affairs; May 1, 2009,
reported adversely, with favorable Committee Substitute by the
following vote: Yeas 6, Nays 2; May 1, 2009, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1065 By: Van de Putte
A BILL TO BE ENTITLED
AN ACT
relating to civil racketeering; providing civil penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 6, Civil Practice and Remedies Code, is
amended by adding Chapter 140 to read as follows:
CHAPTER 140. CIVIL RACKETEERING
Sec. 140.001. LEGISLATIVE PURPOSE AND INTENT. (a) The
legislature finds that law enforcement authorities at the local
level, including district attorneys and county attorneys with
felony criminal jurisdiction, are experienced and capable in the
investigation, prosecution, and eradication of crime.
(b) The legislature further finds that certain crimes are
increasingly committed by organized enterprises that have the
capability of operating throughout the state, the United States,
and, in some instances, internationally.
(c) The legislature further finds that the
transjurisdictional nature and scope of these organized
enterprises can present challenges to the investigation,
prosecution, and eradication of some of their activities.
(d) The legislature further finds that the
transjurisdictional nature and scope of these organized
enterprises requires that the State of Texas, at a statewide level,
become more involved in addressing the ability of these enterprises
to operate in and throughout this state.
(e) It is the intent of the legislature that the efforts of
the State of Texas under this chapter will assist local law
enforcement agencies in the shared mission of disabling the
organized activity referenced in this chapter and protecting the
health, safety, and welfare of the people of Texas.
Sec. 140.002. DEFINITIONS. In this chapter:
(1) "Acquire" means an act:
(A) to possess property;
(B) to prevent another person from using that
person's property or to dictate the terms of use of the property;
(C) to bring about or receive the transfer of any
interest in property, whether to oneself or to another person; or
(D) to secure performance of a service.
(2) "Enterprise" means any legal entity, or any group
of persons associated in fact although not a legal entity, or any
combination of such groups or entities.
(3) "Gain" means a benefit, an interest, or property
of any kind, without reduction for expenses incurred in acquiring
or maintaining the benefit, interest, or property or incurred for
any other reason.
(4) "Proceeds" means an interest in property of any
kind acquired or derived from, produced or realized through, or
caused by, directly or indirectly, an act or omission, and any
fruits of the interest, in whatever form.
(5) "Racketeering" means an act described by Section
140.003.
Sec. 140.003. CIVIL RACKETEERING. (a) A person commits
racketeering if:
(1) for financial gain, the person knowingly engages
in an enterprise that commits, facilitates, or promotes:
(A) any gambling offense punishable at least as a
Class A misdemeanor;
(B) the promotion of prostitution, as described
by Section 43.03, Penal Code;
(C) compelling prostitution, as described by
Section 43.05, Penal Code;
(D) unlawful manufacture, transportation,
repair, or sale of firearms or prohibited weapons;
(E) unlawful manufacture, delivery,
dispensation, or distribution of a controlled substance or
dangerous drug, or unlawful possession of a controlled substance or
dangerous drug through forgery, fraud, misrepresentation, or
deception;
(F) any offense under Subchapter B, Chapter 43,
Penal Code, depicting or involving conduct by or directed toward a
child younger than 18 years of age;
(G) trafficking of persons, as described by
Chapter 20A, Penal Code;
(H) bigamy, as described by Section 25.01, Penal
Code; or
(I) fraudulent use or possession of identifying
information, as described by Chapter 32, Penal Code; and
(2) the event, omission, transaction, or occurrence,
or the series of events, omissions, transactions, or occurrences,
relating to the act that meets the requirements of Subdivision (1):
(A) takes place or occurs in more than one county
in Texas; or
(B) is perpetuated by use of the United States
mail, electronic mail, telephone, facsimile, or a wireless
communication from one county to another.
Sec. 140.004. SUIT TO ABATE RACKETEERING. (a) The
attorney general may bring suit under this chapter in the name of
the state against any person or enterprise who engages in a pattern
or practice of racketeering and may seek to recover civil
penalties, costs of suit, including reasonable attorney's fees, and
any appropriate injunctive relief. The reasonable attorney's fees
that the attorney general recovers in a suit brought under this
chapter shall be determined and awarded pursuant to Section
2107.006, Government Code.
(b) This chapter does not authorize suit by a person or
enterprise that sustains injury as a result of racketeering.
(c) A suit under this chapter must be brought in a district
court in a county in which all or part of the alleged racketeering
activity giving rise to the suit occurred.
Sec. 140.005. INJUNCTIVE RELIEF; OTHER REMEDIES. (a) A
court in which a proceeding is brought under this chapter may
prevent, restrain, and remedy racketeering by issuing appropriate
orders. The orders may include, but are not limited to, a temporary
restraining order, a temporary or permanent injunction, the
creation of a receivership, the enforcement of a constructive trust
in connection with any property or other interest, prejudgment
writs of attachment under Chapter 61 for the purpose of the
freezing, preserving, and disgorging of assets, orders to
repatriate property beyond the jurisdiction of the court, or other
remedies or restraints the court considers proper.
(b) Following a final determination of liability under this
chapter, the court may issue an order that includes, but is not
limited to:
(1) requiring any person to divest any interest,
direct or indirect, in any enterprise;
(2) imposing reasonable restrictions on the future
activities or investments of any person that affect the laws of this
state, including prohibiting any person from engaging in the type
of endeavor or enterprise that gave rise to the racketeering
activity, to the extent the constitutions of the United States and
this state permit;
(3) requiring the dissolution or reorganization of any
enterprise involved in the suit;
(4) ordering the recovery of reasonable fees,
expenses, and costs incurred in obtaining injunctive relief or
civil remedies or in conducting investigations under this chapter,
including court costs, attorney's fees, witness fees, and
deposition fees;
(5) ordering payment of an amount equal to:
(A) the gain acquired or maintained through
racketeering; or
(B) the amount for which any person is liable
under this chapter;
(6) ordering payment of a civil penalty by a person or
enterprise found liable for racketeering, in an amount not to
exceed $250,000 for each separately alleged and proven act of
racketeering;
(7) ordering payment of damages for racketeering shown
to have materially damaged the state; and
(8) ordering that property attached under Chapter 61
be used to satisfy any award of the court, including awards for
damages, penalties, costs, or fees.
(c) If any property attached under Chapter 61 is not
necessary to satisfy an award of the court, and after a finding of
liability for racketeering of the person or enterprise having an
interest in such property, the court may order that the property be
disgorged to the state to the extent of the person's or enterprise's
interest, if it is proven that the property is one or more of the
following:
(1) property or an interest in property acquired or
maintained by the person or enterprise through racketeering;
(2) any interest, security, claim, or any other form
of property, office, title, license, or contractual right that
affords a source of influence over any enterprise that conducted or
participated in racketeering; or
(3) proceeds traceable to racketeering activity and
all money, negotiable instruments, securities, and other property
used or intended to be used in any manner, or in any part, to
facilitate the commission of the racketeering.
(d) In determining the amount of a civil penalty ordered
under Subsection (b)(6), the court shall consider:
(1) the seriousness of the racketeering activity and
the consequent harm, financial or personal, to the state and to any
identified victim or victims; and
(2) the duration of the racketeering activity.
(e) In determining the amount of damages ordered under
Subsection (b)(7), the court shall consider:
(1) loss of tax revenue to the state;
(2) unpaid state unemployment taxes;
(3) unpaid state licensing and regulatory fees;
(4) medical and counseling costs incurred by the state
on behalf of any victim of the racketeering; and
(5) any other damages suffered by the state due to the
racketeering.
(f) Unless otherwise provided by this chapter, remedies and
awards ordered by a court under this chapter, including costs and
reasonable attorney's fees, may be assessed against and paid from
money or property awarded under this chapter.
(g) This chapter is not intended to provide the exclusive
remedy for unlawful activity addressed by this chapter. A
proceeding under this chapter may be in addition to or in the
alternative of any other action, civil or criminal, available under
the laws of this state.
(h) Notwithstanding any other provision of this chapter,
the court shall order that any awards issued under this chapter
shall, after taking into account any costs of suit, including
reasonable attorney's fees and court costs, be paid in accordance
with Section 140.012.
(i) Notwithstanding any other provision of this chapter,
the provisions of Articles 59.13 and 59.14, Code of Criminal
Procedure, shall apply to any remedy under this section, and in no
event shall the remedies herein result in the impairment of a
security interest in property subject to a bona fide lien.
Sec. 140.006. CONSTRUCTIVE TRUST. (a) A person or
enterprise that, through racketeering, acquires any property or
prevents another person from receiving property that by law is
required to be transferred or paid to that person is an involuntary
trustee. An involuntary trustee or any other person or enterprise,
except a bona fide purchaser or lien holder for value as described
under Subsection (b), holds the property and its proceeds in
constructive trust for the benefit of persons entitled to remedies
under this chapter.
(b) A bona fide purchaser for value who was reasonably
without notice of unlawful conduct and who did not knowingly take
part in an illegal transaction is not an involuntary trustee under
Subsection (a) and is not subject to a constructive trust imposed
under this chapter.
Sec. 140.007. EVIDENCE. (a) In a proceeding under this
chapter, the state bears the burden of proof by a preponderance of
the evidence.
(b) A person convicted in a criminal proceeding is
precluded, in a proceeding under this chapter, from subsequently
denying the essential allegations of the criminal offense of which
the person was convicted. For purposes of this subsection, a
verdict or a plea, including a no contest plea, is considered a
conviction.
(c) An individual may not be held liable in damages or for
other relief under this chapter based on the conduct of another
unless the finder of fact, by a preponderance of the evidence, finds
that the individual authorized, requested, commanded, participated
in, ratified, or recklessly tolerated the unlawful conduct of the
other.
(d) An enterprise may not be held liable in damages or for
other relief under this chapter based on the conduct of an agent
unless the finder of fact, by a preponderance of the evidence, finds
that a director or high managerial agent of the enterprise
performed, authorized, requested, commanded, participated in,
ratified, or recklessly tolerated the unlawful conduct of the
agent.
(e) A bank or savings and loan association insured by the
Federal Deposit Insurance Corporation, a credit union insured by
the National Credit Union Administration, or a holder of a money
transmission license under Chapter 151, Finance Code, may not be
held liable in damages or for other relief under this chapter unless
the finder of fact, by a preponderance of the evidence, finds that
the board of directors performed, authorized, requested,
commanded, participated in, ratified, or recklessly tolerated the
unlawful conduct.
Sec. 140.008. LIMITATIONS PERIOD. No proceeding may be
commenced under this chapter unless the proceeding is filed not
later than seven years after the date of the alleged act of
racketeering. This provision supersedes any conflicting
limitations provision creating a shorter period.
Sec. 140.009. SPECIAL DOCKETING PROCEDURES. The attorney
general may file with the clerk of the district court in which a
proceeding is brought under this chapter a certificate stating that
the case is of special public importance. The clerk shall
immediately furnish a copy of the certificate to the administrative
judge of the district court of the county in which the proceeding is
pending. On receiving the copy of the certificate, the
administrative judge shall immediately designate a judge to hear
and determine the proceeding. The designated judge shall promptly
assign the proceeding for hearing, participate in hearings, make
determinations, and cause the action to be expedited.
Sec. 140.010. NOTIFICATION TO LOCAL PROSECUTOR. (a) If
the attorney general investigates racketeering activity under this
chapter, then the attorney general shall use reasonable efforts to
provide notice to the district attorney or county attorney with
felony criminal jurisdiction in each county where the attorney
general determines the racketeering activity occurs or occurred.
If the attorney general intends to file suit under this chapter, the
attorney general shall provide notice of this intention to the
district attorney or county attorney with felony criminal
jurisdiction in the county where the attorney general intends to
file suit.
(b) The notices described in this section must describe or
otherwise identify the defendant or defendants of the suit or
investigation.
Sec. 140.011. COOPERATION WITH LOCAL AUTHORITIES. (a) A
district attorney or county attorney with felony criminal
jurisdiction that receives notice under Section 140.010 may notify
the attorney general of any pending criminal investigation or
prosecution relating to the subject matter of the racketeering
action.
(b) Upon receipt of a notice from a district attorney or
county attorney with felony criminal jurisdiction under Subsection
(a), the attorney general shall coordinate and cooperate with the
district attorney or county attorney with felony criminal
jurisdiction to ensure that the filing or prosecution of a suit
under this chapter does not interfere with any ongoing criminal
investigation or prosecution. The attorney general shall update
each such district attorney or county attorney with felony criminal
jurisdiction on matters affecting the suit or the investigation.
(c) If the district attorney or county attorney with felony
criminal jurisdiction in the county determines that a suit brought
under this chapter will interfere with an ongoing criminal
investigation or prosecution, the district attorney or county
attorney with felony criminal jurisdiction in the county may ask
the attorney general, in writing, to abate the suit. If the
attorney general determines that it is necessary for the suit to
continue, then the attorney general may ask the court for
permission to proceed, and shall provide notice of the request to
the district attorney or county attorney with felony criminal
jurisdiction who made the request to the attorney general. The
court may hold a hearing to determine this issue, with the burden of
persuasion being upon the attorney general. A hearing held under
this subsection may, at the request of either party, be conducted in
camera to protect the integrity of the ongoing investigation or
prosecution, as well as the identity of any person or enterprise
then under investigation or prosecution.
Sec. 140.012. DISPOSITION AND SHARING OF ASSETS. (a) Any
awards issued in an action brought under this chapter shall, by
court order, be paid in accordance with this section.
(b) The court shall order that 80 percent of any award
issued under this chapter be paid to the State of Texas. The
remaining 20 percent of the award shall be shared, on a pro rata
basis, by and among any law enforcement agencies determined by the
court to have assisted in the investigation and furtherance of the
suit.
(c) The first $10 million that is paid to the state under
this chapter in any given fiscal year, after taking into account any
costs of suit, including reasonable attorney's fees and court
costs, shall be dedicated to the compensation to victims of crime
fund established under Subchapter B, Chapter 56, Code of Criminal
Procedure.
Sec. 140.013. PREVIOUSLY SEIZED ASSETS. Notwithstanding
any other provision of this chapter, no remedies provided by this
chapter may be assessed against, and the attorney general may not
claim or pursue in a suit brought under this chapter, any proceeds,
contraband, or other property of any kind over which a law
enforcement authority has previously asserted jurisdiction under
Chapter 59, Code of Criminal Procedure, at the time a suit under
this chapter was filed.
SECTION 2. (a) The changes in law made by Chapter 140,
Civil Practice and Remedies Code, as added by this Act, apply only
to an offense committed on or after the effective date of this Act.
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.
(b) An offense committed before the effective date of this
Act is covered by the law in effect when the offense was committed,
and the former law is continued in effect for that purpose.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2009.
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