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Introduced Version House Bill 3044 History

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H. B. 3044

 

         (By Delegates D. Poling, Frazier, Miley, Brown,

           Caputo, Longstreth, Moore, Skaff, Ellem,

Hamilton and Sobonya)

         [Introduced February 7, 2011; referred to the

         Committee on the Judiciary then Finance.]

 

 

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §61-14-1, §61-14-2, §61-14-3, §61-14-4, §61-14-5, §61-14-6, §61-14-7 and §61-14-8, all relating to civil forfeiture actions related to criminal activity; establishing general rules and procedures for civil forfeiture proceedings for crimes of fraud; authorizing civil proceedings pertaining to property and assets used in, acquired, gained or flowing from various criminal fraudulent activities; providing definitions; statement of purpose of forfeitures for certain offenses of fraud; property subject to forfeiture; provisional title to property subject to forfeiture; seizure of property; seizure and disposition of forfeited and other property; interference with or diminishing forfeitable property; providing right to trial by jury; care of property in law-enforcement custody; sale of forfeited property, application of proceeds and forfeiture funds; and providing exceptions.

Be it enacted by the Legislature of West Virginia:

    That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §61-14-1, §61-14-2, §61-14-3, §61-14-4, §61-14-5, §61-14-6, §61-14-7 and §61-14-8, all to read as follows:

ARTICLE 14. WEST VIRGINIA CIVIL FORFEITURE FOR FRAUDULENT CRIMES                 AND OFFENSES.

§61-14-1. Purpose and scope.

    (a) The provisions of this article establish civil forfeiture guidelines and procedures to be followed in cases in which forfeiture of property or restitution is sought for the specified crimes and offenses set forth in subsection (c) of this section.

    (b) Forfeitures under this article are governed by all of the following purposes:

    (1) To provide economic disincentives and remedies to deter and offset the economic effect of offenses by seizing and forfeiting contraband, proceeds, and certain instrumentalities associated with the commission of acts of fraud against the state and its citizens, including acts of fraud against the elderly;

    (2) To provide a means for restitution of victims of fraudulent offenses and fraudulent criminal enterprises;

    (3) To protect third parties from wrongful forfeiture of their property; and

    (4) To ensure that seizures and forfeitures of instrumentalities are proportionate to the offense committed.

    (c) Offenses for which property may be forfeited pursuant to provisions of this article include any act or omission which, when committed by an adult, constitutes one or more of the following misdemeanor or felony offenses of fraud:

    (1) As defined in section nine, article eight, chapter thirty-one-a of this code as against banking institutions;

    (2) As defined in section four, article three-c of this chapter as against computer fraud;

    (3) As defined in section thirteen, article three-c of this chapter as fraudulent activity in relation to access devices;

    (4) As defined in section twenty-four-a, article three of this chapter as against credit cards;

    (5) As defined in section twenty-four, article three of this chapter as against disposing of property to defraud creditors;

    (6) As defined in section twenty-four, article three of this chapter as against money, property, goods and services;

    (7) As defined in section twenty-four-d, article three of this chapter as common schemes against money, property, goods and services;

    (8) As defined in section fifty-seven, article three of this chapter as against bogus receipts or universal product codes;

    (9) Any crime of fraud against the elderly as “elderly” is defined in section three-k, article five-p, chapter sixteen of this code; and

    (10) Any crime listed in section fifty-four, article three of this chapter as against identity theft.

    (d) The provisions of this article do not apply to or amend the provisions of article seven, chapter sixty-a of this code, commonly known as the “West Virginia Contraband Forfeiture Act”.

§61-14-2. Definitions.

    As used in this article:

    (1) “Appropriate person” means any member of the State Police, any sheriff, and deputy sheriff, and municipal police officer or other law-enforcement officer who is authorized to enforce any offense covered by this article and has the general authority to make arrests for any offense covered by this article, and execute and serve search warrants, arrest warrants, subpoenas and summonses issued under the authority of the state.

    (2) “Aircraft” has the same meaning as described in section one, article two-a, chapter twenty-nine of this code.

    (3) “Computers,” “computer networks,” “computer systems,” “computer software,” and “telecommunications device” have the same meanings as described in section three, article three-c, chapter sixty-one of this chapter.

    (4) “Financial institution” means a bank, credit union, savings and loan association, or a licensee or registrant as defined in section two, article one, chapter thirty-one-a of this code.

    (5) “Firearm” and “deadly weapon” have the same meanings as in section two, article seven of this chapter.

    (6) “Innocent person” includes any bona fide purchaser of property that is subject to forfeiture, including any person who establishes a valid claim to or interest in the property in accordance with the provisions of section seven, chapter sixty-a of this code and any victim of an alleged offense.

    (7) “Instrumentality” means property otherwise lawful to possess that is used in or intended to be used in an offense. An “instrumentality” may include, but is not limited to, a firearm, a mobile instrumentality, a computer, a computer network, a computer system, computer software, a telecommunications device, money, and any other means of exchange.

    (8) “Law-enforcement officer” includes, but is not limited to, the definition contained in section three, article ten, chapter fifteen of this code.

    (9) “Mobile instrumentality” means an instrumentality that is inherently mobile and used in the routine transport of persons. “Mobile instrumentality” includes, but is not limited to, any vehicle, any watercraft, and any aircraft.

    (10) “Money” has the same meaning as in section one, article six, chapter forty-seven of this code.

    (11) “Offense” means any act or omission that could be charged as a criminal offense, whether or not a formal criminal prosecution began at the time the forfeiture is initiated.

    (12) “Proceeds” means both of the following:

    (A) In cases involving fraudulent or lawful goods, services, or activities, “proceeds” means any property derived directly or indirectly from an offense. “Proceeds” may include, but is not limited to, money or any other means of exchange. “Proceeds” is not limited to the net gain or profit realized from the offense.

    (B) In cases involving lawful goods or services that are sold or provided in an unlawful manner, “proceeds” means the amount of money or other means of exchange acquired through the illegal transactions resulting in the forfeiture, less the direct costs lawfully incurred in providing the goods or services. The lawful costs deduction does not include any part of the overhead expenses of, or income taxes paid by, the entity providing the goods or services. The alleged offender or delinquent child has the burden to prove that any costs are lawfully incurred.

    (13) “Property” means “property” as defined in section ten, article two, chapter two of this code and any benefit, privilege, claim, position, interest in an enterprise, or right derived, directly or indirectly, from the offense.

    (14) “Property subject to forfeiture” includes contraband and proceeds and may include instrumentalities as provided in this article.

    (15) “Prosecutor” means any duly elected or appointed prosecutor or special prosecutor.

    (16) “Vehicle” has the same meaning as in section four, article one, chapter seventeen and section one, article one, chapter seventeen-b of this code.

    (17) “Watercraft” means any motorized or nonmotorized vessel.

§61-14-3. Property subject to forfeiture.

    (a) The following property is subject to forfeiture to the state or a political subdivision pursuant to this article:

    (1) Contraband involved in any offense set forth in subsection (c), section one of this article;

    (2) Proceeds derived from or acquired through the commission of any offense set forth in subsection (c), section one of this article;

    (3) An instrumentality that is used in or intended to be used in the commission or facilitation of any offense listed in subsection (c) of section one of this article: Provided, That the use or intended use is consistent with an attempt to commit, complicity in committing or a conspiracy to commit the described offense. 

    (b) In determining whether an alleged instrumentality was used in or was intended to be used in the commission or facilitation of an offense or an attempt, complicity, or conspiracy to commit an offense in a manner sufficient to warrant its forfeiture, the trier of fact shall consider the following factors the trier of fact determines are relevant:

    (1) Whether the offense could not have been committed or attempted but for the presence of the instrumentality;

    (2) Whether the primary purpose in using the instrumentality was to commit or attempt to commit the offense;

    (3) The extent to which the instrumentality furthered the commission of, or attempt to commit, the offense.

§61-14-4. Procedures for seizure of forfeitable property.

    (a) Seizure of property made subject to forfeiture by the provisions of this article may be made upon process issued by any court of record having jurisdiction over the property.

    (b) Notwithstanding the provisions of subsection (a) of this section, seizure of property subject to forfeiture by the provisions of this article may be made without process if:

    (1) The seizure is incident to a lawful arrest or pursuant to a search under a search warrant or an inspection warrant;

    (2) The property subject to seizure has been the subject of a prior judgment in favor of the state in a forfeiture proceeding based upon this article;

    (3) The appropriate person has probable cause to believe that the property is directly or indirectly dangerous to health or safety; or

    (4) The appropriate person has probable cause to believe that the property was used or intended for use in the commission or facilitation of any offense listed in subsection (c) of section one of this article.

    (c) In the event of seizure pursuant to subsection (b) of this section, forfeiture proceedings shall be instituted within ninety days of the seizure thereof.

    (d) Property taken or detained under this section is not subject to replevin, but is deemed to be in the custody of the appropriate person, subject only to the orders and decrees of the court having jurisdiction over the forfeiture proceedings. When property is seized under this article, the appropriate person may:

    (1) Place the property under seal;

    (2) Remove the property to a place designated by him or her;     (3) Require the appropriate law-enforcement agency to take custody of the property and remove it to an appropriate location for disposition in accordance with law; or

    (4) In the case of seized moneys, securities or other negotiable instruments, place the assets in any interest-bearing depository insured by an agency of the federal government.

    The requirements of this subsection pertaining to the removal of seized property are not mandatory in the case of real property and appurtenances thereto.

§61-14-5. Procedures for forfeiture.

    (a) The following procedures for forfeiture shall be followed:

    (1) Any proceeding wherein the state seeks forfeiture of property subject to forfeiture under this section shall be a civil proceeding. A petition for forfeiture may be filed on behalf of the state and any law-enforcement agency making a seizure under this article by the prosecuting attorney of a county, or duly appointed special prosecutor;

    (2) A petition for forfeiture may be filed and proceedings held thereon in the circuit court of the county wherein the seizure was made or the circuit court of the county wherein any owner of the property subject to forfeiture may reside;

    (3) Any civil trial stemming from a petition for forfeiture brought under this article at the demand of either party shall be by jury;

    (4) A petition for forfeiture of the seized property shall be filed within ninety days after the seizure of the property in question. The petition shall be verified by oath or affirmation of a law-enforcement officer representing the law-enforcement agency responsible for the seizure or the prosecuting attorney and shall contain the following:

    (A) A description of the property seized;

    (B) A statement as to who is responsible for the seizure;

    (C) A statement of the time and place of seizure;

    (D) The identity of the owner or owners of the property, if known;

    (E) The identity of the person or persons in possession of the property at the time seized, if known;

    (F) A statement of facts upon which probable cause for belief that the seized property is subject to forfeiture pursuant to the provisions of this article is based;

    (G) The identity of all persons or corporations having a perfected security interest or lien in the subject property, as well as the identity of all persons or corporations known to the affiant who may be holding a possessory or statutory lien against the property; and

    (H) A prayer for an order directing forfeiture of the seized property to the state, and vesting ownership of the property in the state.

    (b) At the time of filing or as soon as practicable thereafter, a copy of the petition for forfeiture shall be served upon the owner or owners of the seized property, as well as all holders of a perfected security interest or lien or of a possessory or statutory lien in the same class, if known. Should diligent efforts fail to disclose the lawful owner or owners of the seized property, a copy of the petition for forfeiture shall be served upon any person who was in possession or alleged to be in possession of the property at the time of seizure, where the person’s identity is known. The above service shall be made pursuant to the provisions of the West Virginia Rules of Civil Procedure. Any copy of the petition for forfeiture so served shall include a notice substantially as follows:

    “To any claimant to the within described property: You have the right to file an answer to this petition setting forth your title in, and right to possession of, the property within thirty days from the service hereof. If you fail to file an answer, a final order forfeiting the property to the state will be entered, and the order is not subject to appeal.”

    If no owner or possessors, lienholders or holders of a security interest is found, then the service may be made by Class II legal publication in accordance with the provisions of article three, chapter fifty-nine of this code, and the publication area is the county in which the property was located at the time of seizure and the county in which the petition for forfeiture is filed.

    (c) In addition to the requirements of subsection (b) of this section, the prosecuting attorney or law-enforcement officer upon whose oath or affirmation the petition for forfeiture is based, shall be responsible for the publication of a further notice. The further notice that a petition for forfeiture has been filed shall be published by Class II legal advertisement in accordance with article three, chapter fifty nine of this code. The publication area is the county in which the property was seized and the county in which the petition for forfeiture is filed. The notice shall advise any claimant to the property of their right to file a claim on or before the date set forth in the notice, which date may not be less than thirty days from the date of the first publication. The notice shall specify that any claim must clearly state the identity of the claimant and an address where legal process can be served upon that person. In addition, the notice shall contain the following information:

    (1) A description of the property seized;

    (2) A statement as to who is responsible for the seizure;

    (3) A statement of the time and place of seizure;

    (4) The identity of the owner or owners of the property, if known;

    (5) The identity of the person or persons in possession of the property at the time of seizure, if known; and

    (6) A statement that prayer for an order directing forfeiture of the seized property to the state, and vesting ownership of the property in the state, shall be requested of the court.

    (d) If no answer or claim is filed within thirty days of the date of service of the petition pursuant to subsection (b) of this section, or within thirty days of the first publication pursuant to subsection (b) of this section, the court shall enter an order forfeiting the seized property to the state. If any claim to the seized property is timely filed, a time and place shall be set for a hearing upon the claim. The claimant or claimants shall be given notice of the hearing not less than ten days prior to the date set for the hearing.

    (e) At the hearing upon the claim or claims, the state has the burden of proving by a preponderance of the evidence that the seized property is subject to forfeiture pursuant to the provisions of this article.

    (f) Any order forfeiting property to the state and entered pursuant to this section perfects the state’s right, title and interest in the forfeited property and relates back to the date of seizure: Provided, That in any proceeding under this article the circuit court shall in its final order make specific findings with respect to whether or not probable cause to seize the property existed at the time of the seizure.

    (g) During the pendency of a forfeiture proceeding, it is unlawful for any property owner or holder of a bona fide security interest or other valid lien-holder to transfer or attempt to transfer any ownership interest or security interest in seized property with the intent to defeat the purpose of this article, and the court wherein the petition for forfeiture is filed may enjoin a property owner or holder of a security interest or other lien-holder from making such a transfer should one come to its attention. Any such transfer, that is made in violation of the provisions of this subsection, shall have no effect upon an order of the court forfeiting seized property to the state if a notice of lis pendens is filed prior to the recording of the instrument of transfer.

    (h) The court may void any transfer of property made before or after a forfeiture proceeding has been commenced, which is subject to forfeiture, if the transfer was not to a bona fide purchaser without notice for value.

    (i) An appeal of a decision of the circuit court concerning a forfeiture proceeding brought pursuant to this article must be filed within one hundred twenty days of the date of entry of the final appealable order. The appellant is required to give notice of intent to appeal within thirty days of the entry of the appealable order.

§61-14-6. Innocent owner defense.

    (a) A mobile instrumentality used by any person as a common carrier in the transaction of business as a common carrier may not be forfeited under this article unless it appears that the person owning the mobile instrumentality is a consenting party or privy to the underlying criminal activity.

    (b) A mobile instrumentality may not be forfeited under the provisions of this article if the person owning the mobile instrumentality establishes that he or she neither knew, nor had reason to know, that the mobile instrumentality was being employed or was likely to be used to facilitate the underlying criminal activity.

    (c) A bona fide security interest or other valid lien in any mobile instrumentality may not be forfeited under the provisions of this article, unless the state proves by a preponderance of the evidence that the holder of the security interest or lien either knew, or had reason to know, that the mobile instrumentality was being used or was likely to be used to facilitate the underlying criminal activity.

    (d) No moneys, bonds, negotiable instruments, securities or other things of value obtained by or traceable as proceeds of fraudulent activity or used as instrumentalities to commit fraudulent acts covered by this article may be forfeited to the extent of the interest of an innocent owner or lienholder, who establishes by a preponderance of the evidence that the fraudulent activity was committed without his or her knowledge or consent.

    (e) No real property or real property interest things of value obtained by or traceable as proceeds of fraudulent activity or used as instrumentalities to commit fraudulent acts covered by this article may be forfeited to the extent of the interest of an innocent owner or lienholder, who establishes by a preponderance of the evidence that the fraudulent activity was committed without his or her knowledge or consent.

    (f) Notwithstanding any other provisions of this article to the contrary, any items of real property or any items of tangible personal property sold to a bona fide purchaser are not subject to forfeiture unless the state establishes by clear and convincing proof that the bona fide purchaser knew or should have known that the property had been used to facilitate the offense of fraud or were acquired with the proceeds of one or more of the fraudulent offenses listed in subsection (c) of section one of this article within three years preceding the sale.

§61-14-7. Disposition of forfeited moneys, securities or other negotiable instruments; distribution of proceeds.

    (a) Whenever moneys, securities or other negotiable instruments are forfeited under the provisions of this article, the proceeds shall first be distributed to satisfy any order of restitution ordered to the victim or victims of the fraudulent offense or offenses in a related criminal proceeding, or to satisfy any recovery ordered for the person harmed in a civil forfeiture case, unless paid from other assets.

    (b) Any funds which remain after the distribution of the proceeds remaining after distribution pursuant to subsection (a) of this section shall be distributed as follows:

    (1) Ten percent of the remaining proceeds shall be tendered to the office of the prosecuting attorney which initiated the forfeiture proceeding;

    (2) Twenty percent to the Regional Jail Authority to offset the per diem rate for every county;

    (3) Seventy percent of the remaining funds shall be deposited in a special law-enforcement investigation fund. The fund may be placed in any interest-bearing depository insured by an agency of the federal government. The fund shall be administered by the chief of the law-enforcement agency that seized the forfeited property; and

    (c) No funds may be expended from the special law-enforcement investigation fund except as follows:

    (1) In the case of the funds belonging to the Department of Public Safety, the funds may only be expended at the direction of the superintendent of the department and in accordance with the provisions of section fifteen, article two, chapter five-a of this code and the provisions of subsection (j), section two, article two, chapter twelve of this code;

    (2) In the case of funds belonging to the office of either the sheriff or prosecuting attorney of any county in which the special fund has been created, the funds therein may only be expended in the manner provided in sections four and five, article five, chapter seven of this code; and

    (3) In the case of funds belonging to the police department of any municipality in which the special fund has been created, the funds therein may only be expended in the manner provided in section twenty-two, article thirteen, chapter eight of this code.

§61-14-8. Disposition of other forfeited property; distribution of proceeds.

    (a) When property other than that referred to in section six of this article is forfeited under this article, the circuit court ordering the forfeiture, upon application by the prosecuting attorney or the chief of the law-enforcement agency that seized said forfeited property, may direct that:

    (1) Title to the forfeited property be vested in the law-enforcement agency so petitioning; or

    (2) The law-enforcement agency responsible for the seizure to retain the property for official use; or

    (3) The forfeited property shall be offered at public auction to the highest bidder for cash. Notice of the public auction shall be published as a Class III legal advertisement in accordance with article three, chapter fifty-nine of this code. The publication area is the county where the public auction will be held.

    (b) When a law-enforcement agency receives property pursuant to this section, the court may, upon request of the prosecuting attorney initiating the forfeiture proceeding, require the law-enforcement agency to pay unto the office of said prosecuting attorney a sum not to exceed ten percent of the value of the property received to compensate said office for actual costs and expenses incurred.

    (c) The proceeds of every public sale conducted pursuant to this section shall be paid and applied as follows:

    (1)First, to the balance due on any security interest preserved by the court;

    (2) Second, to the costs incurred in the storage, maintenance and security of the property;

    (3) Third, to the costs incurred in selling the property; and     (4) Fourth, to satisfy any order of restitution ordered to the victim or victims of the fraudulent offense or offenses in a related criminal proceeding, or to satisfy any recovery ordered for the person harmed in a civil forfeiture case, unless paid from other assets.

    (d) Any proceeds of a public sale remaining after distribution pursuant to subsection (c) of this section shall be distributed as follows:

    (1) Ten percent of the proceeds shall be tendered to the office of the prosecuting attorney who initiated the forfeiture proceeding.

    (2) Twenty percent to the Regional Jail Authority to offset the per diem rate for every county;

    (3) (A) Seventy percent divided among the investigating agencies through a memo of understanding, with the proceeds to be deposited in a special law-enforcement investigation fund. Such fund shall be administered by the chief of the law-enforcement agency that seized the forfeited property sold and shall take the form of an interest-bearing account with any interest earned to be compounded to the fund. Any funds deposited in the special law-enforcement investigative fund pursuant to this article may be expended only to defray the costs of protracted or complex investigations, to provide additional technical equipment or expertise, to provide matching funds to obtain federal grants or for such other law-enforcement purposes as the chief of the law-enforcement agency may deem appropriate; however, these funds may not be utilized for regular operations of the agency.

    (B) If more than one law-enforcement agency was substantially involved in effecting the seizure and forfeiture of property, the portion to be deposited into the law-enforcement investigative fund shall be equitably distributed among the law-enforcement agencies by the court wherein the petition for forfeiture was filed. In the event of a public sale of the property pursuant to subsection (a) of this section, the court shall equitably distribute forty percent of any proceeds remaining after distributions pursuant to subsection (c) and subdivisions (1) and (2), subsection (d) of this section among such law-enforcement agencies for deposit into their individual special law-enforcement investigative fund. Equitable distribution shall be based upon the overall contribution of the individual law-enforcement agency to the investigation which led to the seizure.

    (e) Upon the sale of any forfeited property for which title or registration is required by law, the state shall issue a title or registration certificate to any bona fide purchaser at a public sale of the property conducted pursuant to subsection (a) of this section. Upon the request of the law-enforcement agency receiving, pursuant to the order of the court, or electing to retain, pursuant to subsection (a) of this section, any forfeited property for which title or registration is required by law, the state shall issue a title or registration certificate to the appropriate governmental body.

    (f) Any funds expended pursuant to the provisions of this section, may only be expended in the manner provided in subsection (b), section seven hundred five of this article.

    (g) Every prosecuting attorney or law-enforcement agency receiving forfeited property or proceeds from the sale of forfeited property pursuant to this article shall submit an annual report to the body which has budgetary authority over the agency. The report shall specify the type and approximate value of all forfeited property and the amount of proceeds from the sale of forfeited property received in the preceding year. No county or municipality may use anticipated receipts of forfeited property in their budgetary process.

    (h) In lieu of the sale of any forfeited property subject to a bona fide security interest preserved by an order of the court, the law-enforcement agency receiving the forfeited property may pay the balance due on any security interest preserved by the court from funds budgeted to the office or department or from the special fund and retain possession of the forfeited property for official use pursuant to subsection (a) of this section.

    (i) In every case where property is forfeited, disposition of the forfeited property, in accordance with this article, shall be made within six months of the date upon which the court of jurisdiction orders forfeiture. Should the office or agency receiving the property fail either to place the property in official use or dispose of the property in accordance with law, the court of jurisdiction shall cause disposition of the property to be made with any proceeds therefrom to be awarded to the state.

    (j) No disposition may occur until all applicable periods for filing a notice of intent to appeal has expired and no party in interest has filed such notice. The filing of the notice of intent to appeal stays any such disposition until the appeal has been finally adjudicated or until the appeal period of one hundred eighty days has expired without an appeal having actually been taken or filed, unless a valid extension of the appeal has been granted by the circuit court under the provisions of section seven, article four, chapter fifty-eight of this code.

    (k) The special law-enforcement investigative funds of each law-enforcement agency may be placed in an interest-bearing depository insured by the federal government.


    NOTE: The purpose of this bill is to establish a civil forfeiture procedure by which property used to facilitate crimes of fraud or traceable as proceeds from crimes of fraud may be seized by the state. The procedures and protections established by this bill include due process measures and notice requirements which are designed to protect the interests of the affected property owners, including innocent persons, lienholders and bona fide third party transfers. The bill also provides for the disposition forfeited property, and includes provisions by which for a portion of the forfeited proceeds would be applied to satisfy orders of restitution or recovery to victims of the fraudulent activity.


    This article is new; therefore, it has been completely underscored.

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