Victims of Corporate Fraud Compensation Fund.

Existing law establishes the Victims of Corporate Fraud Compensation Fund, a continuously appropriated fund, within the State Treasury administered by the Secretary of State, the sole purpose of which is to provide restitution to victims of corporate fraud. This bill would revise and recast those provisions, including eliminating the requirement that the Secretary of State adopt those regulations. The bill would provide that an aggrieved person who obtains a final judgment, as specified, against a corporation based upon the corporation's fraud, misrepresentation, or deceit, made with intent to defraud, may file an application with the Secretary of State for payment from the fund for the amount unpaid on the judgment that represents the awarded actual and direct loss to the claimant in the final judgment. The bill would limit the amount to be paid from the fund to $50,000 with respect to any one claimant, as specified. This bill would require a claimant to apply for restitution on a form prescribed by the Secretary of State including specified information and representations. The bill would establish procedures for the Secretary of State in determining whether a claim shall be paid, including giving written notice to the claimant and the corporation, as specified. The bill would prescribe procedures for judicial review of a denied claim. The bill would require a corporation to reimburse the fund and pay interest for any payment made from the fund by the Secretary of State in settlement of a claim or toward satisfaction of a final judgment against the corporation, as specified. The bill would make it a crime to file a document under these provisions that is false or contains willful, material misstatements. The bill would apply its provisions to applications submitted to the Secretary of State on or after January 1, 2013. The bill would make conforming changes. Because this bill would create new crimes, the bill would create a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.