Penal Code § 186.11, California's freeze-and-seize law, allows prosecutors to seek court orders preserving property and financial assets in qualifying fraud and embezzlement cases involving more than $100,000.
The statute can affect real estate, investment accounts, business assets, bank accounts, and property transferred to third parties.
The law also creates an aggravated white-collar crime enhancement that can add consecutive prison time and substantial fines when prosecutors prove the statutory requirements.
For high-net-worth defendants, the asset-preservation provisions can become an immediate concern because a temporary restraining order can restrict access to property before the criminal case reaches trial.
What is the California “Freeze and Seize” Law?
Penal Code § 186.11 applies when a defendant is accused of qualifying fraud or embezzlement conduct involving more than $100,000.
The statute addresses two related issues: increased punishment for certain aggravated white-collar crimes and preservation of assets that may ultimately be used for restitution and fines. The aggravated white-collar crime enhancement generally requires:
- Two or more related felonies,
- A pattern of related felony conduct, and
- A taking or loss exceeding $100,000.
The statute defines a pattern as at least two felonies sharing a similar purpose, result, principals, victims, method, or other distinguishing characteristics.
The asset-preservation provisions are broader. Under § 186.11(d), prosecutors may seek protective relief when a qualifying fraud or embezzlement felony exceeds $100,000, even if the specific aggravated white-collar enhancement is not ultimately established.
This distinction is important. A person may face an immediate asset-freeze proceeding based on the allegations in the criminal case before the court determines whether the aggravated white-collar enhancement should ultimately apply.
How Does Penal Code § 186.11 Affect High-Value Assets?
Section 186.11 gives prosecutors several mechanisms for preventing assets from being transferred, sold, encumbered, or otherwise dissipated. Depending on the circumstances, the court may issue:
- A temporary restraining order
- A preliminary injunction
- An order restricting transfers or encumbrances
- A lis pendens against real property
- Appointment of a receiver to manage property or business assets
- An order directing financial institutions to disclose account information
- A bond or other undertaking in place of certain protective orders
The statute expressly reaches property located outside California. It also addresses property transferred to third parties after the alleged criminal conduct, subject to the statutory exception for bona fide purchases.
This can become particularly significant when prosecutors allege that proceeds were moved among corporations, trusts, investment accounts, family members, or other entities.
Real estate presents a separate concern. When prosecutors seek preservation of real property, § 186.11 requires a lis pendens identifying the property, owner of record, and assessor's parcel number. A lis pendens is simply a formal notification that alerts potential property buyers of active legal proceedings or disputes involving the property.
A restriction involving a high-value residence, commercial building, development project, or investment property can interfere with a planned sale or refinancing transaction.
Financial institutions can also become involved. The statute permits prosecutors to obtain an order requiring disclosure of account numbers and asset values and then identify particular accounts for restraining orders or other protective remedies.
When Can a Court Freeze Assets Under Penal Code § 186.11?
A prosecutor may file a petition seeking protective relief at the same time as, or after, filing the criminal charges. The petition must identify the criminal proceeding and the property or assets the prosecution seeks to protect.
A court may issue a temporary restraining order without advance notice in appropriate circumstances.
Under § 186.11(f), a sworn declaration from a peace officer with personal knowledge of the investigation may establish probable cause that qualifying fraud or embezzlement occurred and that the potential restitution and fines equal or exceed the value of the assets subject to the requested order.
The court may consider hearsay in deciding whether interim relief is appropriate. It weighs the likelihood that the prosecution will prevail, the risk that assets will be dissipated, and the potential harm to the defendant and other interested parties.
In other words, there is an important difference between the ultimate criminal burden of proof and the evidentiary showing used for temporary asset protection. The prosecution does not need to prove the criminal case beyond a reasonable doubt merely to obtain an interim restraining order.
How is Property Analyzed When Prosecutors Seek a Penal Code § 186.11 Freeze?
A freeze order can affect assets that have substantial legitimate value even when the defendant disputes the prosecution's characterization of the underlying transactions. The statutory analysis therefore requires careful separation of the alleged criminal proceeds from other property.
For example, an investment portfolio may contain funds accumulated years before the alleged offense, proceeds from unrelated investments, or assets belonging partly to another person.
A real estate portfolio may include properties acquired with legitimate income, mortgage financing, inherited funds, or independently owned corporate assets.
The ownership history and source of funds can therefore become significant evidence. Relevant records may include:
- Purchase and sale agreements
- Deeds and title records
- Mortgage documents
- Bank and brokerage statements
- Partnership and operating agreements
- Corporate accounting records
- Tax returns
- Trust documents
- Wire-transfer records
- Investment statements
- Records showing legitimate sources of income
Section 186.11 also expressly protects innocent third-party interests. The court must consider the interests of innocent spouses and others not involved in the alleged criminal activity.
Can Frozen Assets Be Used to Pay Legal Fees and Living Expenses?
Yes. Penal Code § 186.11 allows the court to consider releasing some protected property for reasonable legal fees, necessary living expenses, and bail. The court must weigh the defendant's needs against the public interest in preserving property for restitution and fines.
This issue can become particularly significant when most of a defendant's wealth is tied up in restricted accounts, real estate, privately held companies, or investment assets. A blanket freeze may create practical problems that have nothing to do with the ultimate merits of the criminal allegations.
The statute does not automatically release property. The defendant must establish why particular funds or assets should be made available, and the court considers the statutory factors governing preservation of property.
How Does the Aggravated White-Collar Crime Enhancement Increase Punishment?
Penal Code § 186.11(a) establishes additional consecutive prison terms when its requirements are satisfied.
For related felony conduct involving more than $500,000, the additional term is two, three, or five years. For amounts exceeding $100,000 but not more than $500,000, § 186.11(a)(3) incorporates the term specified in Penal Code § 12022.6.
Escalating enhancements under the law are based on the amount of loss or property value:
- More than $50,000: one additional year
- More than $200,000: two additional years
- More than $1 million: three additional years
- More than $3 million: four additional years
- Each additional $3 million beyond $3 million: one additional year
Enhancement under § 12022.6 must be charged in the accusatory pleading and admitted by the defendant or found true by the trier of fact (judge or jury) before the enhancement may be imposed.
Hypothetical Case Study: Challenging a $12 Million Asset Freeze in a Real Estate Fraud Prosecution
A Los Angeles real estate developer is charged with six felony counts involving alleged fraudulent representations to investors.
Prosecutors allege that the developer diverted approximately $2.4 million from several investment projects and charge the case under Penal Code § 186.11.
The prosecution also seeks a temporary restraining order covering approximately $12 million in assets, including three apartment buildings, a brokerage account, and an offshore investment account.
The prosecution argues that the entire portfolio should be preserved because the developer acquired several properties after receiving investor funds. It relies heavily on bank records and a financial investigator's declaration connecting transfers among the developer's companies.
Case Examination by Eisner Gorin LLP
Eisner Gorin LLP identifies a more complicated financial history. The apartment buildings were purchased years before the transactions underlying the criminal allegations.
Mortgage records show substantial third-party financing, while tax records establish that rental income and proceeds from unrelated property sales funded portions of the acquisitions. The brokerage account also contains securities purchased before the alleged scheme.
Our attorneys separately analyze the transactions attributed to each criminal count. They identify transfers that prosecutors had aggregated despite involving different projects and different sources of money.
Our team also presents records showing that one investment company, although controlled by the developer, held assets belonging in part to an unrelated business partner.
At the hearing, our firm argues that the prosecution has not established a sufficient basis to freeze the entire portfolio.
The attorneys seek release of assets unrelated to the alleged conduct, protection of the innocent partner's interest, and access to a defined portion of funds for legal fees and necessary expenses.
The court narrows the restraining order, releases the unrelated investment assets, and permits limited access to funds for legal expenses. The prosecution retains restrictions on assets directly implicated by the alleged investor transactions.
Related Federal & State Statutes
Understanding related criminal statutes and financial crime enhancements is critical because prosecutors frequently charge multiple code sections together to stack potential prison terms, restrict judicial discretion, and force high-stakes plea negotiations.
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California Penal Code § 487(a) (Grand Theft): Criminalizes the unlawful taking of money, labor, or real or personal property valued at more than $950.
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California Penal Code § 503 (Embezzlement): Penalizes the fraudulent appropriation of property by a person to whom it has been lawfully entrusted.
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California Penal Code § 186.10 (Money Laundering): Prohibits conducting financial transactions through monetary instruments or financial institutions with the intent to promote, facilitate, or disguise illegal proceeds.
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California Penal Code § 470 (Forgery): Criminalizes altering, falsifying, or creating false financial instruments, deeds, checks, or contracts with intent to defraud.
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California Penal Code § 532 (Theft by False Pretenses): Makes it a felony to knowingly and deliberately defraud another person of money, labor, or real or personal property using false representations or promises.
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18 U.S.C. § 1343 (Federal Wire Fraud): Prohibits executing or attempting to execute a scheme to defraud or obtain money or property through interstate or foreign wire communications.
Frequently Asked Questions (FAQs)
Reviewing these frequently asked questions is essential because understanding the procedural limits, mandatory sentencing structures, and defense strategies under PC § 186.11 helps defendants and their families make informed decisions during high-stakes criminal proceedings.
What is California's "Freeze and Seize" law under Penal Code § 186.11?
Penal Code § 186.11 allows California prosecutors to seek pre-trial court orders freezing property, real estate, bank accounts, and investment portfolios in fraud or embezzlement cases involving loss over $100,000.
Can prosecutors freeze assets before a defendant is convicted?
Yes; prosecutors can obtain temporary restraining orders or preliminary injunctions before trial upon showing probable cause that qualifying felony fraud occurred and that assets must be preserved for restitution and fines.
Can frozen assets under PC § 186.11 be released for living or legal expenses?
Yes; defendants can petition the court to release a portion of restricted property or funds to cover reasonable living expenses, attorney fees, and bail, subject to judicial balancing.
How does Penal Code § 186.11 affect real estate holdings?
Prosecutors can file a lis pendens against real property, which places a public cloud on the title and restricts sales, refinancing, or encumbrances on high-value residential or commercial holdings.
Are innocent spouses or business partners protected from an asset freeze?
Yes; PC § 186.11 explicitly directs courts to consider and protect the legitimate ownership rights of innocent third parties who were not involved in the alleged criminal activity.
What criminal enhancements apply under PC § 186.11 for high-value losses?
In addition to asset freezing, PC § 186.11 creates an aggravated white-collar crime enhancement, adding two, three, or five consecutive years in prison for pattern-based felony fraud schemes involving over $500,000.
The criminal defense attorneys at Eisner Gorin LLP can help you. Schedule your consultation by calling (818) 781-1570 or filling out the contact form. Our law firm is based in Los Angeles.
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