The State of California imposes a stiff sentencing enhancement for convictions involving multiple charges of fraud or embezzlement involving large amounts of money.
This enhancement, also called the "white-collar sentencing enhancement," is embodied in California Penal Code 186.11 PC. It's also called the "freeze and seize law" because it empowers the government to seize assets to pay fines and restitution.
In other words, if you are charged and convicted of two or more felonies related to fraud or embezzlement involving a minimum amount of money, there is an automatic penalty enhancement that both imposes additional time in prison and the right to confiscate your assets to pay fines to the government and restitution to the victims.
PC 186 (a)(1) says, “Any person who commits two or more related felonies, a material element of which is fraud or embezzlement, which involve a pattern of related felony conduct, and the pattern of related felony conduct involves the taking of, or results in the loss by another person or entity of, more than $100,000, shall be punished, upon conviction of two or more felonies in a single criminal proceeding, in addition, and consecutive to the punishment prescribed for the felony offenses of which they were convicted, by an additional term of imprisonment in the state prison as specified in paragraph (2) or (3)."
"This enhancement shall be known as the aggravated white-collar crime enhancement. The aggravated white-collar crime enhancement shall only be imposed once in a single criminal proceeding. For purposes of this section, “pattern of related felony conduct” means engaging in at least two felonies that have the same or similar purpose, result, principals, victims, or methods of commission or are otherwise interrelated by distinguishing characteristics and that are not isolated events. For purposes of this section, “two or more related felonies” means felonies committed against two or more separate victims or against the same victim on two or more separate occasions.”
If your conviction qualifies for the enhancement, you could face additional time in prison. Let's review this state law in more detail below.
Penal Code 186.11 Explained
Under Penal Code 186.11 PC, the sentencing enhancement applies if:
- The state convicts you on two or more felony charges of fraud or embezzlement in a single criminal proceeding;
- The acts in question point to a pattern of felony conduct; and
- The crimes involve a loss or theft of more than $100,000.
Note that this enhancement only applies to crimes of fraud or embezzlement; however, since most white-collar crimes involve these acts, PC 186.11 has been named the "white-collar sentencing enhancement."
Generally speaking, you have committed fraud if you do something that causes undue loss or harm to someone else, usually financially, while also creating an unfair benefit or advantage for yourself.
Embezzlement refers to Penal Code 503 PC, in which you have been entrusted with someone else's property and fraudulently used that property for your benefit.
What Type of Crimes Apply to PC 186.11?
The most apparent crimes related to "freeze and seize" are the crimes of fraud and embezzlement since these crimes activate the sentencing enhancement.
California recognizes many types of fraud. They typically involve misrepresentation made to deceive someone or an entity for financial gain and include the following:
- Check fraud;
- Credit card fraud;
- Bank fraud,
- Identity theft,
- Mail fraud,
- Health care fraud,
- Real estate fraud.
As noted, Penal Code 503 PC embezzlement occurs when someone lawfully entrusted with money or property unlawfully appropriates it for their use or the use of a third party.
Embezzlement is often seen in cases involving public officials, corporate employees, or family members. It's a misdemeanor for less than $950 and a felony for any amount greater than $950.
What Are the Enhanced Penalties Under PC 186.11?
If you are convicted of two or more counts of felony fraud or embezzlement, and if the total loss exceeds $100,000, you can face the following additional penalties under PC 186.11:
Additional prison time. You will face an additional prison sentence of one to five years on top of any sentence you receive for the crimes. This sentence begins immediately after completing your original sentence and cannot be served simultaneously. The additional amount of prison time depends on the amount taken or lost:
- For amounts from $100,000 to $500,000: One to two additional years.
- For amounts exceeding $500,000: Up to five years additional.
Fines. Again, the fines assessed depend on the amount taken or lost:
- For amounts up to $500,000: the fine could be $100,000 or double the amount taken, whichever is greater.
- For amounts exceeding $500,000, the fine could be $500,000 or double the amount taken, whichever is greater.
Note that these fines do not represent restitution to the victim, which may be assessed separately.
"Freeze and Seize." PC 186.11 also gives the government authority to seize any assets under your control and any assets you transferred to a third party to avoid seizure, pay your fines, and pay restitution to the victims of your crimes. The assets the government may freeze or seize may include, but are not limited to:
- Bank accounts;
- Real estate;
- Business assets.
What Are Some Examples?
EXAMPLE 1: Tim is an accountant for a large firm. Over several years, he systematically embezzles more than $1 million from the company. Prosecutors don't attempt to charge him with every instance of embezzlement, but they manage to convict him on three counts of $150,000 in losses. Accordingly, Tim is subject to the sentencing enhancement under PC 186.11.
EXAMPLE 2: Karla is convicted on two counts of mail fraud involving a check-kiting scheme in which she defrauded people out of approximately $20,000. She is not subject to the white-collar sentencing enhancement under PC 186.11 because the amount stolen was below the required threshold.
EXAMPLE 3: Roger is convicted on one count of felony mail fraud, with a total loss of $150,000. While he will likely face fines and time in prison, Roger is not subject to the white-collar sentencing enhancement under PC 186.11. Although there is a high loss value, he must be convicted of two or more felonies to trigger the additional sentence.
What Are the Common Defenses?
There are numerous strategies that California criminal defense attorneys may employ to help you avoid sentencing enhancements under PC 186.11.
Since these enhancements only apply if you have been convicted of a crime, plea bargaining and negotiations are the most effective ways for an attorney to help you avoid white-collar sentencing enhancements, as discussed below.
Perhaps we can negotiate to reduce one of the two felonies to a misdemeanor offense. Recall that PC 186.11 only applies to felony convictions.
Perhaps we can have you plead guilty to one felony count of fraud in exchange for dropping the other charges.
Perhaps we can argue that there was a lack of Knowledge. For example, you had no knowledge that the finances you were dealing with had been embezzled or gained through fraud.
Perhaps through prefiling negotiations, we may persuade the prosecution not to file formal criminal charges (DA reject). You can phone us or review the case details using the contact form. Eisner Gorin LLP is based in Los Angeles, CA.