2014 -- H 7517

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LC004281

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO CRIMINAL OFFENSES -- FRAUD AND FALSE DEALING

     Introduced By: Representatives Kennedy, Keable, Kazarian, Naughton, and Williams

     Date Introduced: February 13, 2014

     Referred To: House Judiciary

     (Attorney General)

It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 11-18 of the General Laws entitled "Fraud and False Dealing" is

hereby amended by adding thereto the following section:

     11-18-34. Residential mortgage fraud. -- (a) For purposes of this section, the following

definitions shall apply:

     (1) "Mortgage lending process" means the process through which a person seeks or

obtains a residential mortgage loan including, but not limited to, solicitation, application, or

origination, negotiation of terms, real estate appraisals, third-party provider services,

underwriting, signing and closing, and funding of the loan. Documents involved in the mortgage

lending process include, but are not limited to, uniform residential loan applications or other loan

applications; appraisal reports: HUD-1 settlement statements; verifications or certifications

regarding occupancy intentions; supporting personal documentation for loan applications such as

W-2 forms, verifications of income and employment, bank statements, tax returns, and payroll

stubs; and any required disclosures.

     (2) "Pattern of residential mortgage fraud" means one or more misstatements,

misrepresentations, or omissions made during the mortgage lending process that involve two (2)

or more residential properties, which have the same or similar intents, results, accomplices,

victims, or methods of commission or otherwise are interrelated by distinguishing characteristics.

     (3) "Person" means an individual, corporation, company, limited liability company,

partnership, trustee, association, or any other entity.

     (4) "Residential mortgage loan" means a loan or agreement to extend credit made to a

person, which loan is secured by a deed to secure debt, security deed, mortgage, security interest,

deed of trust, or other document representing a security interest or lien upon any interest in a one

to four family residential property, including the renewal or refinancing of any such loan.

     (5) "Victim" means a person who experienced personal loss, including, but not limited to

monetary loss, due to a violation subsection (b).

     (b) A person commits residential mortgage fraud when, with the intent to defraud, such

person:

     (1) Knowingly makes any deliberate written misstatement, misrepresentation or omission

during the mortgage lending process with the intention that a mortgage lender, a borrower, or any

other person that is involved in the mortgage lending process will rely on such written

misstatement, misrepresentation or omission;

     (2) Knowingly uses or facilitates the use or attempts to use or facilitate the use of any

written misstatement, misrepresentation or omission during the mortgage lending process with the

intention that a mortgage lender, a borrower or any other person that is involved in the mortgage

lending process relies on it;

     (3) Receives or attempts to receive proceeds or any other funds in connection with a

residential mortgage lending transaction that the person knew or should have known resulted

from an act or acts constituting residential mortgage fraud;

     (4) Conspires with or solicits another to engage in an act or acts constituting residential

mortgage fraud; or

     (5) Files or causes to be filed with a city or town clerk any document involved in

mortgage lending process that the person knows to contain a deliberate misstatement,

misrepresentation or omission.

     (c) Any person who violates this section, upon conviction, shall be subject to the

following penalties:

     (1) Any person who commits an offense under subsection (b) shall be guilty of a felony

subject to imprisonment for not more than five (5) years, a fine of not more than five thousand

dollars ($5,000), or both.

     (2) Any person who engages or participates in a pattern of residential mortgage fraud or a

conspiracy or endeavor to engage or participate in a pattern of residential mortgage fraud shall be

guilty of a felony subject to imprisonment for not more than twenty (20) years, a fine of not more

than one hundred thousand dollars ($100,000), or both.

     (3) Any person who commits an offense and knew or had reason to know that the victim

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was vulnerable due to age, disability, infirmity, reduced physical or mental capacity, national

origin or ancestry, shall be guilty of a felony subject to imprisonment for not more than fifteen

(15) years, a fine of not more than fifteen thousand dollars ($15,000), or both.

     (4) The court shall order restitution to any victim.

     (5) In addition to any criminal penalties above, any person found in violation of this

section shall forfeit anything of value received by him or her in the course of such violation.

Action for recovery of these amounts shall be brought in the superior court of any county in

which any element of the crime occurred. The actions shall be brought in the name of the state by

the attorney general for the benefit and use of the state.

     (d) It shall be sufficient in any prosecution for residential mortgage fraud to show that the

accused party committed the act with the intent to defraud. It shall be unnecessary to show that

any particular person was harmed financially in the transaction or that the person to whom the

deliberate misstatement, misrepresentation or omission was made relied upon the misstatement,

misrepresentation or omission.

     SECTION 2. Section 12-12-17 of the General Laws in Chapter 12-12 entitled

"Indictments, Informations and Complaints" is hereby amended to read as follows:

     12-12-17. Statute of limitations. -- (a) There shall be no statute of limitations for the

following offenses: treason against the state, any homicide, arson, first degree arson, second

degree arson, third degree arson, burglary, counterfeiting, forgery, robbery, rape, first degree

sexual assault, first degree child molestation sexual assault, second degree child molestation

sexual assault, bigamy, manufacturing, selling, distribution or possession with intent to

manufacture, sell or distribute a controlled substance under the Uniform Controlled Substance

Act, chapter 28 of title 21, or any other offense for which the maximum penalty provided is life

imprisonment.

      (b) The statute of limitations for the following offenses shall be ten (10) years: larceny

under section 11-41-2 (receiving stolen goods), section 11-41-3 (embezzlement and fraudulent

conversion), section 11-41-4 (obtaining property by false pretenses or personation), section 11-

41-11 (embezzlement by bank officer or employee), section 11-41-12 (fraudulent conversion by

agent or factor), and section 11-41-13 (obtaining signature by false pretenses), or any larceny

which is punishable as a felony; any violation of chapter 7 of title 11 (bribery); any violation of

section 11-18-1 (giving false document to agent, employee, or public official); perjury; any

violation of chapter 42 of title 11 (threats and extortion); any violation of chapter 15 of title 7

(racketeer influenced and corrupt organizations); any violation of chapter 57 of title 11 (racketeer

violence); or any violation of chapter 36 of title 6 (antitrust law). ; any violation of § 11-41-11.1

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(unlawful appropriation); any violation of § 11-18-6 (false financial statement to obtain loan or

credit); any violation of §19-9-28 (false statement to obtain a loan); any violation of § 19-9-29

(bank fraud); or any violation of § 11-18-34 (residential mortgage fraud).

      (c) The statute of limitations for any other criminal offense shall be three (3) years unless

a longer statute of limitations is otherwise provided for in the general laws.

      (d) Any person who participates in any offense, either as a principal accessory, or

conspirator shall be subject to the same statute of limitations as if the person had committed the

substantive offense.

      (e) The statute of limitations for any violation of chapter 18.9 of title 23 (refuse

disposal), chapter 19 of title 23 (solid waste management corporation), chapter 19.1 of title 23

(hazardous waste management), chapter 12 of title 46 (water pollution), and chapter 13 of title 46

(public drinking water supply) shall be seven (7) years from the time that the facts constituting

the offense or violation shall have become known to law enforcement authorities, unless a longer

statute of limitations is otherwise provided for in the general laws.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO CRIMINAL OFFENSES -- FRAUD AND FALSE DEALING

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     This act would criminalize residential mortgage fraud and extend the statute of

limitations for the offenses of unlawful appropriation, false financial statement to obtain loan or

credit, false statement to obtain a loan, bank fraud and residential mortgage fraud.

     This act would take effect upon passage.

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