2016 -- S 2634

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO CRIMINAL OFFENSES -- FRAUD AND FALSE DEALING

     

     Introduced By: Senators Pichardo, Nesselbush, Jabour, and Raptakis

     Date Introduced: February 25, 2016

     Referred To: Senate Judiciary

     (Attorney General)

It is enacted by the General Assembly as follows:

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

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hereby amended by adding thereto the following section:

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     11-18-34. Residential mortgage fraud. -- (a) As used in this section, the following

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words and terms shall have the following meanings:

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

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

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

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

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

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applications; appraisal reports; title reports or title policies; homeowners insurance policies;

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HUD-1 settlement statements; verifications or certifications regarding occupancy intentions;

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supporting personal documentation for loan applications such as W-2 forms, verifications of

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income and employment, bank statements, tax returns, and payroll stubs; and any required

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disclosures.

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     (2) “Pattern of residential mortgage fraud” means one or more violations of subsection

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(b)(1) or (b)(2) of this section that involve two (2) or more residential mortgage loans and that

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have the same or similar intent, result, or method of commission or otherwise result from

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comparable actions or omissions.

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     (3) “Person” means an individual, a business, sole proprietorship, partnership,

 

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corporation, limited liability company, association, trust, estate, or any other legal entity.

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

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

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interest, deed of trust, promissory note, or other document representing a security interest or lien

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upon any interest in a one to four (4) family residential property including the renewal,

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modification or refinancing of any such loan.

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

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

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

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person:

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     (1) Knowingly makes an omission of a material fact, or a written misrepresentation or

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misstatement of a material fact during the mortgage lending process with the intention that a

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

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will rely on the absence of such material fact or the making of such material misrepresentation or

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misstatement; or

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

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omission of a material fact or written misrepresentation or misstatement of a material fact during

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

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person that is involved in the mortgage lending process will rely on the absence of such material

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fact or the making of such material misrepresentation or misstatement; or

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

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

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from an act or acts constituting a violation of subsection (b)(1) or (b)(2) of this section;

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

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of subsection (b)(1) or (b)(2) of this section; or

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

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mortgage lending process that the person knows to contain an omission of a material fact or a

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written misrepresentation or misstatement of a material fact.

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

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following penalties:

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     (1) Any person who commits an offense under subsection (b) of this section shall be

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guilty of a felony and subject to imprisonment for not more than ten (10) years, a fine of not more

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than ten thousand dollars ($10,000), or both.

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

 

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conspires or endeavors to engage or participate in a pattern of residential mortgage fraud shall be

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

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

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     (3) Any person who commits an offense and knew that the victim was vulnerable due to

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age, disability, infirmity, reduced physical or mental capacity, or national origin shall be guilty of

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a felony and subject to imprisonment for not more than fifteen (15) years, a fine of not more than

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fifteen thousand dollars ($15,000), or both.

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

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     (5) In addition to any criminal penalties provided for in this section, any person found in

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violation of this section shall forfeit anything of value received by them in the course of such

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violation less any restitution they actually paid pursuant to subsection (c)(4) of this section.

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

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

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

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

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

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

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material misrepresentation, misstatement or omission was made relied upon the

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misrepresentation, misstatement or omission.

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

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

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

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

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

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

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

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

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

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imprisonment.

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

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

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11-41-4 (obtaining property by false pretenses or personation), § 11-41-11 (embezzlement by

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bank officer or employee), § 11-41-12 (fraudulent conversion by agent or factor), and § 11-41-13

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(obtaining signature by false pretenses), or any larceny that is punishable as a felony; any

 

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violation of chapter 7 of title 11 (bribery); any violation of § 11-18-1 (giving false document to

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agent, employee, or public official); perjury; any violation of chapter 42 of title 11 (threats and

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extortion); any violation of chapter 15 of title 7 (racketeer influenced and corrupt organizations);

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any violation of chapter 57 of title 11 (racketeer violence); any violation of chapter 36 of title 6

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(antitrust law); or any violation of § 11-68-2 (exploitation of an elder); any violation of §11-41-

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

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

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

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

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

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

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

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substantive offense.

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

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

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

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

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

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

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     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

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limitations for certain criminal offenses including unlawful appropriation, false financial

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

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mortgage fraud.

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     This act would take effect upon passage.

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