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Second Substitute S.B. 134


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House Floor Amendments 3-3-2008 je/sca
This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Thu, Feb 7, 2008 at 12:38 PM by rday. --> This document includes House Floor Amendments incorporated into the bill on Mon, Mar 3, 2008 at 1:58 PM by jeyring. -->
Senator Sheldon L. Killpack proposes the following substitute bill:


             1     
MORTGAGE FRAUD ACT

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Sheldon L. Killpack

             5     
House Sponsor: Paul Ray

             6     

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah Criminal Code relating to offenses against property and
             10      creating an offense of mortgage fraud.
             11      Highlighted Provisions:
             12          This bill:
             13          .    establishes penalties for certain conduct governed by the Real Estate Appraiser
             14      Licensing and Certification Act and the Utah Residential Mortgage Practices Act;
             15          .    requires the attorney general to hire a mortgage fraud prosecutor H. [ , paralegal,
             15a      and two
             16      investigators with primary responsibilities of investigating and prosecuting
             17      mortgage fraud
] .H
;
             18          .    enacts the Mortgage Fraud Act including:
             19              .    creating the crime of mortgage fraud;
             20              .    establishing penalties; and
             21              .    providing definitions; and
             22          .    includes mortgage fraud as an illegal activity under the Pattern of Illegal Activity
             23      Act.
             24      Monies Appropriated in this Bill:
             25          None



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             26
     Other Special Clauses:
             27          None
             28      Utah Code Sections Affected:
             29      AMENDS:
             30          61-2-21, as last amended by Laws of Utah 2007, Chapter 325
             31          61-2b-33, as last amended by Laws of Utah 2005, Chapter 199
             32          76-10-1602, as last amended by Laws of Utah 2007, Chapter 129
             33      ENACTS:
             34          61-2c-405, Utah Code Annotated 1953
             35          67-5-26, Utah Code Annotated 1953
             36          76-6-1201, Utah Code Annotated 1953
             37          76-6-1202, Utah Code Annotated 1953
             38          76-6-1203, Utah Code Annotated 1953
             39          76-6-1204, Utah Code Annotated 1953
             40     

             41      Be it enacted by the Legislature of the state of Utah:
             42          Section 1. Section 61-2-21 is amended to read:
             43           61-2-21. Remedies and action for violations.
             44          (1) (a) The director shall issue and serve upon a person an order directing that person to
             45      cease and desist from an act if:
             46          (i) the director has reason to believe that the person has been engaging, is about to
             47      engage, or is engaging in the act constituting a violation of this chapter; and
             48          (ii) it appears to the director that it would be in the public interest to stop the act.
             49          (b) Within ten days after receiving the order, the person upon whom the order is served
             50      may request an adjudicative proceeding.
             51          (c) Pending the hearing, any cease and desist order shall remain in effect.
             52          (d) If a request for a hearing is made, the division shall follow the procedures and
             53      requirements of Title 63, Chapter 46b, Administrative Procedures Act.
             54          (2) (a) After the hearing, if the commission and the director agree that the act of the
             55      person violates this chapter, the director:
             56          (i) shall issue an order making the order issued under Subsection (1) permanent; and



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             57
         (ii) may impose a civil penalty not to exceed the greater of:
             58          (A) $2,500 for each violation; or
             59          (B) the amount of any gain or economic benefit derived from each violation.
             60          (b) The director shall file suit in the name of the Department of Commerce and the
             61      Division of Real Estate, in the district court in the county in which an act described in
             62      Subsection (1) occurred or where the person resides or carries on business, to enjoin and
             63      restrain the person from violating this chapter if:
             64          (i) (A) no hearing is requested; and
             65          (B) the person fails to cease the act described in Subsection (1); or
             66          (ii) after discontinuing the act described in Subsection (1), the person again
             67      commences the act.
             68          (c) The district courts of this state shall have jurisdiction of an action brought under
             69      this section.
             70          (d) Upon a proper showing in an action brought under this section [related to an
             71      undivided fractionalized long-term estate,] or upon a conviction under Section 76-6-1203 , the
             72      court may:
             73          (i) issue a permanent or temporary, prohibitory or mandatory injunction;
             74          (ii) issue a restraining order or writ of mandamus;
             75          (iii) enter a declaratory judgment;
             76          (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
             77          (v) order disgorgement;
             78          (vi) order rescission;
             79          (vii) impose a civil penalty not to exceed the greater of:
             80          (A) $2,500 for each violation; or
             81          (B) the amount of any gain or economic benefit derived from each violation; and
             82          (viii) enter any other relief the court considers just.
             83          (e) The court may not require the division to post a bond in an action brought under
             84      this Subsection (2).
             85          (3) Any license or registration issued by the division to any person or entity convicted
             86      of a violation of Section 76-6-1203 is automatically revoked.
             87          [(3)] (4) The remedies and action provided in this section may not interfere with, or



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House Floor Amendments 3-3-2008 je/sca
             88
     prevent the prosecution of, any other remedies or actions including criminal proceedings.
             89          Section 2. Section 61-2b-33 is amended to read:
             90           61-2b-33. Penalty for violating this chapter -- Automatic revocation.
             91          [(1) Any person required by this chapter to be licensed or certified who engages in real
             92      estate appraisal activity in this state without obtaining a license or certification or]
             93          (1) In addition to being subject to a disciplinary action by the board, a person who
             94      violates [any provision of] this chapter:
             95          [(a)] (a) is guilty of a class [B] A misdemeanor [punishable by a $1,000 fine and up to
             96      six months in jail] upon a conviction of a first violation of this chapter; and
             97          [(b) shall be ineligible to apply for a license or certificate for a period of one year from
             98      the date of the person's conviction of the offense.]
             99          [(2) The division, in its discretion, may grant a license or certification to a person
             100      ineligible pursuant to Subsection (1) within the one-year period upon application and after an
             101      administrative hearing.]
             102          (b) is guilty of third degree felony, upon conviction of a second or subsequent violation
             103      of this chapter.
             104          (2) Any license or registration issued by the division to any person or entity convicted
             105      of a violation of Section 76-6-1203 is automatically revoked.
             106          Section 3. Section 61-2c-405 is enacted to read:
             107          61-2c-405. Penalty for violating this chapter -- automatic revocation.
             108          (1) In addition to being subject to a disciplinary action by the commission, a person
             109      who violates this chapter:
             110          (a) is guilty of a class A misdemeanor upon conviction of a first violation of this
             111      chapter; and
             112          (b) is guilty of third degree felony, upon conviction of a second or subsequent violation
             113      of this chapter.
             114          (2) Any license or registration issued by the division to any person or entity convicted
             115      of a violation of Section 76-6-1203 is automatically revoked.
             116          Section 4. Section 67-5-26 is enacted to read:
             117          67-5-26. Real estate fraud prosecutor H. [ , paralegal, and investigators ] .H .
             118          (1) The state attorney general shall employ H. [ : ]



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House Floor Amendments 3-3-2008 je/sca
             119
          [ (a) ] .H an attorney licensed to practice law in Utah who:
             120           H. [ (i) ] (a) .H has knowledge of the law related to mortgage fraud; and
             121           H. [ (ii) ] (b) .H preferably also has background or expertise in investigating and
             121a      prosecuting
             122      mortgage fraud H. [ ; ] .
             123           [ (b) a paralegal; and
             124          (c) at least two investigators who have background or expertise in investigating
             125      mortgage fraud.
] .H

             126          (2) H. [ (a) ] .H The primary responsibility of the attorney employed under
             126a      Subsection (1) H. [ (a) ] .H is
             127      the prosecution of real estate fraud.
             128           H. [ (b) The primary responsibility of each person employed under Subsection (1)(c) is the
             129      investigation of real estate fraud.
] .H

             130          (3) The state attorney general may employ clerks, interns, or other personnel as
             131      necessary to assist the attorney employed under Subsection (1) H. [ (a) ] .H .
             132          Section 5. Section 76-6-1201 is enacted to read:
             133     
Part 12. Utah Mortgage Fraud Act

             134          76-6-1201. Title.
             135          This part is known as the "Utah Mortgage Fraud Act."
             136          Section 6. Section 76-6-1202 is enacted to read:
             137          76-6-1202. Definitions.
             138          As used in this part:
             139          (1) "Mortgage lending process" means the process through which a person seeks or
             140      obtains a mortgage loan, including solicitation, application, or origination, negotiation of terms,
             141      third-party provider services, underwriting, signing and closing, and funding of the loan.
             142          (2) "Mortgage loan":
             143          (a) means a loan or agreement made to extend credit to a person when the loan is
             144      secured by a deed, security deed, mortgage, security interest, deed of trust, or other document
             145      representing a security interest or lien upon any interest in one-to-four family residential
             146      property; and
             147          (b) includes the renewal or refinancing of any loan.
             148          (3) "Pattern of unlawful activity" has the same definition as in Section 76-10-1602 .
             149          (4) "Sensitive personal identifying information" includes:



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Senate 3rd Reading Amendments 2-7-2008 rd/sca
             150
         (a) the following information regarding an individual's:
             151          (i) Social Security number;
             152          (ii) driver license number or other government issued identification number;
             153          (iii) financial account number or credit or debit card number;
             154          (iv) password or personal identification number or other identification required to gain
             155      access to a financial account or a secure website;

             156          (v) automated or electronic signature; and
             157          (vi) unique biometric data; and
             158          (b) any other information that can be used to gain access to an individual's financial
             159      accounts or to obtain goods or services.

             160          (5) "Value" means the value of the property, money, or thing obtained or sought to be
             161      obtained.

             162          Section 7. Section 76-6-1203 is enacted to read:
             163          76-6-1203. Mortgage fraud.
             164          A person commits the offense of mortgage fraud if the person does any of the following
             165      with the intent to defraud:
             166          (1) knowingly makes any S. [ deliberate ] material .S misstatement, misrepresentation, or
             166a      S. [ material ] .S
             167      omission during the mortgage lending process S. [ that is ] , intending that it be .S relied upon
             167a      by a mortgage lender,
             168      borrower, or any other party to the mortgage lending process;
             169          (2) knowingly uses or facilitates the use of any S. [ deliberate ] material .S misstatement,
             170      misrepresentation, or S. [ material ] .S omission, during the mortgage lending process S. [ that
             170a      is ] intending that it be .S relied S. [ on ] upon .S
             171      by a mortgage lender, borrower, or any other party to the mortgage lending process;
             172          (3) files or causes to be filed with any county recorder in Utah any document that the
             173      person knows contains a S. [ deliberate ] material .S misstatement, misrepresentation, or
             173a      S. [ material ] .S omission; S. or .S
             174          (4) receives any proceeds or any compensation in connection with a mortgage loan that
             175      the person knows resulted from a violation of this section S. [ ; or
             176          (5) assists, abets, solicits, or conspires with another to violate this section
] .S
.
             177          Section 8. Section 76-6-1204 is enacted to read:
             178          76-6-1204. Classification of offense.
             179          (1) Notwithstanding any other administrative, civil, or criminal penalties, a person who
             180      violates Section 76-6-1203 is guilty of a:



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             181
         (a) class A misdemeanor when the value is or exceeds $300 but is less than $1,000;
             182          (b) third degree felony when the value is or exceeds $1,000 but is less than $5,000;
             183          (c) second degree felony when the value is or exceeds $5,000;
             184          (d) second degree felony when the object or purpose of the commission of an act of
             185      mortgage fraud is other than the obtaining of something of monetary value; and
             186          (e) second degree felony when the object or purpose of the commission of an act of
             187      mortgage fraud is the obtaining of sensitive personal identifying information, regardless of the
             188      value.
             189          (2) The determination of the degree of any offense under Subsection (1) is measured by
             190      the total value of all property, money, or things obtained or sought to be obtained by a violation
             191      of Section 76-6-1203 , except as provided in Subsections (1)(d) and (e).
             192          (3) Each residential or commercial property transaction offense under this part
             193      constitutes a separate violation.
             194          Section 9. Section 76-10-1602 is amended to read:
             195           76-10-1602. Definitions.
             196          As used in this part:
             197          (1) "Enterprise" means any individual, sole proprietorship, partnership, corporation,
             198      business trust, association, or other legal entity, and any union or group of individuals
             199      associated in fact although not a legal entity, and includes illicit as well as licit entities.
             200          (2) "Pattern of unlawful activity" means engaging in conduct which constitutes the
             201      commission of at least three episodes of unlawful activity, which episodes are not isolated, but
             202      have the same or similar purposes, results, participants, victims, or methods of commission, or
             203      otherwise are interrelated by distinguishing characteristics. Taken together, the episodes shall
             204      demonstrate continuing unlawful conduct and be related either to each other or to the
             205      enterprise. At least one of the episodes comprising a pattern of unlawful activity shall have
             206      occurred after July 31, 1981. The most recent act constituting part of a pattern of unlawful
             207      activity as defined by this part shall have occurred within five years of the commission of the
             208      next preceding act alleged as part of the pattern.
             209          (3) "Person" includes any individual or entity capable of holding a legal or beneficial
             210      interest in property, including state, county, and local governmental entities.
             211          (4) "Unlawful activity" means to directly engage in conduct or to solicit, request,



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             212
     command, encourage, or intentionally aid another person to engage in conduct which would
             213      constitute any offense described by the following crimes or categories of crimes, or to attempt
             214      or conspire to engage in an act which would constitute any of those offenses, regardless of
             215      whether the act is in fact charged or indicted by any authority or is classified as a misdemeanor
             216      or a felony:
             217          (a) any act prohibited by the criminal provisions of Title 13, Chapter 10, Unauthorized
             218      Recording Practices Act;
             219          (b) any act prohibited by the criminal provisions of Title 19, Environmental Quality
             220      Code, Sections 19-1-101 through 19-7-109 ;
             221          (c) taking, destroying, or possessing wildlife or parts of wildlife for the primary
             222      purpose of sale, trade, or other pecuniary gain, in violation of Title 23, Chapter 13, [Wildlife
             223      Resources Code of Utah] General Provisions, or Section 23-20-4 ;
             224          (d) false claims for medical benefits, kickbacks, and any other act prohibited by Title
             225      26, Chapter 20, Utah False Claims Act, Sections 26-20-1 through 26-20-12 ;
             226          (e) any act prohibited by the criminal provisions of Title 32A, Chapter 12, Criminal
             227      Offenses;
             228          (f) any act prohibited by the criminal provisions of Title 57, Chapter 11, Utah Uniform
             229      Land Sales Practices Act;
             230          (g) any act prohibited by the criminal provisions of Title 58, Chapter 37, Utah
             231      Controlled Substances Act, or Title 58, Chapter 37b, Imitation Controlled Substances Act,
             232      Title 58, Chapter 37c, Utah Controlled Substance Precursor Act, or Title 58, Chapter 37d,
             233      Clandestine Drug Lab Act;
             234          (h) any act prohibited by the criminal provisions of Title 61, Chapter 1, Utah Uniform
             235      Securities Act;
             236          (i) any act prohibited by the criminal provisions of Title 63, Chapter 56, Utah
             237      Procurement Code;
             238          (j) assault or aggravated assault, Sections 76-5-102 and 76-5-103 ;
             239          (k) a terroristic threat, Section 76-5-107 ;
             240          (l) criminal homicide, Sections 76-5-201 , 76-5-202 , and 76-5-203 ;
             241          (m) kidnapping or aggravated kidnapping, Sections 76-5-301 and 76-5-302 ;
             242          (n) sexual exploitation of a minor, Section 76-5a-3 ;



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             243
         (o) arson or aggravated arson, Sections 76-6-102 and 76-6-103 ;
             244          (p) causing a catastrophe, Section 76-6-105 ;
             245          (q) burglary or aggravated burglary, Sections 76-6-202 and 76-6-203 ;
             246          (r) burglary of a vehicle, Section 76-6-204 ;
             247          (s) manufacture or possession of an instrument for burglary or theft, Section 76-6-205 ;
             248          (t) robbery or aggravated robbery, Sections 76-6-301 and 76-6-302 ;
             249          (u) theft, Section 76-6-404 ;
             250          (v) theft by deception, Section 76-6-405 ;
             251          (w) theft by extortion, Section 76-6-406 ;
             252          (x) receiving stolen property, Section 76-6-408 ;
             253          (y) theft of services, Section 76-6-409 ;
             254          (z) forgery, Section 76-6-501 ;
             255          (aa) fraudulent use of a credit card, Sections 76-6-506.1 , 76-6-506.2 , and 76-6-506.4 ;
             256          (bb) deceptive business practices, Section 76-6-507 ;
             257          (cc) bribery or receiving bribe by person in the business of selection, appraisal, or
             258      criticism of goods, Section 76-6-508 ;
             259          (dd) bribery of a labor official, Section 76-6-509 ;
             260          (ee) defrauding creditors, Section 76-6-511 ;
             261          (ff) acceptance of deposit by insolvent financial institution, Section 76-6-512 ;
             262          (gg) unlawful dealing with property by fiduciary, Section 76-6-513 ;
             263          (hh) bribery or threat to influence contest, Section 76-6-514 ;
             264          (ii) making a false credit report, Section 76-6-517 ;
             265          (jj) criminal simulation, Section 76-6-518 ;
             266          (kk) criminal usury, Section 76-6-520 ;
             267          (ll) fraudulent insurance act, Section 76-6-521 ;
             268          (mm) retail theft, Section 76-6-602 ;
             269          (nn) computer crimes, Section 76-6-703 ;
             270          (oo) identity fraud, Section 76-6-1102 ;
             271          (pp) mortgage fraud, Section 76-6-1203 ;
             272          [(pp)] (qq) sale of a child, Section 76-7-203 ;
             273          [(qq)] (rr) bribery to influence official or political actions, Section 76-8-103 ;



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             274
         [(rr)] (ss) threats to influence official or political action, Section 76-8-104 ;
             275          [(ss)] (tt) receiving bribe or bribery by public servant, Section 76-8-105 ;
             276          [(tt)] (uu) receiving bribe or bribery for endorsement of person as public servant,
             277      Section 76-8-106 ;
             278          [(uu)] (vv) official misconduct, Sections 76-8-201 and 76-8-202 ;
             279          [(vv)] (ww) obstruction of justice, Section 76-8-306 ;
             280          [(ww)] (xx) acceptance of bribe or bribery to prevent criminal prosecution, Section
             281      76-8-308 ;
             282          [(xx)] (yy) false or inconsistent material statements, Section 76-8-502 ;
             283          [(yy)] (zz) false or inconsistent statements, Section 76-8-503 ;
             284          [(zz)] (aaa) written false statements, Section 76-8-504 ;
             285          [(aaa)] (bbb) tampering with a witness or soliciting or receiving a bribe, Section
             286      76-8-508 ;
             287          [(bbb)] (ccc) retaliation against a witness, victim, or informant, Section 76-8-508.3 ;
             288          [(ccc)] (ddd) extortion or bribery to dismiss criminal proceeding, Section 76-8-509 ;
             289          [(ddd)] (eee) public assistance fraud in violation of Section 76-8-1203 , 76-8-1204 , or
             290      76-8-1205 ;
             291          [(eee)] (fff) unemployment insurance fraud, Section 76-8-1301 ;
             292          [(fff)] (ggg) intentionally or knowingly causing one animal to fight with another,
             293      Subsection 76-9-301 (1)(f);
             294          [(ggg)] (hhh) possession, use, or removal of explosives, chemical, or incendiary
             295      devices or parts, Section 76-10-306 ;
             296          [(hhh)] (iii) delivery to common carrier, mailing, or placement on premises of an
             297      incendiary device, Section 76-10-307 ;
             298          [(iii)] (jjj) possession of a deadly weapon with intent to assault, Section 76-10-507 ;
             299          [(jjj)] (kkk) unlawful marking of pistol or revolver, Section 76-10-521 ;
             300          [(kkk)] (lll) alteration of number or mark on pistol or revolver, Section 76-10-522 ;
             301          [(lll)] (mmm) forging or counterfeiting trademarks, trade name, or trade device,
             302      Section 76-10-1002 ;
             303          [(mmm)] (nnn) selling goods under counterfeited trademark, trade name, or trade
             304      devices, Section 76-10-1003 ;



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             305
         [(nnn)] (ooo) sales in containers bearing registered trademark of substituted articles,
             306      Section 76-10-1004 ;
             307          [(ooo)] (ppp) selling or dealing with article bearing registered trademark or service
             308      mark with intent to defraud, Section 76-10-1006 ;
             309          [(ppp)] (qqq) gambling, Section 76-10-1102 ;
             310          [(qqq)] (rrr) gambling fraud, Section 76-10-1103 ;
             311          [(rrr)] (sss) gambling promotion, Section 76-10-1104 ;
             312          [(sss)] (ttt) possessing a gambling device or record, Section 76-10-1105 ;
             313          [(ttt)] (uuu) confidence game, Section 76-10-1109 ;
             314          [(uuu)] (vvv) distributing pornographic material, Section 76-10-1204 ;
             315          [(vvv)] (www) inducing acceptance of pornographic material, Section 76-10-1205 ;
             316          [(www)] (xxx) dealing in harmful material to a minor, Section 76-10-1206 ;
             317          [(xxx)] (yyy) distribution of pornographic films, Section 76-10-1222 ;
             318          [(yyy)] (zzz) indecent public displays, Section 76-10-1228 ;
             319          [(zzz)] (aaaa) prostitution, Section 76-10-1302 ;
             320          [(aaaa)] (bbbb) aiding prostitution, Section 76-10-1304 ;
             321          [(bbbb)] (cccc) exploiting prostitution, Section 76-10-1305 ;
             322          [(cccc)] (dddd) aggravated exploitation of prostitution, Section 76-10-1306 ;
             323          [(dddd)] (eeee) communications fraud, Section 76-10-1801 ;
             324          [(eeee)] (ffff) any act prohibited by the criminal provisions of [Title 76,] Chapter 10,
             325      Part 19, Money Laundering and Currency Transaction Reporting Act;
             326          [(ffff)] (gggg) any act prohibited by the criminal provisions of the laws governing
             327      taxation in this state; and
             328          [(gggg)] (hhhh) any act illegal under the laws of the United States and enumerated in
             329      Title 18, Section 1961 (1)(B), (C), and (D) of the United States Code.


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