Corporate Three Strikes Bill Passes Senate Committee

Sacramento — Legislation banning corporations from doing business in California if they are convicted of three or more felony crimes passed its first hurdle in the Senate Judiciary Committee today. It now heads for the Senate floor.

SB 335, authored by Senator Gloria Romero and sponsored by the Foundation for Taxpayer and Consumer Rights (FTCR), would make California the first state to have a three strikes law for corporate crime.

“No one would give a three time bank robber the keys to Fort Knox, or put a three time drunk driver behind the wheel, no matter how many times they said they’d be better this time.” said Carmen Balber, consumer advocate with FTCR. “The Corporate Three Strikes Act puts companies on notice that three time corporate crooks will no longer be tolerated as a threat to California’s communities, economy, and environment.”

The legislation will ban corporations convicted of three or more felony crimes within a ten-year period, a “strike”, from doing business in the state of California. It will revoke the charter of a California corporation convicted of three strikes, or revoke the certificate of qualification to do business in California for out-of-state corporations.

SB 335 will:

– Require every company to report its criminal convictions to the Secretary of State, and will make this information available to the public, online. Currently, the Attorney General issues a report of street crime in California every quarter, yet there is no place where the public or anyone else can find information about corporate crime.

– A company with one or two “strikes” against it is required to publicize its transgression with an advertisement in California’s largest newspaper.

– If a company is convicted of a third “strike”, tried in a California court, the company will lose the right to do business in California.

“As lawmakers grapple with a ballooning budget deficit, they would do well to remember that corporate crooks — be it Enron or Tenet Healthcare — siphoned billions of those dollars out of California’s bank account. SB 335 arms California with a true weapon to scare crooked corporations straight. Crime shouldn’t pay in California,” noted Balber.

Crime in the Suites Deserves Tough Punishment

FTCR called attention to Santa Barbara-based Tenet Healthcare Corporation’s history of criminal acts. Tenet, currently under investigation for allegations of Medicare fraud, performing unnecessary medical procedures and gouging the uninsured, was previously convicted of Medicare fraud for committing patients to psychiatric hospitals unnecessarily and holding them against their will. Although the company changed its name and paid nearly $700 million in fines and reparations, it did not waver from its criminal path, said FTCR.

“‘Drop in the bucket’ fines give corporations no incentive to change bad behavior. SB 335 gives California the hammer it needs to bring corporations into line. Without strong action to make corporations accountable, they will continue to break the law with impunity and pass on the cost of their crimes to the public,” said FTCR’s Balber.

In opposition to the bill were the Chamber of Commerce and the Civil Justice Association of California, which is a big business group for limited civil liability for corporations. The group now supports both limited civil and criminal liability for corporations.

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