The 1st meeting of the Interim Joint Committee on Judiciary was held on Tuesday, September 17, 2002, at 10:00 AM, in Room 149 of the Capitol Annex. Representative Gross Lindsay, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Robert Stivers, Co-Chair; Representative Gross Lindsay, Co-Chair; Senators Lindy Casebier, David K. Karem, Marshall Long, Gerald Neal, Katie Stine, Elizabeth Tori, and Jack Westwood; Representatives Paul Bather, Jesse Crenshaw, Bob Heleringer, John Will Stacy, Kathy Stein, Gary Tapp, John Vincent, Rob Wilkey, and Brent Yonts.
Guests: Representative Tim Feeley; Mr. John Ellis, Triad Services; Sergeant Nikki Henderson, Crimes Against Elderly Unit, Jefferson County Police Department; Mr. Todd Lewis, Jefferson County Commonwealth’s Attorney Office; Mr. Tim Jackson, Deputy Secretary, Cabinet for Families and Children; Ms. Kathy Gannoe, Executive Director, Nursing Home Ombudsman Agency of the Bluegrass; Representative Keith Hall; Representative Stan Lee; Ms. Colleen Keefe, Director, Division of Securities, Department of Financial Institutions; and Mr. Kyle Trimble, Branch Manager, Securities Enforcement, Department of Financial Institutions.
LRC Staff: Norman Lawson, CSA; Scott Varland, Jonathan Grate, Peter Cassidy, and Lisa Fenner.
The meeting was called to order by Chairman Lindsay, the roll was called, and there was a quorum.
The first speaker was Representative Tim Feeley who spoke about 02 RS HB 667, which would have provided new offenses and enhanced penalties for abuse of the elderly as well as establishing a commission on elder abuse. Representative Feeley indicated that the Governor, by executive order, had created the commission sought in his legislation and similar legislation by Representative Palumbo. As indicated by Representative Feeley, Representative Palumbo was not going to proceed with her legislation as the matter had been addressed through the executive order. Representative Feeley then introduced Mr. John Ellis who is a former FBI agent who is interested in eldercare issues, Sergeant Nikki Henderson of the Jefferson County Police Department Crimes Against Seniors Unit, and Mr. Todd Lewis of the Jefferson County Commonwealth's Attorney's Office.
The next speaker was Sergeant Henderson who spoke of the organization of the Crimes Against Seniors Unit in the Jefferson County Police Department in July 2000. Sergeant Henderson indicated that the unit handles matters relating to adult abuse, caretaker abuse, domestic, violence, frauds against the elderly, and related financial exploitation. In the first year of its operation, Sergeant Henderson indicated 145 cases were opened with that expanding to 212 cases in the second year of operation. Current problems, which have been increasing, involve scams against the elderly and identity theft. Sergeant Henderson described the elderly as being more vulnerable because they frequently have few social contacts, are trusting, and are easily threatened. Sergeant Henderson indicated that various members of a criminal organization known as the "Irish Travelers" are currently awaiting trials and that interviews with members of the organization indicated that they looked for houses with weeds, dusty cars, and lots of cats around. The Travelers then would befriend the elderly or cite needs for repairs, or intimidate the elderly into providing them with money for worthless or non-existent repairs. Sergeant Henderson indicated that the department has now forged new relationships with Adult Protective Services and the courts to provide a more effective prosecution of crimes against the elderly.
The next speaker was Mr. Todd Lewis of the Jefferson County Commonwealth's Attorney's Office who indicated that only a handful of states protect the elderly and that the protection normally relates to financial problems. Some of the legislative improvements, which Mr. Lewis indicated are needed are: 1) clarity for offenses in which offenses are clearly defined; 2) finer graduation of punishment with increasing punishment for aggravating circumstances such as caretaker crimes; 3) raising most of the current misdemeanor crimes to various levels of felony; 4) provide for an increase of prosecutorial discretion through the use of more crimes and more aggravating circumstances; 5) remove unnecessary hurdles from prosecution; 6) end the "Catch 22" found in financial crimes where the penalties are too low to encourage police investigation and prosecution by prosecutors; and 7) enhance penalties for victim targeting.
Representative Feeley indicated that the present KRS Chapter 209 was initially targeted at abuses committed by nursing homes and no longer adequately protects against the range of crimes being committed against the elderly. Representative Feeley suggested a "per se" violation for a person over 65 along with speedy trial provisions. In some cases the matter takes too long to get to trial and the elderly person dies, is physically unable to attend court, is mentally unable to testify, or cannot remember the details of the incident. Representative Feeley indicated that he modeled his legislation after legislation passed in Florida which actually goes farther than his legislation and is the national model for such legislation.
Chairman Lindsay indicated that he thought that Class B felony penalties with 10 to 20 years in prison might be viewed as excessive and asked if the punishment was meant to fit the crime or provide prosecutors with a means of negotiating a plea for a lesser offense. Mr. Lewis responded that the legislation was designed to treat a person of trust or confidence, who commits a crime against the elderly, more harshly and spoke of situations where the person was in a position of authority or confidence, and had the ability to provide or deny services or to separate a victim from services.
Representative Vincent posed a question where the spouse of an elderly person who was the caretaker and told the elderly person "You're not going shopping any more" might be charged with a Class B felony. Mr. Lewis indicated that there could technically be a conviction in the matter. Then Representative Vincent posed the situation in which the caretaker went on vacation or even left over the weekend, and the elderly person suffered an injury or other problem, which could not be addressed. Would this be neglect and a criminal act under the proposal? Mr. Lewis answered that it could be and Representative Feeley agreed. Senator Stivers observed that for enhancement to occur a person does not have to be in a "position of special trust" but merely has to fail to recognize something which might harm the elderly person.
Senator Stivers also questioned whether or not the 90-day trial provision might violate the separation of powers authorized by the Constitution of Kentucky. \
Representative Wilkey asked if Representative Feeley had looked into the current criminal statutes and why they do not work with regard to crimes against the elderly. Sergeant Henderson replied that the "Irish Travelers" used home improvement scams in which they created an atmosphere of intimidation to extort a check from the elderly, and that this action was not adequately covered by the statutes and that theft by deception was difficult to prove in such circumstances. Sergeant Henderson further indicated that all theft offenses are Class D felonies and that it is also difficult to prove robbery which has a higher penalty. This is why, according to Sergeant Henderson, a range of higher penalties is needed for these crimes.
Representative Yonts asked if a corporation could be prosecuted for the actions of a negligent employee to which the answer was yes. Mr. Lewis indicated that Florida prosecutes corporate offenders. Representative Yonts asked if the statute could be used when the state closed a nursing home to which Mr. Lewis responded yes. Mr. Lewis also indicated that the statute could be used in a situation where the elderly person was in their own home receiving care from a corporate caregiver's employee. Representative Yonts then asked about a situation where a caregiver-broker-financial adviser invested the elderly person's funds and the investment lost value, could this be a violation? Mr. Lewis responded that ordinarily it would not be, but if could be if there was criminal intent and that a bill provided a "Good Samaritan" provision protecting those who do things on behalf of a person for whom they act. Representative Yonts then asked about the situation where the elderly person does not seek prosecution, but the relatives who are named in the estate seek prosecution because the assets are not now as large as they thought they should be. Mr. Lewis indicated that anyone should be able to complain on behalf of the victim.
Senator Karem indicated that he felt this was an important issue and should be addressed at the upcoming session of the General Assembly. Representative Bather echoed Senator Karem's statement and asked that the legislation be expanded to combat predatory lending practices.
Senator Tori asked how many persons had been convicted under present legislation. Sergeant Henderson replied that in the first year of operation 20 persons were arrested and that in the second year of operation of her unit 24 persons had been arrested, but that there had been no convictions yet because most of the cases had not yet come to trial. Senator Tori asked what crimes resulted in arrests to which Sergeant Henderson replied that one involved a caregiver not paying a nursing home bill, sexual abuse by a caregiver, and various financial crimes.
The next speaker was Mr. Tim Jackson, Deputy Secretary of the Cabinet for Families and Children, who indicated that KRS Chapter 209 needs to be amended to better clarify the roles of various agencies. He also indicated that the problems between Chapter 209, the Penal Code, and the roles of various agencies invite conflict and that there is a need for a coordinated system.
The next speaker was Ms. Kathy Gannoe, Executive Director of the Nursing Home Ombudsman Agency of the Bluegrass, who indicated that she represents 5,000 residents in nursing homes in Central Kentucky. Ms. Gannoe called attention to handouts provided to the committee on the subjects of who's who in protecting nursing home residents, and listings of various incidents reported to the Cabinet for Health Services. Ms. Gannoe indicated that residents and their families are afraid to report abuse and neglect because of a fear of retaliation against the resident, and that in many cases they fear that the complaint will not result in any correction anyway. Ms. Gannoe suggested that continued corporate practices of neglect and abuse or permitting such practices should be punished as a criminal offense. Ms. Gannoe suggested using the Elder Justice Act of 2002 introduced in the United States Senate by Senator John Breaux as a model.
The next speakers were Representative Keith Hall and Representative Stan Lee, who spoke about the Kentucky Court of Appeals decision in the Scott v. Scott case, relating to KRS 405.021 relating to grandparent visitation, and the Troxel v. Granville decision of the Supreme Court of the United States, relating to the rights of parents vs. the rights of grandparents which construed a grandparents rights statute from Oregon. In the Troxel case the presumption is that the parent is a fit caregiver and that the grandparent must prove by clear and convincing evidence that the parent is unfit and that the child would be harmed if the grandparent were not granted custody or visitation. Representatives Hall and Lee presented a proposed bill draft for introduction at the 2003 Regular Session of the General Assembly.
Chairman Lindsay asked what changes needed to be made to the existing version of KRS 405.021 to which Representative Lee replied that the "best interest of the child" test needs to be changed to match the standards in the Troxel case. Senator Stivers then asked about the requirement that harm would occur if the visitation were not granted to which Representative Lee responded that the burden of proof is on the grandparent. Senator Stivers then observed that if one cannot prove that the parent is unfit then the second element is never reached. Representative Wilkey observed that courts might still apply the best interest of the child test with harm as a prerequisite.
Representative Lee indicated that the court in the Scott case was not totally clear as to how the test would work and that he thinks that the current law violates the 14th Amendment to the Constitution of the United States.
Representative Heleringer suggested that a portion of the bill on page 2, from lines 13 to 18, relating to a situation where a grandparent provides financial support to the child, should be deleted as a result of a compromise reached on the bill as introduced in the 2002 Regular Session to which Representative Lee agreed.
Discussion then turned to whether or not the new law would permit reopening old cases and Representative Heleringer indicated that some of the judges he has talked with did not like reopening old cases and retrying them every time the law changed.
The next speaker was Ms. Colleen Keefe, Director of the Division of Securities of the Department of Financial Institutions. Prior to Ms. Keefe's presentation, Representative Kathy Stein indicated that the proposed Constitutional Amendment relating to corporations which was passed by the General Assembly in 2002 has a "dangerous direction with regard to any corporate fraud legislation".
Ms. Keefe indicated that the elderly are frequently victims of securities fraud. Ms. Keefe indicated that her agency focus is on fraud cases and technical violations. Older persons, Ms. Keefe, observed, frequently have large pools of money and that in this time of market losses that a local person or local entity is committing the fraud. In a typical case, insurance agents marketed worthless promissory notes. Violations of the statutes are Class D felonies. Ms. Keefe indicated that the agency has no criminal prosecution authority and refers cases to the local criminal authorities, but that most are not pursued and those losses, never the less, have serious impacts on the elderly victim. For most perpetrators, the fines that can be levied by the Department have little effect because the violators have already spent the money and do not have any money left with which to pay the fines.
Larger cases, Ms. Keefe indicated, are prosecuted in cooperation with other states under an interstate compact. This group has created a multistate task force, which has successfully prosecuted Solomon Smith and Citygroup. Ms. Keefe observed that individual states do not have the resources that a multistate group can bring to bear. Senator Stivers observed that we better need to integrate civil and criminal restitution in such cases so that the victims of the offense can be compensated to which Ms. Keefe replied that in many cases the organization is bankrupt or has no assets so that no compensation would be available. Ms. Keefe indicated that successful actions have been brought by the Attorney General of New York and that 31 states have the Uniform Securities Act under which prosecutions and other actions can be brought. Senator Stivers asked about a situation where stock broker sales persons were told to sell stock in corporations which the broker's analysts had no confidence to which Ms. Keefe indicated that the information can be discovered and civil and criminal actions can be brought. Ms. Keefe indicated that the duty of the stock adviser or analyst is to protect the interests of the investor and that this is a duty that is pursued in Kentucky. Upon response to the question as to whether such a prosecution was ever successful in Kentucky, the answer given by Ms. Keefe was no and that even the United States Attorney will not take small cases where less than $1 million is involved. Ms. Keefe further indicated that there was a successful federal prosecution in 1999, where a church member sold worthless stock to fellow church members, and the defendant pled guilty and received a 20 year sentence, but was released from prison after four years.
In response to a question by Chairman Lindsay, Ms. Keefe indicated that improvements needed in the statute would be to increase the criminal penalty, provide for tiering so that larger cases would be punished more severely, and that elderly or vulnerable exploitation be punished more severely. Ms. Keefe indicated that more successful criminal prosecutions might send the needed message to the potential violators.
The next speaker was Mr. Kyle Trimble, Branch Manager, Securities Enforcement of the Department of Financial Institutions, who indicated that under the present statute that a willful violation is required. Chairman Lindsay indicated that this standard is proper and that an unsuitable recommendation is not necessarily fraud. Mr. Trimble indicated that the Securities and Exchange Commission Law has preempted the field with regard to mutual funds and nationally traded securities. Senator Stivers asked if a broker gives bad advice, and later the firm finds out about the problem, is the firm obligated to report the incident. Mr. Trimble responded that there is a corporate duty to supervise agents and that the firm and the broker can be criminally prosecuted by the Federal Government.
Chairman Lindsay informed the committee that the October meeting will focus on criminal justice proposals and similar items from the Justice Cabinet and the Criminal Justice Council. Chairman Lindsay also informed the committee that the October meeting would be chaired by Senator Stivers.
The meeting was adjourned at 12:05 PM.