If you are charged and convicted of two or more felonies related to fraud or embezzlement involving a minimum amount of money, the state of California allows for an automatic penalty enhancement that both imposes additional time in prison and the right to confiscate your assets to pay fines to the government and restitution to the victims.
This penalty enhancement law is called the "freeze and seize" law, embodied in Penal Code 186.11 PC. If this enhancement is triggered, your total time in prison could be extended by as much as five years beyond your initial sentence.
PC 186.11(a)(1) says in part: “Anyone who commits two or more related felonies, fraud or embezzlement with a pattern of related felony conduct involving the taking of, or results in the loss by another person or entity of over $100,000, will be punished if convicted of two or more felonies in a single criminal proceeding in addition and consecutive to the punishment for the felony by an additional term in state prison. This enhancement will be known as the aggravated white-collar crime enhancement, and “two or more related felonies” means felonies committed against two or more separate victims, or the same victim on two or more separate occasions.”
A typical fraud crime involves deception or trickery of someone for personal or financial gain. Some common fraud-related offenses include Penal Code 503 PC embezzlement and Penal Code 470 PC forgery.
The crime of embezzlement is described as someone, typically an employee, unlawfully taking property entrusted to them with the intent of depriving the rightful owner of the use of the property. Our California criminal defense attorneys will review this law further below.
An Overview of Penal Code 186.11
Penal Code 186.11 is considered a "white-collar" sentencing enhancement because it deals explicitly with crimes of fraud and embezzlement.
The penalties described in PC 186.11 are activated when a defendant is convicted of two related fraud/embezzlement felonies involving the taking of $100,000 or more.
The law defines "two or more related felonies" as "felonies committed against two or more separate victims, or the same victim on two or more separate occasions." The enhancement has two facets to it:
- It imposes an additional prison sentence to be served consecutively (NOT simultaneously) to the original sentence; and
- It permits the government to confiscate the defendant's assets to cover any applicable fines and to pay restitution to the victims of the crimes, hence the term "freeze and seize".
A pattern of related felony conduct means engaging in at least two felonies with similar methods, purposes, or results.
What is the Sentencing Enhancement?
For the additional prison sentence to apply, the prosecution must prove that:
- The defendant committed two or more related felonies materially related to fraud or embezzlement;
- The offenses point to a "pattern of related felony conduct"—meaning they are interrelated and not isolated incidents; and
- Those felonies involved the taking of at least $100,000 or more.
The amount of the additional and consecutive prison sentence that can be imposed is two, three, or five years. The actual length of the sentence will depend on several factors, including:
- The number of felony convictions in the case; and
- The total value of the assets involved in the crimes.
Note that the sentencing enhancement occurs consecutively, and in addition to the original sentence, it cannot be served simultaneously.
"Freeze and Seize"
In addition to the consecutive prison sentence, PC 186.11 also authorizes the state to impose temporary restraining orders and preliminary injunctions to freeze the defendant's assets and confiscate them to pay fines and restitution.
The fine can be as much as $500,000 or double the value of the assets involved in the crime, depending on the circumstances. The government may seize any "asset or property" directly under the defendant's control or transfer it to a third party (e.g., a banking institution or another person).
While third parties may challenge the seizure under certain conditions, this provision effectively blocks the defendant from offloading assets to hide them from the government.
What Type of Crimes Apply to PC 186.11?
The two most apparent crimes directly related to "freeze and seize" are the crimes of fraud and embezzlement since these are the types of crimes that activate the sentencing enhancement.
California recognizes many types of fraud (both misdemeanors and felonies). Still, they all generally involve some material misrepresentation made to deceive another person or entity for financial gain. Types of fraud can include but are not limited to:
- Bank fraud,
- Check fraud,
- Credit card fraud,
- Identity theft,
- Unemployment insurance fraud,
- Mail fraud,
- Health care fraud,
- Real estate fraud,
As noted, Penal Code 503 PC embezzlement is a type of theft that occurs when someone lawfully entrusted with money or property unlawfully appropriates it for their use or the use of a third party.
Embezzlement can happen in many different contexts but is often seen in cases involving public officials, corporate employees, or family members. It's a misdemeanor offense for any amount less than $950 and a felony for any amount greater than $950.
What Are the Common Defenses to the "Freeze and Seize" Enhancement?
To avoid the additional prison time and the disruptive seizure of your property, a good defense attorney will seek out all defense strategies allowed by law to prevent the "freeze and seize" enhancement from kicking in. Common defenses include are discussed below.
Perhaps we can argue there was a lack of Knowledge. For example, you had no knowledge that the finances you were dealing with had been embezzled or gained through fraud.
Perhaps we can argue there was a lack of Intent. You were unaware that you were misrepresenting information to the victim—you believed it to be the truth at the time.
Perhaps we could argue there was no embezzlement. You only took property or money you believed was your own.
If a conviction seems apparent, your attorney may also engage in plea bargaining to keep the enhancement from activating—for example, having you plead guilty to one felony in return for the others being dropped or having some of the "wobbler" charges reduced to misdemeanors so you can be convicted of no more than one felony.
Through prefiling negotiations, we may be able to persuade the prosecution not to file formal criminal charges (DA reject). If you need legal guidance, contact the criminal defense law firm of Eisner Gorin LLP by phone or use the contact form.