Gov. Jerry Brown signed legislation Tuesday designed to cut red tape that has delayed numerous payouts of money set aside in a multimillion-dollar state fund for victims of corporate fraud.
The measure, Senate Bill 1058, was crafted by Democratic Sen. Ted Lieu of Torrance in response to a story in The Bee last October that said the fund had collected $14.6 million but paid out only $112,496 since its creation in 2002.
Lieu said a key problem in making payouts was that the secretary of state's hands were tied by lengthy, time-consuming regulations requiring victims to produce substantial paperwork and overcome bureaucratic hurdles even after winning a court judgment.
SB 1058 revamps the implementing regulations to pay restitution within 90 days of a court judgment, increase maximum amounts from $20,000 to $50,000, and restrict guilty corporations from contesting payments and blocking appeals, Lieu said.
"This will actually get money to victims of fraud rather than have it sit with the state because nobody can figure out how to access it," Lieu said.
The Victims of Corporate Fraud Compensation Fund was created by legislation in 2002 after national scandals involving Enron, WorldCom and other national corporations.
Then-Assemblyman Kevin Shelley, a San Francisco Democrat running for secretary of state, proposed the fund at a time when lawmakers were pushing through a package of bills to crack down on corporate fraud.
The victims fund was bankrolled by tacking an additional $2.50 fee onto the cost of filing incorporation papers.
Republicans were split on SB 1058 in both houses of the Legislature. It passed the Assembly, 60-19, and the Senate, 25-6,.