II

105TH CONGRESS

1ST SESSION S. 214

To amend the Robert T. Stafford Disaster Relief and Emergency Assistance

Act to combat fraud and price-gouging committed in connection with

the provision of consumer goods and services for the cleanup, repair,

and recovery from the effects of a major disaster declared by the President, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 28, 1997

Mr. AKAKA (for himself, Mr. INOUYE, and Mr. GLENN) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works

A BILL

To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to combat fraud and price-gouging

committed in connection with the provision of consumer

goods and services for the cleanup, repair, and recovery

from the effects of a major disaster declared by the

President, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Disaster Victims Crime

5 Prevention Act of 1997’’.
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1 SEC. 2. PREVENTION OF FRAUD FOLLOWING MAJOR DISAS2 TERS.

3 (a) IN GENERAL.—Title III of the Robert T. Stafford

4 Disaster Relief and Emergency Assistance Act (42 U.S.C.

5 5141 et seq.) is amended—

6 (1) by redesignating sections 315 through 321

7 as sections 316 through 322, respectively; and

8 (2) by inserting after section 314 the following:

9 ‘‘SEC. 315. PREVENTION OF FRAUD FOLLOWING MAJOR DIS10 ASTERS.

11 ‘‘(a) DEFINITIONS.—In this section:

12 ‘‘(1) AGREEMENT.—The term ‘agreement’, with

13 respect to the provision of a consumer good or serv14 ice, includes an offer or undertaking to provide or

15 arrange for the provision of the consumer good or

16 service without regard to whether an enforceable

17 contract is entered into.

18 ‘‘(2) CONSUMER GOOD OR SERVICE.—The term

19 ‘consumer good or service’ means a good, piece of

20 equipment, or service provided primarily for per21 sonal, family, or household purposes, including food,

22 water, ice, a chemical, a building supply, a tool, a

23 petroleum product, a residential lease property, a

24 residential construction, reconstruction, or repair

25 service, or a service for the removal of debris (in26 cluding a damaged tree) and garbage.
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1 ‘‘(3) PROVIDE.—The term ‘provide’, with re2 spect to a consumer good or service, means to sell,

3 lease, or otherwise provide in exchange for consider4 ation, the good or service.

5 ‘‘(4) SUPPLIER.—The term ‘supplier’ includes a

6 seller, reseller, wholesaler, distributor, retailer, les7 sor, provider, or licensed or unlicensed contractor,

8 subcontractor, or laborer, involved in the provision

9 or distribution of a consumer good or service.

10 ‘‘(b) ESTABLISHMENT OF ANTI-FRAUD STRIKE

11 FORCES.—Following the declaration of the existence of a

12 major disaster by the President, the Attorney General

13 shall—

14 ‘‘(1) consult with the United States Attorney

15 for the district in which the disaster occurred and

16 with State and local law enforcement officials to de17 termine the extent to which victims of the disaster

18 are being further victimized by fraudulent or other19 wise unscrupulous activities of suppliers offering

20 consumer goods and services for the cleanup, repair,

21 and other recovery from the effects of the disaster;

22 and

23 ‘‘(2) if it appears that the extent of the activi24 ties referred to in paragraph (1) is such that the re25 sources of the officials are not sufficient to quickly
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1 and adequately investigate and prosecute the activi2 ties, establish an anti-fraud task force of investiga3 tors and prosecutors to combat the activities in the

4 area affected by the disaster.

5 ‘‘(c) FRAUD INVOLVING DISASTER VICTIMS.—

6 ‘‘(1) SUPPLIERS OF CONSUMER GOODS AND

7 SERVICES.—

8 ‘‘(A) OFFENSE.—During the period begin9 ning on the date the existence of a major disas10 ter is declared by the President and ending 180

11 days after that date, and within the area to

12 which the declaration applies, a supplier who by

13 false pretenses, by the making of a representa14 tion that the supplier knows, or has reason to

15 know, is false or misleading, or through fraudu16 lent conduct, obtains money or any other thing

17 of value in connection with an agreement to

18 provide a consumer good or service for the

19 cleanup, repair, or other recovery from the ef20 fects of a major disaster shall be punished as

21 provided in subparagraph (B).

22 ‘‘(B) PENALTY.—A supplier who commits

23 an offense described in subparagraph (A) shall

24 be imprisoned not more than 10 years or fined

25 under title 18, United States Code, or both.
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1 ‘‘(C) PRESUMPTIONS.—For the purposes

2 of subparagraph (A), a supplier shall be consid3 ered to obtain money or another thing of value

4 by false pretenses if—

5 ‘‘(i)(I) the supplier uses the money or

6 other thing of value for any purpose other

7 than to—

8 ‘‘(aa) purchase materials to be

9 used in carrying out the agreement;

10 ‘‘(bb) pay for work performed or

11 other expenses incurred in connection

12 with the agreement; or

13 ‘‘(cc) pay for a proportionate

14 share of the overhead and profit of

15 the supplier; and

16 ‘‘(II) the person with whom the agree17 ment was made has not authorized, in

18 writing, the use of the money or other

19 thing of value for a purpose other than a

20 purpose described in item (aa), (bb), or

21 (cc) of subclause (I); or

22 ‘‘(ii) in the case of an agreement to

23 provide or arrange for the provision of a

24 residential construction, reconstruction, or

25 repair service, or a service for the removal
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1 of debris (including a damaged tree) and

2 garbage—

3 ‘‘(I) the supplier receives more

4 than 10 percent of the money or other

5 thing of value under the agreement

6 for the service and fails to—

7 ‘‘(aa) apply for each permit

8 necessary to carry out the agree9 ment by the date that is 30 days

10 after the date of the receipt of

11 the money or thing of value; or

12 ‘‘(bb) start carrying out the

13 construction, reconstruction, re14 pair, or removal by the date that

15 is 90 days after the last nec16 essary permit is obtained; and

17 ‘‘(II) the person with whom the

18 agreement was made has not author19 ized, in writing, a longer time period

20 than the applicable period described in

21 subclause (I).

22 ‘‘(2) BENEFICIARIES OF FEDERAL ASSIST23 ANCE.—

24 ‘‘(A) OFFENSE.—A person who by false

25 pretenses, by the making of a representation
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1 that the supplier knows, or has reason to know,

2 is false or misleading, or through fraudulent

3 conduct, obtains a grant or loan of money, a

4 consumer good or service, or any other form of

5 assistance, directly or indirectly, from the Fed6 eral Government for use in connection with the

7 cleanup, repair, or other recovery from the ef8 fects of a major disaster shall be punished as

9 provided in subparagraph (B).

10 ‘‘(B) PENALTY.—A person who commits

11 an offense described in subparagraph (A) shall

12 be imprisoned not more than 10 years or fined

13 under title 18, United States Code, or both.

14 ‘‘(d) PRICE-GOUGING OF DISASTER VICTIMS.—

15 ‘‘(1) OFFENSE.—

16 ‘‘(A) IN GENERAL.—During the period be17 ginning on the date the existence of a major

18 disaster is declared by the President and ending

19 180 days after that date, and within the area

20 to which the declaration applies, it shall be un21 lawful for a supplier to provide, or to offer to

22 provide, any consumer good or service at an un23 conscionably excessive price (as determined

24 under subparagraph (B)).
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1 ‘‘(B) DETERMINATION OF UNCONSCION2 ABLY EXCESSIVE PRICE.—

3 ‘‘(i) IN GENERAL.—For the purpose

4 of subparagraph (A), whether a price is

5 unconscionably excessive shall be a ques6 tion of law for a court to determine. There

7 shall be considered to be prima facie evi8 dence that a price is unconscionably exces9 sive if—

10 ‘‘(I)(aa) the amount charged rep11 resents a gross disparity between the

12 price of the consumer good or service

13 that is the subject of the transaction

14 and the average price at which the

15 consumer good or service was pro16 vided, or offered to be provided, by

17 the supplier in the ordinary course of

18 business during the 30-day period im19 mediately prior to the declaration of

20 the existence of the disaster; or

21 ‘‘(bb) the amount charged grossly

22 exceeds the average price at which the

23 same or similar consumer goods or

24 services were readily obtainable by

25 consumers in the trade area during
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1 the 30-day period immediately prior

2 to the declaration of the existence of

3 the disaster; and

4 ‘‘(II) subject to clause (ii), the

5 amount by which the amount charged

6 exceeds the average price referred to

7 in subclause (I) is not attributable to

8 increased costs incurred by the sup9 plier in connection with the provision

10 of the consumer good or service.

11 ‘‘(ii) DETERMINATION OF INCREASED

12 COSTS OF SUPPLIER.—In determining the

13 increased costs incurred by a supplier

14 under clause (i)(II), an increase in the re15 placement cost to the supplier of a good

16 may not be taken into account unless the

17 supplier has no reasonable assurance of re18 couping the increased replacement cost in

19 a subsequent sale involving the good.

20 ‘‘(2) ENFORCEMENT.—

21 ‘‘(A) PENALTY.—A supplier who know22 ingly violates paragraph (1) shall be imprisoned

23 not more than 1 year or fined not more than
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1 $10,000, or both. In addition, a court may re2 quire disgorgement of any gain unlawfully ac3 quired and restitution to any injured party.

4 ‘‘(B) ACTIONS BY VICTIMS.—A person,

5 Federal agency, State, or local government that

6 suffers loss or damage as a result of a violation

7 of paragraph (1) may bring an action against

8 a supplier in a district court of the United

9 States for treble damages, disgorgement, special

10 or punitive damages, reasonable attorney’s fees,

11 costs and expenses of suit, and any other ap12 propriate legal or equitable relief, including in13 junctive relief.

14 ‘‘(C) ACTIONS BY STATE ATTORNEYS GEN15 ERAL.—An attorney general of a State, or other

16 authorized State official, may bring a civil ac17 tion in the name of the State, on behalf of per18 sons residing in the State, in a district court of

19 the United States that has jurisdiction over the

20 defendant for treble damages, disgorgement,

21 special or punitive damages, reasonable attor22 ney’s fees, costs and expenses of suit, and any

23 other appropriate legal or equitable relief, in24 cluding injunctive relief.
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1 ‘‘(3) NO PREEMPTION.—Nothing in this sub2 section preempts State law.

3 ‘‘(e) PROVISION OF FRAUD PREVENTION INFORMA4 TION.—The Director of the Federal Emergency Manage5 ment Agency shall—

6 ‘‘(1) in consultation with the Attorney General,

7 the Administrator of the Small Business Administra8 tion, State attorneys general, and other State offi9 cials with responsibility for fraud prevention, develop

10 public information materials to assist victims of

11 major disasters in detecting and avoiding suppliers

12 who attempt to obtain money or other things of

13 value from the victims in exchange for fraudulent or

14 otherwise unscrupulous offers of consumer goods or

15 services for the cleanup, repair, and other recovery

16 from the effects of the disasters; and

17 ‘‘(2) provide for the distribution of the mate18 rials developed under paragraph (1) to the victims of

19 each major disaster as soon as practicable after the

20 declaration of the existence of the disaster by the

21 President.’’.

22 (b) COMMISSION OF OFFENSE FOLLOWING A MAJOR

23 DISASTER TO BE CONSIDERED AN AGGRAVATING FAC24 TOR.—The United States Sentencing Commission, in the

25 exercise of the authority of the Commission under section
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1 994 of title 28, United States Code, shall review and, if

2 necessary, amend the sentencing guidelines promulgated

3 under the section to provide that the commission of an

4 offense under section 1341, 1343, or 2314 of title 18,

5 United States Code, in connection with the provision of

6 a consumer good or service (as defined in section

7 315(a)(2) of the Robert T. Stafford Disaster Relief and

8 Emergency Assistance Act (as amended by subsection

9 (a)(2))) for the cleanup, repair, or other recovery from the

10 effects of a major disaster declared by the President under

11 the Robert T. Stafford Disaster Relief and Emergency As12 sistance Act (42 U.S.C. 5121 et seq.) shall be an aggravat13 ing factor that may result in the imposition of a sentence

14 that is twice as great as a sentence that would otherwise

15 be imposed.

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