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H0088...........................................................by BUSINESS
FINANCIAL FRAUD PREVENTION ACT - Repeals, adds to and amends existing law
to set forth provisions of the Idaho Financial Fraud Prevention Act and the
Idaho Continuing-Care Disclosure Act.
02/02 House intro - 1st rdg - to printing
02/03 Rpt prt - to Bus
02/24 Rpt out - rec d/p - to 2nd rdg
02/25 2nd rdg - to 3rd rdg
03/07 3rd rdg - PASSED - 63-3-4
AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bedke, Bell,
Bilbao, Black, Block, Boe, Bolz, Bradford, Chadderdon, Clark,
Collins, Deal, Denney, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Garrett, Harwood, Henbest, Henderson, Jaquet, Jones, Kemp,
LeFavour, Martinez, Mathews, McGeachin, McKague, Miller, Mitchell,
Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie,
Snodgrass, Trail, Wills, Wood, Mr. Speaker
NAYS -- Barrett, Hart, Loertscher
Absent and excused -- Cannon, Crow, Lake, Stevenson
Floor Sponsor - Smith(30)
Title apvd - to Senate
03/08 Senate intro - 1st rdg - to Com/HuRes
03/16 Rpt out - rec d/p - to 2nd rdg
03/17 2nd rdg - to 3rd rdg
03/23 3rd rdg - PASSED - 34-0-0, 1 vacancy
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
Schroeder, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- (District 21 seat vacant)
Floor Sponsor - Cameron
Title apvd - to House
03/24 To enrol
03/28 Rpt enrol - Sp signed
03/29 Pres signed
03/30 To Governor
04/05 Governor signed
Session Law Chapter 265
Effective: 07/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 88
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE DEPARTMENT OF FINANCE; REPEALING SECTIONS 67-2750 THROUGH
3 67-2764, IDAHO CODE, RELATING TO THE IDAHO CONTINUING-CARE DISCLOSURE ACT;
4 AMENDING CHAPTER 27, TITLE 67, IDAHO CODE, BY THE ADDITION OF A NEW SEC-
5 TION 67-2750, IDAHO CODE, TO PROVIDE A SHORT TITLE; AMENDING CHAPTER 27,
6 TITLE 67, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2751, IDAHO
7 CODE, TO DEFINE TERMS; AMENDING CHAPTER 27, TITLE 67, IDAHO CODE, BY THE
8 ADDITION OF A NEW SECTION 67-2752, IDAHO CODE, TO SET FORTH PROHIBITED
9 CONDUCT; AMENDING CHAPTER 27, TITLE 67, IDAHO CODE, BY THE ADDITION OF A
10 NEW SECTION 67-2753, IDAHO CODE, TO PROHIBIT THE EMPLOYMENT OR AFFILIATION
11 OF CERTAIN PERSONS; AMENDING CHAPTER 27, TITLE 67, IDAHO CODE, BY THE
12 ADDITION OF A NEW SECTION 67-2754, IDAHO CODE, TO SET FORTH THE POWERS OF
13 THE DIRECTOR OF THE DEPARTMENT OF FINANCE; AMENDING CHAPTER 27, TITLE 67,
14 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2755, IDAHO CODE, TO PRO-
15 VIDE FOR INJUNCTIONS AND OTHER REMEDIES; AMENDING CHAPTER 27, TITLE 67,
16 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2756, IDAHO CODE, TO PRO-
17 VIDE FOR CUSTOMER INDEMNIFICATION; AMENDING CHAPTER 27, TITLE 67, IDAHO
18 CODE, BY THE ADDITION OF A NEW SECTION 67-2757, IDAHO CODE, TO PROVIDE FOR
19 THE INSTITUTION OF CRIMINAL PROCEEDINGS; AMENDING CHAPTER 27, TITLE 67,
20 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2758, IDAHO CODE, TO PRO-
21 VIDE CRIMINAL PENALTIES AND TO LIMIT ACTIONS; AMENDING CHAPTER 27, TITLE
22 67, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2759, IDAHO CODE, TO
23 PROVIDE THAT CRIMINAL PUNISHMENT IS NOT EXCLUSIVE; AMENDING CHAPTER 27,
24 TITLE 67, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2760, IDAHO
25 CODE, TO PROVIDE FOR JUDICIAL REVIEW OF ORDERS; AMENDING CHAPTER 27, TITLE
26 67, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 67-2761, IDAHO CODE, TO
27 PROVIDE FOR ADMINISTRATION; AMENDING CHAPTER 27, TITLE 67, IDAHO CODE, BY
28 THE ADDITION OF A NEW SECTION 67-2762, IDAHO CODE, TO PROVIDE FOR ADMINIS-
29 TRATIVE PUBLIC HEARINGS AND TO PROVIDE AN EXCEPTION; AMENDING TITLE 26,
30 IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 37, TITLE 26, IDAHO CODE, TO
31 PROVIDE A SHORT TITLE, TO PROVIDE A STATEMENT OF PURPOSE, TO DEFINE TERMS,
32 TO PROVIDE FOR REGISTRATION AND ANNUAL FEES, TO REQUIRE DISCLOSURE STATE-
33 MENTS OF FINANCIAL RESPONSIBILITY, TO PROVIDE FOR SPECIFICATION FOR RESI-
34 DENCE CONTRACTS, TO PROVIDE FOR ESCROWS, TRUSTS, SURETY BONDS AND COLLEC-
35 TION OF DEPOSITS, TO PROHIBIT CROSS-COLLATERALIZATION, TO PROVIDE FOR
36 AUDITS, TO PROVIDE CIVIL LIABILITY, TO PROVIDE FOR INJUNCTIONS, TO SET
37 FORTH GROUNDS FOR DENIAL, SUSPENSION OR REVOCATION OF REGISTRATION, TO
38 PROVIDE FOR OATHS AND SUBPOENAS, TO PROVIDE PUNISHMENT, TO SPECIFY EXEMP-
39 TION FROM CRIMINAL PROSECUTION FOR TESTIMONY, TO PROVIDE CRIMINAL PENAL-
40 TIES AND TO PROVIDE FOR REGULATORY AUTHORITY; AMENDING SECTION 26-1111,
41 IDAHO CODE, TO PROVIDE A CODE REFERENCE; AMENDING CHAPTER 22, TITLE 26,
42 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 26-2226, IDAHO CODE, TO SET
43 FORTH PROHIBITED CONDUCT; AMENDING SECTION 26-2501, IDAHO CODE, TO REVISE
44 A DEFINITION; AMENDING SECTION 26-2505, IDAHO CODE, TO PROVIDE FOR ADMIN-
45 ISTRATION AND ENFORCEMENT BY THE DIRECTOR OF THE IDAHO DEPARTMENT OF
46 FINANCE AND TO MAKE TECHNICAL CORRECTIONS; AND TO PROVIDE FOR SEVERABIL-
2
1 ITY.
2 Be It Enacted by the Legislature of the State of Idaho:
3 SECTION 1. That Sections 67-2750 through 67-2764, Idaho Code, be, and the
4 same are hereby repealed.
5 SECTION 2. That Chapter 27, Title 67, Idaho Code, be, and the same is
6 hereby amended by the addition thereto a NEW SECTION, to be known and desig-
7 nated as Section 67-2750, Idaho Code, and to read as follows:
8 67-2750. SHORT TITLE. This act shall be known and may be cited as the
9 "Idaho Financial Fraud Prevention Act."
10 SECTION 3. That Chapter 27, Title 67, Idaho Code, be and the same is
11 hereby amended by the addition of a NEW SECTION, to be known and designated as
12 Section 67-2751, Idaho Code, and to read as follows:
13 67-2751. DEFINITIONS. As used in sections 67-2750 through 67-2762, Idaho
14 Code:
15 (1) "Act" or "Idaho Financial Fraud Prevention Act" means sections
16 67-2750 through 67-2762, Idaho Code.
17 (2) "Department" means the Idaho department of finance.
18 (3) "Director" means the director of the Idaho department of finance or
19 his designee.
20 (4) "Financial institution" means any state or federally chartered bank,
21 savings bank, savings and loan association, thrift institution, holding com-
22 pany, credit union, credit union service organization, "regulated lender" as
23 defined in section 28-41-301(37), Idaho Code, collection agency licensed under
24 the Idaho collection agency act, mortgage lender, mortgage broker, or loan
25 originator licensed under the Idaho residential mortgage practices act, licen-
26 see under the Idaho money transmitters act, escrow agency, or broker-dealer or
27 investment advisor licensed under the Idaho securities act or federal law, or
28 such an institution licensed under the laws of another state, and doing busi-
29 ness in Idaho.
30 (5) "Person" means a natural person, firm, partnership, association, cor-
31 poration, limited liability company, limited liability partnership, trust, or
32 any other association of individuals, however organized, and whether or not
33 citizens or residents of this state.
34 SECTION 4. That Chapter 27, Title 67, Idaho Code, be and the same is
35 hereby amended by the addition of a NEW SECTION, to be known and designated as
36 Section 67-2752, Idaho Code, and to read as follows:
37 67-2752. FINANCIAL FRAUD ILLEGAL. It is unlawful for any person, directly
38 or indirectly:
39 (1) To employ any device, scheme or artifice to defraud a financial
40 institution;
41 (2) To obtain or attempt to obtain money, funds, credits, assets, securi-
42 ties, or other property owned by, or under the custody or control of a finan-
43 cial institution by means of false or fraudulent pretenses, representations,
44 or promises or through the use of any fraudulent device, scheme, artifice, or
45 fraudulent monetary instrument;
46 (3) To falsely represent that a person is a financial institution or a
47 representative of a financial institution, for the purpose of obtaining money,
3
1 goods, or services from any person;
2 (4) To obtain or record or attempt to obtain or record, personal identi-
3 fying information of another person without the authorization of that person,
4 for the purpose of obtaining money, goods, or services from any person,
5 through a false or fraudulent representation that the person doing so is a
6 financial institution. "Personal identifying information" has the same meaning
7 as set forth in section 18-3122(10), Idaho Code, or any successor to that sec-
8 tion;
9 (5) To fraudulently make, emboss, encode, or use a financial transaction
10 card, financial transaction card account number, personal identification code
11 or credit card sales draft, as defined in sections 18-3122, 18-3123, 18-3124
12 and 18-3125A, Idaho Code, or any successors to those sections, for the purpose
13 of obtaining money, goods, or services from any person; or
14 (6) While serving as an employee, agent or representative of a financial
15 institution, to obtain or attempt to obtain the money, funds, credits, assets,
16 securities, or other property owned by, held by, or under the custody or con-
17 trol of, the financial institution by means of false or fraudulent pretenses,
18 representations, or promises or by means of any fraudulent device, scheme or
19 artifice, or through the use of a fraudulent monetary instrument.
20 SECTION 5. That Chapter 27, Title 67, Idaho Code, be and the same is
21 hereby amended by the addition of a NEW SECTION, to be known and designated as
22 Section 67-2753, Idaho Code, and to read as follows:
23 67-2753. EMPLOYMENT OR AFFILIATION OF CERTAIN PERSONS. Except with the
24 prior written consent of the director, no person who has been convicted of, or
25 who has pled nolo contendre to, any criminal offense involving dishonesty,
26 breach of trust or fiduciary duty, or money laundering, or who has been
27 granted a withheld judgment based on such offense, or who has been found to
28 have violated this act, shall seek employment with, accept employment by,
29 become employed by, or continue in their employment with an Idaho state char-
30 tered or licensed financial institution.
31 SECTION 6. That Chapter 27, Title 67, Idaho Code, be and the same is
32 hereby amended by the addition of a NEW SECTION, to be known and designated as
33 Section 67-2754, Idaho Code, and to read as follows:
34 67-2754. POWERS OF DIRECTOR. The director shall have the following powers
35 and authority under this act:
36 (1) Investigations. The director may make such public or private investi-
37 gations within or without this state as he deems necessary to determine
38 whether any person has violated this act or is attempting or conspiring to
39 violate this act. The investigative powers of the director under this act
40 shall include, but not be limited to, participating in joint or multistate
41 investigations with any regulatory or law enforcement agencies of this state,
42 any other state, the federal government or authorized agency thereof, or any
43 regulatory or law enforcement agency of another country. The director may also
44 participate in any antifraud or criminal information network or service avail-
45 able to the director or the department.
46 (2) Statements. The director may require or permit any person to file a
47 statement in writing, under oath, to appear before the director and give tes-
48 timony, or otherwise, as the director may determine, as to all the facts and
49 circumstances concerning the matter to be investigated.
50 (3) Publication. The director may publish information concerning any
51 violation or attempted violation of this act, or any rule or order hereunder.
4
1 (4) Subpoenas and production. Either in the course of an investigation,
2 or in any administrative proceeding brought pursuant to this act, in addition
3 to the powers and penalties set forth in section 67-2717, Idaho Code, the
4 director may subpoena documents and witnesses, take evidence, require the pro-
5 duction of any books, papers, correspondence, memoranda, agreements or other
6 documents or records in any form or on any media, which the director, in his
7 discretion, deems material or relevant.
8 (a) Failure to comply. In case of contumacy or refusal to obey a subpoena
9 or order to compel production issued to any person, any court of competent
10 jurisdiction, upon application by the director, may issue to that person
11 an order requiring him to appear before the director or the officer desig-
12 nated by him, to produce documentary evidence if so ordered, to appear and
13 produce testimony if so ordered, or to give evidence relating to the mat-
14 ter under investigation or proceeding and any failure to obey such order
15 of the court may be punished by the court as a contempt of court.
16 (b) Use of evidence or testimony. No person is excused from attending
17 and testifying, from producing any document or record before the director
18 or obeying the subpoena of the director or any officer designated by him
19 or in any proceeding instituted by the director on the ground that the
20 testimony or evidence, documentary or otherwise, required of him may tend
21 to incriminate him or subject him to a penalty or forfeiture; but no indi-
22 vidual may be prosecuted or subjected to any penalty or forfeiture for or
23 on account of any transaction, matter or thing concerning which he is com-
24 pelled, after claiming his privilege against self-incrimination, to tes-
25 tify, except that the individual so testifying shall not be exempt from
26 prosecution and punishment for perjury committed in so testifying.
27 SECTION 7. That Chapter 27, Title 67, Idaho Code, be and the same is
28 hereby amended by the addition of a NEW SECTION, to be known and designated as
29 Section 67-2755, Idaho Code, and to read as follows:
30 67-2755. INJUNCTIONS -- OTHER REMEDIES. Whenever it appears to the direc-
31 tor that any person has engaged or is about to engage in any act or practice
32 constituting a violation of any provision of this act or any rule or order
33 hereunder, he may in his discretion:
34 (1) Order the person to cease and desist from the violation or attempted
35 violation of any provision of this act, rule or order hereunder, if, in the
36 determination of the director, it is necessary to protect any financial insti-
37 tution or the public, or a person is violating or is about to violate this
38 act, or other good cause justifies the same, without prior notice to the per-
39 son or opportunity for hearing.
40 (2) Order the person to cease and desist from the violation or attempted
41 violation of any provision of this act, rule or order hereunder and, after
42 giving reasonable notice and opportunity for a hearing, issue the following:
43 (a) An order restoring to any financial institution or person in interest
44 any consideration, funds or property which may have been acquired or
45 transferred in violation of this act;
46 (b) An order that the person violating this act, or any rule or order
47 hereunder, pay a civil penalty to the department of finance in an amount
48 not to exceed five thousand dollars ($5,000) for each violation. In the
49 event a person violating this act knowingly accepts money representing (i)
50 equity in a person's home, (ii) a withdrawal from any individual retire-
51 ment account or similar account or (iii) a withdrawal from any qualified
52 retirement plan as defined in the Internal Revenue Code, that person may
53 be ordered by the director to pay a civil penalty to the department of
5
1 finance in an amount not to exceed ten thousand dollars ($10,000) for each
2 violation.
3 (c) In addition to the penalties set forth in paragraph (b) of this sub-
4 section, in the event a person violating this act has knowledge that the
5 victim is an elder or dependent adult, that person may be ordered by the
6 director to pay a civil penalty to the department of finance in an amount
7 not to exceed ten thousand dollars ($10,000) for each violation. As used
8 in this section, "elder" means any person who is sixty-five (65) years of
9 age or older. As used in this section, "dependent adult" means any person
10 who is between the ages of eighteen (18) and sixty-four (64) years, who
11 has physical or mental limitations which restrict the person's ability to
12 carry out normal activities or to protect the person's rights including,
13 but not limited to, persons who have physical or developmental disabili-
14 ties or whose physical or mental abilities have diminished because of age
15 or illness;
16 (d) An order that the person violating this act, or any rule or order
17 hereunder, pay costs, which in the discretion of the director may include
18 an amount representing reasonable attorney's fees and reimbursements of
19 investigative efforts; or
20 (e) An order granting other appropriate remedies.
21 (3) Enter into a consent order, or other administrative order or agree-
22 ment, setting forth requirements, limitations and restrictions on the future
23 conduct or practices of a person violating this act. A consent order, or
24 other administrative order or agreement entered into pursuant to this act, may
25 include assessment of any of the penalties authorized in subsection (2) of
26 this section.
27 (4) Bring an action in any court of competent jurisdiction to enjoin any
28 such acts or practices and to enforce compliance with this act or any rule or
29 order hereunder. Upon a showing that a person has engaged or is about to
30 engage in any act or practice constituting a violation of this act or any rule
31 hereunder, a permanent or temporary injunction, restraining order or writ of
32 mandamus shall be granted. The director shall not be required to furnish a
33 bond.
34 (5) In addition to the remedies in subsection (4) of this section, the
35 director, in his discretion and upon a showing in any court of competent
36 jurisdiction that a person has violated the provisions of this act or any rule
37 or order hereunder, may be granted the following additional remedies:
38 (a) An order restoring to any financial institution or to any person in
39 interest any consideration, funds or property which may have been acquired
40 or transferred in violation of this act;
41 (b) An order that the person violating this act, rules or any order here-
42 under pay a civil penalty to the department of finance in an amount not to
43 exceed ten thousand dollars ($10,000) for each violation;
44 (c) An order awarding the director all costs incurred, which in the dis-
45 cretion of the court may include an amount representing reasonable attor-
46 ney's fees and reimbursements for investigative efforts; or
47 (d) An order granting other appropriate remedies.
48 (6) Liability for sanctions, both civil and criminal, and personal juris-
49 diction shall extend to all persons who engaged in violations or attempted
50 violations or who aided and abetted others or conspired with others in viola-
51 tions or attempted violations of this act and rules and orders hereunder.
52 Officers and directors of corporations shall not be exempt from actions
53 brought for violations, merely because of their capacity as officers or direc-
54 tors, if they have participated in acts making the violations possible or if
55 they have actual or constructive knowledge of violations by the corporation
6
1 while acting as an officer, director or member.
2 SECTION 8. That Chapter 27, Title 67, Idaho Code, be and the same is
3 hereby amended by the addition of a NEW SECTION, to be known and designated as
4 Section 67-2756, Idaho Code, and to read as follows:
5 67-2756. CUSTOMER INDEMNIFICATION. In the event a financial institution
6 indemnifies its customer for damages caused by a violation of this act, or
7 assumes the loss caused its customer by a violation of this act, the financial
8 institution shall be entitled to sue the violator, at law or in equity, to
9 recover any actual damages suffered by its customer, plus costs and attorney's
10 fees incurred in the bringing of the action.
11 SECTION 9. That Chapter 27, Title 67, Idaho Code, be and the same is
12 hereby amended by the addition of a NEW SECTION, to be known and designated as
13 Section 67-2757, Idaho Code, and to read as follows:
14 67-2757. INSTITUTION OF CRIMINAL PROCEEDINGS. The director may refer such
15 evidence as may be available concerning violations of this act or any rule or
16 order hereunder to the attorney general, prosecuting attorney, United States
17 attorney, county, state or federal law enforcement agency, or foreign law
18 enforcement agency or prosecutor. Any county prosecuting attorney, or the
19 attorney general may, in his discretion, with or without such a referral,
20 institute appropriate criminal proceedings under this act.
21 SECTION 10. That Chapter 27, Title 67, Idaho Code, be and the same is
22 hereby amended by the addition of a NEW SECTION, to be known and designated as
23 Section 67-2758, Idaho Code, and to read as follows:
24 67-2758. CRIMINAL PENALTIES FOR VIOLATIONS -- LIMITATION OF ACTIONS. (1)
25 Any person who violates any provision of this act or who violates any rule or
26 order hereunder, shall be guilty of a felony and, upon conviction, be fined
27 not more than five thousand dollars ($5,000) or imprisoned not more than three
28 (3) years, or both.
29 (2) In the event a person violates any provision of this act or any rule
30 or order hereunder, and accepts money under any of the circumstances described
31 in section 67-2755(2)(b), Idaho Code, or accepts money under any of the facts
32 described in section 67-2755(2)(c), Idaho Code, shall, upon conviction, be
33 fined not more than ten thousand dollars ($10,000) or imprisoned not more than
34 five (5) years for each violation, or both.
35 (3) No indictment or information may be returned under this act more than
36 five (5) years after the alleged violation.
37 SECTION 11. That Chapter 27, Title 67, Idaho Code, be and the same is
38 hereby amended by the addition of a NEW SECTION, to be known and designated as
39 Section 67-2759, Idaho Code, and to read as follows:
40 67-2759. CRIMINAL PUNISHMENT UNDER THIS ACT NOT EXCLUSIVE. Nothing in
41 this act limits the power of the state or any other law enforcement agency to
42 proceed against and punish any person for any conduct which constitutes a
43 crime under any applicable law, statute, code or ordinance.
44 SECTION 12. That Chapter 27, Title 67, Idaho Code, be and the same is
45 hereby amended by the addition of a NEW SECTION, to be known and designated as
46 Section 67-2760, Idaho Code, and to read as follows:
7
1 67-2760. JUDICIAL REVIEW OF ORDERS. Any person aggrieved by a final order
2 of the director may obtain judicial review of that order pursuant to the pro-
3 visions of chapter 52, title 67, Idaho Code.
4 SECTION 13. That Chapter 27, Title 67, Idaho Code, be and the same is
5 hereby amended by the addition of a NEW SECTION, to be known and designated as
6 Section 67-2761, Idaho Code, and to read as follows:
7 67-2761. ADMINISTRATION OF ACT -- RULES, FORMS AND ORDERS. The adminis-
8 tration of the provisions of this act shall be under the general supervision
9 and control of the director. The director may from time to time make, amend
10 and rescind such rules, forms and orders as are necessary to carry out the
11 provisions of this act. No rule or form may be made unless the director finds
12 that the action is necessary or appropriate in the public interest or for the
13 protection of financial institutions and consistent with the purposes of this
14 act.
15 SECTION 14. That Chapter 27, Title 67, Idaho Code, be and the same is
16 hereby amended by the addition of a NEW SECTION, to be known and designated as
17 Section 67-2762, Idaho Code, and to read as follows:
18 67-2762. ADMINISTRATIVE PUBLIC HEARINGS -- EXCEPTION. Every hearing in an
19 administrative proceeding shall be public unless the director in his discre-
20 tion grants a request that the hearing be conducted privately.
21 SECTION 15. That Title 26, Idaho Code, be, and the same is hereby amended
22 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
23 ter 37, Title 26, Idaho Code, and to read as follows:
24 CHAPTER 37
25 IDAHO CONTINUING-CARE DISCLOSURE ACT
26 26-3701. SHORT TITLE. This chapter shall be known and may be cited as the
27 "Idaho Continuing-Care Disclosure Act."
28 26-3702. STATEMENT OF PURPOSE. The legislature recognizes that continuing
29 care communities have become an important and necessary alternative for the
30 long-term residential, social and health maintenance needs for many of the
31 state's elderly citizens.
32 The legislature finds and declares that tragic consequences can result to
33 citizens of the state when a provider of services under a continuing care
34 agreement becomes insolvent or unable to provide responsible care. The legis-
35 lature recognizes the need for full disclosure with respect to the terms of
36 agreements between prospective residents and the provider and the operations
37 of such providers. Accordingly, the legislature has determined that these
38 providers should be regulated in accordance with the provisions of this chap-
39 ter. The provisions of this chapter apply equally to for-profit and not-for-
40 profit provider organizations. The provisions of this chapter shall be the
41 minimum requirements to be imposed upon any person, association or organiza-
42 tion offering or providing continuing care as set forth in this chapter.
43 26-3703. DEFINITIONS. As used in this chapter:
44 (1) "Continuing care" means the furnishing to an individual, other than
45 an individual related by blood, marriage, or adoption to the person furnishing
46 the care, of lodging together with nursing services, medical services, or
8
1 other health related services, pursuant to an agreement requiring an entrance
2 fee.
3 (2) "Department" means the department of finance.
4 (3) "Director" means the director of the department of finance or his
5 authorized designee.
6 (4) "Entrance fee" means an initial or deferred transfer to a provider of
7 a sum of money or other property made or promised to be made as full or par-
8 tial consideration for acceptance of a specified individual as a resident in a
9 facility. A fee which is less than the sum of the regular periodic charges for
10 six (6) months of residency will not be considered to be an entrance fee for
11 the purposes of this chapter.
12 (5) "Facility" means the place or places in which a person undertakes to
13 provide continuing care to an individual.
14 (6) "Living unit" means a room, apartment, cottage or other area within a
15 facility set aside for the exclusive use or control of one (1) or more identi-
16 fied individuals.
17 (7) "Provider" means the promoter, developer, or owner of a continuing
18 care facility, whether a natural person, partnership, unincorporated associa-
19 tion, trust, or corporation, or any other person, or that person's successors
20 or assigns that solicits or undertakes to provide continuing care to the pub-
21 lic under a continuing care facility contract.
22 (8) "Resident" means an individual entitled to receive continuing care in
23 a facility.
24 26-3704. REGISTRATION -- ANNUAL FEE. Each provider who provides continu-
25 ing care services in this state shall register with the director on forms pro-
26 vided by the department and shall pay an annual registration fee. Such regis-
27 tration fee shall be fixed by the director but shall not exceed five hundred
28 dollars ($500) per facility. No provider shall be allowed to operate a facil-
29 ity until so registered and until the provider has filed with the director a
30 disclosure statement as set forth in section 26-3705, Idaho Code. All fees
31 received by the director shall be deposited into the finance administrative
32 account pursuant to section 67-2702, Idaho Code.
33 26-3705. DISCLOSURE STATEMENT OF FINANCIAL RESPONSIBILITY. As a condition
34 to registration with the department, each provider must file evidence of
35 financial responsibility. Said evidence shall be on registration forms pro-
36 vided by the director. The registration forms shall request such information
37 as the director, in his discretion, shall deem appropriate to carry out the
38 functions of this chapter. The director shall require, however, the following
39 information to be included on the provider's statement of financial responsi-
40 bility:
41 (1) The names and business addresses of the officers, directors,
42 trustees, managing or general partners, any person having a ten percent (10%)
43 or greater equity or beneficial interest in the provider, and any person who
44 will be managing the facility on a day-to-day basis, and a description of
45 these persons' interests in or occupations with the provider.
46 (2) Information as follows on all persons named in response to the infor-
47 mation required in subsection (1) of this section:
48 (a) A description of the business experience of this person, if any, in
49 the operation or management of similar facilities;
50 (b) The name and address of any professional service, firm, association,
51 trust, partnership, or corporation in which this person has, or which has
52 in this person, a ten percent (10%) or greater interest and which it is
53 presently intended shall currently or in the future provide goods, leases,
9
1 or services to the facility, or to residents of the facility, of an aggre-
2 gate value of five hundred dollars ($500) or more within any year, includ-
3 ing a description of the goods, leases, or services and the probable or
4 anticipated cost thereof to the facility, provider, or residents or a
5 statement that this cost cannot presently be estimated; and
6 (c) A description of any matter in which the person: (i) has been con-
7 victed, or found guilty of, or received a withheld judgment for a felony,
8 or been held liable, or enjoined in a civil action by final judgment,
9 which civil action involved fraud, embezzlement, fraudulent conversion, or
10 misappropriation of property; or (ii) is subject to a currently effective
11 injunctive or restrictive court order in any action involving fraud,
12 embezzlement, fraudulent conversion, or misappropriation of property; or
13 (iii) within the past five (5) years, had any local, state or federal
14 license or permit suspended or revoked as a result of fraud, embezzlement,
15 fraudulent conversion, or misappropriation of property.
16 (3) A statement as to whether the provider is, or is not affiliated with,
17 an eleemosynary or other nonprofit organization, the extent of the affilia-
18 tion, if any, the extent to which the affiliate organization will be responsi-
19 ble for the financial and contract obligations of the provider, and the provi-
20 sion of the federal Internal Revenue Code, if any, under which the provider or
21 affiliate is exempt from the payment of income tax.
22 (4) A detailed description of all fees required of residents, including
23 the entrance fee and periodic charges, if any. The description shall include,
24 but not be limited to:
25 (a) The circumstances under which the resident will be permitted to
26 remain in the facility in the event of financial difficulties of the resi-
27 dent;
28 (b) The terms and conditions under which a contract for continuing care
29 at the facility may be canceled by the provider or by the resident, and
30 the conditions under which all or any portion of the entrance fee will be
31 refunded in the event of cancellation of the contract by the provider or
32 by the resident or in the event of the death of the resident prior to or
33 following occupancy of a living unit;
34 (c) The manner by which the provider may adjust periodic charges or other
35 recurring fees and the limitations on these adjustments, if any; and, if
36 the facility is already in operation, or if the provider or manager oper-
37 ates one (1) or more similar continuing care locations within this state,
38 tables shall be included showing the frequency and average dollar amount
39 of each increase in periodic charges, or other recurring fees at each
40 facility or location for the previous five (5) years, or such shorter
41 period as the facility or location may have been operated by the provider
42 or manager.
43 (5) The health and financial conditions required for an individual to be
44 accepted as a resident and to continue as a resident once accepted, including
45 the effect of any change in the health or financial condition of a person
46 between the date of entering a contract for continuing care and the date of
47 initial occupancy of a living unit by that person.
48 (6) The provisions that have been made or will be made to provide reserve
49 funding or security to enable the provider to perform its obligations fully
50 under contracts to provide continuing care at the facility, including the
51 establishment of escrow accounts, trusts, or reserve funds, together with the
52 manner in which these funds will be invested, and the names and experience of
53 any individuals in the direct employment of the provider who will make the
54 investment decisions.
55 (7) Certified financial statements of the provider, including (i) a bal-
10
1 ance sheet as of the end of the most recent fiscal year, and (ii) income
2 statements for the three (3) most recent fiscal years of the provider or such
3 shorter period of time as the provider shall have been in existence. The
4 director shall only accept certified financial statements that have been pre-
5 pared and certified by or under the direction of a certified public accoun-
6 tant. If the provider's fiscal year ended more than one hundred twenty (120)
7 days prior to the date the disclosure statement is recorded, interim financial
8 statements as of a date not more than ninety (90) days prior to the date of
9 recording the statement shall be included, but need not be certified.
10 (8) A summary of a report of an actuary, updated every five (5) years,
11 that estimates the capacity of the provider to meet its contract obligation to
12 the residents. Disclosure statements of continuing care facilities established
13 prior to January 1, 1988, do not need an actuary report or summary until Janu-
14 ary 1, 1993.
15 (9) If operation of the facility has not yet commenced, a detailed and
16 itemized statement of the anticipated source and application of the funds used
17 or to be used in the purchase or construction of the facility. Said statements
18 shall also include a detailed and itemized estimate of the funds, if any, that
19 are anticipated to be necessary to fund start-up losses and provide reserve
20 funds to assure full performance of the obligations of the provider under con-
21 tracts for the provision of continuing care.
22 (10) Pro forma annual income statements and balance sheets for the facil-
23 ity for a period of not less than five (5) fiscal years with supporting docu-
24 mentation as the director may, in his discretion, require.
25 (11) All material information relevant to a decision of a prospective res-
26 ident to enter into a continuing care contract with the provider, whether or
27 not specifically requested by the director.
28 (12) All other information required by the director.
29 (13) The cover page of the disclosure statement shall state, in a promi-
30 nent location and in boldface type, the date of the disclosure statement, the
31 last date through which that disclosure statement may be delivered if not ear-
32 lier revised, and that the delivery of the disclosure statement to a contract-
33 ing party before the execution of a contract for the provision of continuing
34 care is required by this chapter but that the disclosure statement has not
35 been reviewed or approved by any government agency or representative to ensure
36 accuracy or completeness of the information set out.
37 (14) A copy of the standard form of contract for continuing care used by
38 the provider shall be attached to and be considered a part of the disclosure
39 statement.
40 26-3706. SPECIFICATION FOR RESIDENCE CONTRACTS. (1) In addition to such
41 other provisions as may be considered proper to effectuate the purpose of any
42 continuing care agreement, each agreement executed on and after the date of
43 the adoption of this chapter shall be written in nontechnical language easily
44 understood by a layperson and shall:
45 (a) Show the value of all property transferred, including donations, sub-
46 scriptions, fees and any other amounts paid or payable by, or on behalf
47 of, the resident or residents;
48 (b) Specify in detail all services which are to be provided by the pro-
49 vider to each resident;
50 (c) Describe the health and financial conditions upon which the provider
51 may have the resident relinquish his space in the designated facility;
52 (d) State the fees and conditions that will apply if the resident marries
53 while at the designated facility;
54 (e) Provide that the agreement may be canceled upon the giving of notice
11
1 of cancellation of at least thirty (30) days by the resident. An agreement
2 may be canceled by the provider if there has been a good faith determina-
3 tion in writing, signed by the medical director and the administrator of
4 the facility, that a resident is a danger to himself or others;
5 (f) Provide in print no smaller than the largest type used in the body of
6 said agreement, the terms governing the refund of any portion of the
7 entrance fee;
8 (g) State the terms under which an agreement is canceled by the death of
9 the resident. The agreement may contain a provision to the effect that,
10 upon the death of the resident, the moneys paid for the continuing care of
11 such resident shall be considered earned and become the property of the
12 provider;
13 (h) Provide for advance notice to the resident, of not less than thirty
14 (30) days, before any change in fees or charges or the scope of care or
15 services may be effective, except for changes required by state or federal
16 assistance programs;
17 (i) Provide that charges for care paid in one (1) lump sum shall not be
18 increased or changed during the duration of the agreed upon care, except
19 for changes required by state or federal assistance programs.
20 (2) A resident shall have the right to rescind a continuing care agree-
21 ment, without penalty or forfeiture, within seven (7) days after making an
22 initial deposit or executing the agreement. A resident shall not be required
23 to move into the facility designated in the agreement before the expiration of
24 the seven (7) day period.
25 (3) If a resident dies before occupancy date, or through illness, injury
26 or incapacity is precluded from becoming a resident under the terms of the
27 continuing care agreement, the agreement is automatically rescinded and the
28 resident or his legal representative shall receive a full refund of all moneys
29 paid to the facility, except those costs specifically incurred by the facility
30 at the request of the resident and set forth in writing in a separate adden-
31 dum, signed by both parties to the agreement.
32 (4) No agreement for care shall permit dismissal or discharge of the res-
33 ident from the facility providing care prior to the expiration of the agree-
34 ment, without just cause for such a removal. Just cause may include, but not
35 be limited to, a good faith determination in writing, signed by the medical
36 director and the administrator of the facility that a resident is a danger to
37 himself or others while remaining in the facility. Dismissal for just cause
38 shall not affect the resident's qualification for a refund under the contract.
39 (5) No act, agreement or statement of any resident, or of any individual
40 purchasing care for a resident under any agreement to furnish care to the res-
41 ident, shall constitute a valid waiver of any provision of this chapter
42 intended for the benefit or protection of the resident or the individual pur-
43 chasing care for the resident.
44 26-3707. ESCROW -- TRUST -- SURETY BOND -- COLLECTION OF DEPOSITS. (1) A
45 provider shall establish an escrow account with a bank or a trust company,
46 that is located in Idaho, agreed upon by the provider and the resident. The
47 terms of this escrow account shall provide that the total amount of any
48 entrance fee received by the provider prior to the date the resident is per-
49 mitted to occupy a living unit in the facility be placed in this escrow
50 account. These funds may be released only as follows:
51 (a) If the entrance fee applies to a living unit that has been previously
52 occupied in the facility, the entrance fee shall be released to the pro-
53 vider when the living unit becomes available for occupancy by the new res-
54 ident;
12
1 (b) If the entrance fee applies to a living unit which has not been pre-
2 viously occupied by any resident, the entrance fee shall be released to
3 the provider when the escrow agent is satisfied that:
4 (i) Construction or purchase of the living unit has been completed
5 and an occupancy permit, if applicable, covering the living unit has
6 been issued by the local government having authority to issue such
7 permits;
8 (ii) A commitment has been received by the provider for any perma-
9 nent mortgage loan, long-term financing or other source of capital
10 and any conditions of the commitment prior to disbursement of funds
11 thereunder have been substantially satisfied; and
12 (iii) Aggregate entrance fees received or receivable by the provider
13 pursuant to binding continuing care retirement community contracts,
14 plus the anticipated proceeds of any first mortgage loan, long-term
15 financing commitment, or other source of capital, are equal to not
16 less than ninety percent (90%) of the aggregate cost of constructing
17 or purchasing, equipping and furnishing the facility plus not less
18 than ninety percent (90%) of the funds estimated in the statement of
19 anticipated source and application of funds submitted by the provider
20 as that part of the disclosure statement required in section 26-3705,
21 Idaho Code, to be necessary to fund start-up losses and assure full
22 performance of the obligations of the provider pursuant to continuing
23 care retirement community contracts.
24 (2) Upon receipt by the escrow agent of a request by the provider for the
25 release of these escrow funds, the escrow agent shall approve release of the
26 funds within five (5) working days unless the escrow agent finds that the
27 requirements of subsection (1) of this section have not been met and notifies
28 the provider of the basis for this finding. The request for release of the
29 escrow funds shall be accompanied by any documentation the fiduciary requires.
30 (3) If the provider fails to meet the requirements for release of funds
31 held in this escrow account within a time period the escrow agent considers
32 reasonable, these funds shall be returned by the escrow agent to the persons
33 who have made payment to the provider. The escrow agent shall notify the pro-
34 vider of the length of this time period when the provider requests release of
35 the funds.
36 (4) An entrance fee held in escrow may be returned by the escrow agent to
37 the person who made payment to the provider at any time upon receipt by the
38 escrow agent of notice from the provider that this person is entitled to a
39 refund of the entrance fee.
40 (5) In addition to the escrow requirement of this section, each provider
41 shall provide a surety bond or an irrevocable letter of credit in a form
42 acceptable to the department. Any surety bond offered as evidence of finan-
43 cial responsibility must be written by a company authorized to do business in
44 this state. The bond must be in effect at any time that funds remain in escrow
45 under the provisions of this section and shall be an amount not less than the
46 aggregate value of all outstanding amounts in escrow.
47 26-3708. CROSS-COLLATERALIZATION PROHIBITED. No part of the entrance fee
48 placed in escrow may be pledged by the provider as collateral for the purpose
49 of securing loans for any purpose other than providing for the care of the
50 resident.
51 26-3709. AUDITS. Each provider upon annual renewal of registration shall
52 provide to the director certified audited reports of the financial condition
53 of the facility and shall amend the disclosure required by section 26-3704,
13
1 Idaho Code, as necessary. The annual audited reports shall be prepared by or
2 under the supervision and direction of a certified public accountant according
3 to generally accepted accounting principles and shall contain such additional
4 information as may be required by the director. The annual renewal of regis-
5 tration shall be filed with the director not later than ninety (90) days after
6 the close of the provider's fiscal year as used for state income tax purposes.
7 26-3710. CIVIL LIABILITY. (1) Any person who, as a provider, or on behalf
8 of a provider:
9 (a) Enters into a contract for continuing care at a facility which has
10 not registered under this chapter;
11 (b) Enters into a contract for continuing care at a facility without hav-
12 ing first delivered a disclosure statement meeting the requirements of
13 this chapter to the person contracting for such continuing care;
14 (c) Enters into a contract for continuing care at a facility with a per-
15 son who has relied on a disclosure statement which contains a misstatement
16 of a material fact or which omits a material fact required to be stated
17 therein or necessary in order to make the statements made therein, in
18 light of the circumstances under which they are made, not misleading; or
19 (d) Engages in any fraudulent or deceptive practices in the provision of
20 services to the resident, or prospective resident;
21 shall be deemed to have violated the terms of this chapter and shall be liable
22 to the person contracting for such continuing care for damages and repayment
23 of all fees paid to the provider, facility or person in violation of the pro-
24 visions of this chapter, less the reasonable value of care and lodging pro-
25 vided to the resident by or on whose behalf the contract for continuing care
26 was entered into prior to discovery of the violation, misstatement or omission
27 or the time the violation, misstatement or omission should reasonably have
28 been discovered, together with interest thereon at the legal rate for judg-
29 ments and court costs and reasonable attorney's fees.
30 (2) Liability under this section shall exist regardless of whether or not
31 the provider or person liable had actual knowledge of the misstatement or
32 omission.
33 (3) A person may not file or maintain an action under this section if the
34 person, before filing the action, received an offer, approved by the director,
35 to refund all amounts paid the provider, facility or person in violation of
36 the provisions of this chapter together with interest from the date of pay-
37 ment, less the reasonable value of care and lodging provided prior to the
38 receipt of the offer and the person failed to accept the offer within thirty
39 (30) days of receipt. At the time a provider makes a written offer of rescis-
40 sion, the provider shall file a copy with the director. The rescission offer
41 shall recite the provisions of this section.
42 (4) An action shall not be maintained to enforce a liability created
43 under this chapter unless brought before the expiration of six (6) years after
44 the execution of the contract for continuing care which gave rise to the
45 violation.
46 (5) Except as expressly provided in this chapter, civil liability in
47 favor of a private party shall not arise against a person, by implication,
48 from or as a result of the violation of this chapter or a rule or order pro-
49 mulgated or issued under this chapter. This chapter shall not limit a liabil-
50 ity which may exist by virtue of any other statute or under common law if this
51 chapter were not in effect.
52 26-3711. INJUNCTIONS. Whenever it appears to the director that any person
53 has engaged in, or is about to engage in, any act or practice constituting a
14
1 violation of any provision of this chapter or any rule or order hereunder, the
2 director may:
3 (1) Issue an order directed at any such person requiring such person to
4 cease and desist from engaging in such act or practice.
5 (2) Bring an action in any court which has appropriate jurisdiction to
6 enjoin the acts or practices and to enforce compliance with this chapter or
7 any rule or order hereunder. Upon a showing that a person has engaged or is
8 about to engage in an act or practice constituting a violation of this chapter
9 or any rule or directive of the director promulgated hereunder, a permanent or
10 temporary injunction, restraining order or writ of mandamus shall be granted
11 and a receiver or conservator may be appointed for the defendant or the
12 defendant's assets. The director shall not be required to post a bond.
13 26-3712. DENIAL, SUSPENSION, REVOCATION OF REGISTRATION -- GROUNDS. The
14 director may by order deny, suspend or revoke registration of any provider:
15 (1) If he finds the order is in the public interest; or
16 (2) Any of the conditions described in section 26-3705(2)(c), Idaho Code,
17 apply to the provider.
18 In addition the director may impose an administrative fine in an amount
19 not to exceed five thousand dollars ($5,000) for each violation of the provi-
20 sions of this chapter.
21 Prior to the revocation or suspension of any registration, the provider
22 shall be given an opportunity for an appropriate contested case in accordance
23 with the provisions of chapter 52, title 67, Idaho Code. Judicial review of
24 the final order of the director shall be governed by chapter 52, title 67,
25 Idaho Code.
26 26-3713. OATHS -- SUBPOENAS -- PUNISHMENT -- EXEMPTION FROM CRIMINAL
27 PROSECUTION FOR TESTIMONY. For the purpose of any investigation or proceeding
28 under this chapter the director or any officer designated by him may adminis-
29 ter oaths and affirmations, subpoena witnesses, compel their attendance, take
30 evidence and require the production of any books, papers, correspondence, mem-
31 oranda, agreements or other documents or records which the director deems rel-
32 evant or material to the inquiry.
33 (1) In case of contumacy or refusal to obey a subpoena issued to any per-
34 son, any court of competent jurisdiction, upon application by the director,
35 may issue to that person an order requiring him to appear before the director
36 or the officer designated by him, there to produce documentary evidence if so
37 ordered or to give evidence relating to the matter under investigation or in
38 question and any failure to obey such order of the court may be punished by
39 the court as a contempt of court.
40 (2) No person is excused from attending and testifying, from producing
41 any document or record before the director or from obeying the subpoena of the
42 director or any officer designated by him or in any proceeding instituted by
43 the director on the ground that the testimony or evidence, documentary or
44 otherwise, required of him may tend to incriminate him or subject him to a
45 penalty or forfeiture; but no individual may be prosecuted or subjected to any
46 penalty or forfeiture for or on account of any transaction, matter or thing
47 concerning which he is compelled, after claiming his privilege against self-
48 incrimination, to testify, except that the individual so testifying shall not
49 be exempt from prosecution and punishment for perjury committed in so testify-
50 ing.
51 26-3714. CRIMINAL PENALTIES. (1) Any person who willfully and knowingly
52 violates any provision of this chapter, or any rule or order under the chap-
15
1 ter, shall be guilty of a misdemeanor and be sentenced to pay a fine of not
2 more than one thousand dollars ($1,000) or imprisonment for not more than one
3 (1) year in the county jail or both for each violation.
4 (2) The director may refer such evidence as is available concerning
5 violations of the provisions of this chapter or of any rule or order hereunder
6 to the attorney general or the proper prosecuting attorney who may, with or
7 without such a reference, institute the appropriate criminal proceedings under
8 this chapter.
9 (3) Nothing in this chapter limits the power of the state to punish any
10 person for any conduct which constitutes a crime under any other statute.
11 26-3715. REGULATORY AUTHORITY. The director shall have the authority to
12 adopt, amend or repeal such rules as are reasonably necessary for the enforce-
13 ment of the provisions of this chapter.
14 SECTION 16. That Section 26-1111, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 26-1111. RECORDS NOT PUBLIC. (1) The department of finance shall keep
17 proper books and records of all regulatory acts, matters and things done by it
18 under the provisions of chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 18,
19 21, 26, 32, 33, 34, 35, and 36 and 37, title 26, Idaho Code, as records of its
20 office, but the same shall be subject to disclosure according to chapter 3,
21 title 9, Idaho Code, except as otherwise provided in this section and in sec-
22 tions 26-1112 and 67-2743E, Idaho Code.
23 (2) All written communications and copies thereof, between the depart-
24 ment, the director, department employees and any bank, bank holding company,
25 trust company, savings and loan association and credit union which relate in
26 any manner to the examination or condition of the financial institution, are
27 the property of the department of finance and, if acquired by any person,
28 shall be returned to the department upon written demand.
29 (3) (a) The director of the department of finance, any federal bank or
30 other financial institution regulatory or supervisory agency, and any
31 bank, bank holding company, trust company, savings and loan association,
32 or credit union incorporated or chartered under title 26, Idaho Code, or
33 under federal law or the law of any state and doing business in the state
34 of Idaho, shall each have a privilege to refuse to disclose and to prevent
35 any other person from disclosing confidential communications, and the con-
36 tents of any documents relating to any confidential communications,
37 between the financial institution and the department of finance or federal
38 bank or financial institution regulatory or supervisory agency made during
39 the regulatory relationship.
40 (b) A communication is confidential if it is made during the regulatory
41 relationship between the department of finance or the federal bank or
42 other financial institution regulatory or supervisory agency and any such
43 bank, bank holding company, trust company, savings and loan association or
44 credit union, and if the communication is not designed or intended for
45 disclosure to any other parties.
46 (c) The privilege may be claimed by the financial institution or by the
47 department of finance or the federal bank or other financial institution
48 regulatory or supervisory agency, or by the lawyer for either. The privi-
49 lege may be waived only in accordance with this section and sections
50 26-1112 and 67-2743E, Idaho Code.
51 (d) The director of the department of finance or the appropriate officer
52 or employee of the federal bank or other financial institution regulatory
16
1 or supervisory agency may disclose confidential communications between the
2 department or agency and financial institutions to the court, in camera,
3 in a civil action. Such disclosure shall also be a privileged communica-
4 tion and the privilege may be claimed by the director, officer or employee
5 or his lawyer.
6 (e) No sanction may be imposed upon any financial institution as a result
7 of the claim of a privilege by the financial institution or the director
8 of the department of finance or the officer or employee of the federal
9 supervisory agency under this section.
10 SECTION 17. That Chapter 22, Title 26, Idaho Code, be, and the same is
11 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
12 ignated as Section 26-2226, Idaho Code, and to read as follows:
13 26-2226. FALSE OR FRAUDULENT DEBT REDUCTION AND ELIMINATION PRACTICES.
14 (1) No person shall obtain or attempt to obtain a fee, compensation or consid-
15 eration from a person through a false or fraudulent representation or state-
16 ment that a debt, loan, or extension of credit could or would be eliminated,
17 reduced or substituted, if the representation or statement is false or mis-
18 leading or has the tendency or capacity to be misleading, or if the person
19 making the representation or statement does not have sufficient information
20 upon which a reasonable belief in the truth of the representation or statement
21 could be based.
22 (2) (a) Whenever it appears to the director that a person has violated
23 subsection (1) of this section, the director shall have the powers and
24 remedies set forth in sections 67-2754 and 67-2755, Idaho Code, as well as
25 the powers and remedies found in this chapter, as to any such violation.
26 (b) Any person who violates subsection (1) of this section shall be sub-
27 ject to the criminal proceedings and penalties set forth in sections
28 67-2757, 67-2758 and 67-2759, Idaho Code, as well as the criminal proceed-
29 ings and penalties provided in this chapter.
30 SECTION 18. That Section 26-2501, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 26-2501. DEFINITION. "Loan broker" means any person, corporation, part-
33 nership or other business entity which offers for compensation, in this state,
34 to arrange for a loan or other extension of credit. "Loan broker" includes a
35 person, corporation, partnership or other business entity which, for compensa-
36 tion or for no compensation, advertises, solicits, or offers to make or to
37 obtain for others a loan or other extension of credit.
38 SECTION 19. That Section 26-2505, Idaho Code, be, and the same is hereby
39 amended to read as follows:
40 26-2505. ADMINISTRATION -- ENFORCEMENT -- ACTIONS FOR MONETARY RELIEF.
41 (1) The director of the Idaho department of finance shall have the power to
42 administer and enforce the provisions of this chapter. Whenever it appears to
43 the director that a loan broker has violated section 26-2503, Idaho Code, the
44 director shall have the powers and remedies set forth in sections 67-2754,
45 67-2755, 67-2757, 67-2758 and 67-2759, Idaho Code.
46 (2) The receiving of any fee, interest or other charge in violation of
47 this chapter shall also be deemed an unfair and deceptive practice in viola-
48 tion of the Idaho Cconsumer Pprotection Aact; provided however, no person
49 aggrieved by a violation of this chapter can recover or attempt to recover
17
1 monetary relief under both this chapter and the Idaho Cconsumer Pprotection
2 Aact, but rather such person must elect whether to file an action pursuant to
3 this chapter or the Idaho Cconsumer Pprotection Aact.
4 SECTION 20. SEVERABILITY. The provisions of this act are hereby declared
5 to be severable and if any provision of this act or the application of such
6 provision to any person or circumstance is declared invalid for any reason,
7 such declaration shall not affect the validity of the remaining portions of
8 this act.
STATEMENT OF PURPOSE
RS 14452C3
Idaho's financial institutions, other industries regulated by the
Department of Finance, and their customers are subjected to large
losses each year due to fraud. Although the fraud is typically a
crime, often it is not prosecuted. The Department is proposing the
Financial Fraud Prevention Act to authorize the Department to
investigate and bring civil enforcement actions against persons who
perpetrate fraud against financial institutions, including non-
depository institutions, and their customers. The law would also
allow referral of actions to criminal law enforcement agencies.
The legislaton also proposes to move the provisions relating to the
Continuing-Care Disclosure Act, a law administered by the
Department, from Title 67, Idaho Code, to Title 26, which contains
the majority of the remainder of the laws administered by the
Department.
FISCAL NOTE
There will be no immediate fiscal impact to the General Fund. If
the bill passes, the Department of Finance plans to utilize
existing staff to administer the law. However, it is anticipated
that in time there will be a need to add an additional
investigator, funded by the Department's dedicated fund, to
effectively administer this law.
CONTACT
Name: Mary Hughes
Agency: Finance, Dept. of
Phone: 208-332-8030
STATEMENT OF PURPOSE/FISCAL NOTE H 88