MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
May 6, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 8:00 a.m., on Tuesday, May 6, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4406, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
Senator Terry Care
GUEST LEGISLATORS PRESENT:
Assemblyman Kelvin D. Atkinson, Assembly District No. 17
Assemblyman John Oceguera, Assembly District No. 16
Assemblywoman Barbara E. Buckley, Assembly District No. 8
Assemblywoman Christina R. Giunchigliani, Assembly District No. 9
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Lora Nay, Committee Secretary
OTHERS PRESENT:
Carlos Brandenburg, Ph.D., Administrator, Division of Mental Health and Developmental Services, Department of Human Resources
Mark G. Tratos, Attorney
Jared Shafer
Benjamin J. Blinn, Lobbyist, Self
Kenneth T. Scruggs, Lobbyist, Household Financial Group
Gail Burks, Executive Director, Nevada Fair Housing Center, Incorporated
Lawrence Weekly, Ward 5, City Council, City of Las Vegas
Keith L. Lee, Lobbyist, Responsible Mortgage Lenders Coalition
Susan Furlong Reil
Leo Davenport, Past President, Nevada Association of Mortgage Brokers
Keith M. Lyons, Jr., Attorney, Nevada Trial Lawyers Association
Janet Serial
Dennis McMullen, Proprietor, Denny’s Dependable Automotive
Norma Gaeta
Laura M. Mijanovich, Lobbyist, American Civil Liberties Union of Nevada
Larry D. Struve, Lobbyist, Lutheran Advocacy Ministry
Ray Valdez
Jeffery Henderson
Liz Moore, Southern Nevada Coordinator, Progressive Leadership Alliance of Nevada
Fritz Schlottman, Economist, Department of Corrections
Gene Munnings
Mijahid Ramadan
Ronald Thomas, Chairman, Project Fresh Start
Onie Cooper, Reverend, Chairman, Northern Nevada Martin Luther King Jr. Commission, and Associate Pastor, Second Baptist Church, Reno
Jerome Lewis, Minister, Business Agent, Teamsters Local 631, Las Vegas
Lucille Lusk, Lobbyist, Nevada Concerned Citizens
Gary Peck, Lobbyist, American Civil Liberties Union of Nevada
Shawn Smith, Guiding Individuals from Trouble Incorporated
Diane Loper, Nevada Women’s Lobby
Spencer Barrett, Pastor, President, National Association for the Advancement of Colored People, Las Vegas Chapter
Mary Valencia Wilson, Political Action Chairwoman, National Association for the Advancement of Colored People, Reno-Sparks
Laurel A. Stadler, Lobbyist, Mothers Against Drunk Driving, Lyon County Chapter
We will start by taking testimony concerning the amendment to Assembly Bill (A.B.) 156 by Dr. Brandenburg.
ASSEMBLY BILL 156 (1st Reprint): Abolishes plea of guilty but mentally ill and reinstates exculpation by reason of insanity. (BDR 14-131)
Carlos Brandenburg, Ph.D., Administrator, Division of Mental Health and Developmental Services, Department of Human Resources:
The amendment for A.B. 156 originates from Senate Bill (S.B.) 403 which provided for the examination of those individuals who performed competency to stand trial evaluations.
SENATE BILL 403: Requires certification of persons who provide reports or evaluations to courts regarding competency of defendants. (BDR 14‑1245)
Assembly Bill 156 is an extremely important issue. Competency to stand trial and the issue of criminal responsibility are extremely complex issues. I cannot think of a more important or significant mental health inquiry in the criminal justice system than the performance of criminal responsibility and competency to stand trial evaluations.
We are trying to standardize the assessment. I spent about 13 years as the administrator for Lakes Crossing Center in Sparks for the mental disordered offender. This facility provides the evaluation for those individuals. Many times psychologists and psychiatrists have asked me for the criteria for competency and the criteria for criminal responsibility.
It is good public policy for us to have a standardized procedure to make sure the forensic examiners, both psychiatrists and psychologists, understand the criteria when it comes to criminal responsibility: the M’Naghten Rule, how that interfaces with the “not guilty by reason of insanity” plea, and how mental state at the time of the offense differs from competency to stand trial. Competency to stand trial is some future evaluation for the individual to aid and assist counsel and understand the charges against him or her.
Chairman Amodei:
Are there any questions for Dr. Brandenburg? Seeing none, we will open the hearing on A.B. 288.
ASSEMBLY BILL 288 (1st Reprint): Provides for judicial approval of certain contracts involving minors. (BDR 11-1116)
Assemblyman Kelvin D. Atkinson, Assembly District No. 17:
Assemblyman Oceguera and I are here to discuss A.B. 288 and present a few people who will speak to this bill.
I am pleased to appear before you today as the sponsor of A.B. 288. The objective of A.B. 288 is to address a growing need in Nevada, particularly in Las Vegas and Reno, as the entertainment industry in this State continues to expand and more and more minors become employed by this industry.
Nevada is a favorite venue for film and television. In 2002 alone, all types of filming in this State resulted in a calendar year total of $126 million in revenue. More than 2500 days of production were generated by 543 projects during that 12-month period. According to the Nevada Film Office Web site, highlights of productions in both northern and southern Nevada during 2002 included notable features such as: Intolerable Cruelty starring George Clooney and Catherine Zeta-Jones, Looney Tunes: Back in Action with Brendan Fraser and Jenna Elfman, The Cooler starring William H. Macy, Little John from Hallmark Hall of Fame, and The Core starring Hilary Swank. Charlie’s Angels 2: Full Throttle, The Hulk, George of the Jungle 2, Head of State with Chris Rock, and Timeline, directed by Richard Donner, all filmed short portions of those films right here in Nevada, in 2002.
Producers often want to hire children in films and television production for both minor and major roles. These minors and their parents often do not know or understand the legalities involved or whether the terms of their contracts are fair and reasonable. Assembly Bill 288 offers assistance to the courts to make determinations, through judicial approval, of contracts with minors who enter into the industry. Assembly Bill 288 is modeled after similar statutes in California and New York. In those states, judicial approval of contracts between minors and the entertainment industry have long been the standard. These contracts are favored not only by minors and their parents, but by the producers as well.
A minor can disavow a contract when he or she reaches the age of 18. That is the law in every state and not only in Nevada. By offering a process by which judicial approval of entertainment contracts with a minor can be sought and obtained, producers can be assured the minor cannot disavow the contract after she or he reaches the age of 18 years.
Assembly Bill 288 reaches beyond the entertainment contract with minors. It also includes contracts with minors to purchase, sell, license, transfer, exchange, or otherwise dispose of tangible and intangible musical, artistic, or dramatic properties. It also includes contracts using a minor’s name, voice, signature, photograph or likeness, and contracts with minors concerning tangible and intangible radio broadcasting, television or motion picture rights for the performance of a minor.
Mr. Chairman and members of this committee, I hope each of you will agree this measure is fitting, not only for our State and for our growing reputation as a favorite destination for film and television, but also for our children, as well as the out-of-State children and foreign children who visit Nevada and who are performing artistic and creative services.
Since we initially introduced this bill in the Assembly, we have made a few changes. My colleague, Assemblyman Oceguera, will go over a few of these changes with you.
Assemblyman John Oceguera, Assembly District No. 16:
Mr. Atkinson and I have been working closely on this bill to make sure everybody is happy. I got involved because of one of my law professors from Las Vegas, Mr. Mark Tratos, who was instrumental in this kind of legislation and does entertainment law. We worked closely with the Second and Eighth Judicial Districts and with the Motion Picture Association of America. There are a few concerns I would like to address.
Compromises must be made in the process of trying to get a bill passed. Section 15 of A.B. 288 caused some heartache and heartburn for the Motion Picture Association of America. They support the bill in its entirety, except for section 15. I suggest removing section 15 in its entirety.
The judges had a minor concern also. There are two sections of Nevada Revised Statutes (NRS) covering contracts and/or provisions concerning minors. Apparently, in NRS 129 all of these contracts and/or provisions go to the family court. We had expressed our interest for these contracts to go to the business court. I talked with legal counsels for the Assembly and they do not see an issue with either section. The judicial branch of our government felt it was better if this bill was in NRS 609 as opposed to NRS 129.
Mark G. Tratos, Attorney:
Assembly Bill 288 was designed to afford protection to minors and to the producers who contract with minors. This bill is consistent with the fashion of bills and laws passed in other states where filming of television and movies are consistently undertaken. Many states have found that producers feel more comfortable with the opportunity to have their contract with a minor reviewed and approved by a court. There is always the ability in any minor’s contract to disavow.
This bill does the task of making certain the parents, guardians, or responsible adults involved with the child’s career have the opportunity to have the contract reviewed and approved by a court. Assemblyman Oceguera’s approach in modifying A.B. 288 so contracts would be directed towards the business courts is also appropriate. We ultimately want to develop a judiciary familiar and experienced with these kinds of contracts. Business courts have been structured in both Reno and Las Vegas to have special judges who will staff these courts. Business courts take long to develop the expertise for these types of contracts, which is preferable to having a rotating situation such as in family courts where a different judge may be seen all the time thus limiting the family court’s ability to really understand the contracts coming before them.
Section 15 was designed to allow a court, on its own motion or in response to a parent or guardian, to revisit a previously approved contract in the event the court becomes concerned about the health, safety, or well-being of the child. The Nevada Film Commission was concerned this kind of provision is not available in California and other states. The Nevada Film Commission felt section 15 would further complicate this bill, creating a burden on producers and discouraging producers from coming to Nevada. The Nevada Film Commission suggested A.B. 288 would receive their support if section 15 were removed, thus making it more similar to California statutes.
Jared Shafer:
I was a Clark County public guardian from 1979 to 1999. After reading A.B. 288 and listening to testimony, I have the impression the industry is being protected and not the children. I also reviewed portions of this bill about what a guardianship is and how kids are protected. Section 3, subsection 1, paragraph (a) says, “A minor agrees,” however minors cannot agree to anything. They need approval by the court. Section 3, subsection 1 paragraph (b) states, “A minor agrees,” section 3, subsection 1, paragraph (c) reads, “agrees with a minor”, these terms are not laid out. There are no definitely defined terms in this bill so we do not really know what is going on. This whole bill belongs in NRS 159.
Family court is not a rotating court. It is overseen by a guardianship commissioner. Therefore, the issue is not the decision to go to business court, but a guardianship issue. Contracts for minors and incompetence should be included. Incompetence in the entertainment industry is not defined. I do not understand section 6, subsection 3 which states, “Resides in this state, or will be rendering services in this state pursuant to a contract.” Does this mean someone can come from California and use California law to act and work in Nevada?
Section 7, subsection 2 says, “Reasonable sums to be expended for the support, care, education, training,” which is in direct conflict with Nevada law which says it is the parents’ duty to support their kids.
Section 10, subsection 2, paragraph (d), says, “Whether the minor has, at any time, had a guardian appointed for him by a court in any jurisdiction or pursuant to a will or deed.” A will or deed cannot appoint a guardian. The terminology is poor.
Section 11, subsection 1 says, “Upon receipt of a petition, the court may schedule a hearing.” “May” is submissive, meaning the court does not have to schedule a meeting. Nobody will ever get a chance to object to something that may be wrong.
We have work rules in this State so I am not sure section 12, subsection 1, paragraph (c), requires we follow Nevada law or the law of another state when minors come in to work. This section needs to be made clear. Section 13, subsection 2 has a double negative, “not ineligible,” which probably should get fixed. Whoever wrote it should put “eligible.” It would be a lot simpler and people would understand it.
The big one is section 14. “The amount or percentage of the net earnings to be set aside must not be less than 15 percent or more than 50 percent of the net earnings.” Somewhere between 50 and 85 percent of the kid’s earnings can be dissipated by someone, somehow, and never set aside for the kid. For years and years we have seen and read about a lot of parents being sued by their kids who reach majority and find out half, or more, of their money has disappeared and the kid is actually broke.
Mr. Shafer:
Section 14, subsection 4, paragraph (a) states, “The guardian of the property of the minor ... ” The terminology is probably the property of the estate of a minor as minors do not have property, per se.
Section 16, subsection 1, notes the contract may not be disaffirmed, “on the ground that the contract was entered into during his minority.” A minor can disaffirm a trust when he or she turns 18. I cannot believe a contract can be written that will bind children through their majority. This is like indentured servitude. If minors get a poor lawyer, they could be locked into a poorly designed contract for many years.
I recommend you have the writers of this bill meet with guardianship experts from both Reno and Clark County and rewrite A.B. 288 to meet the guardianship laws of Nevada and still meet the industry requirements. It can be done. I do not know what NRS 609 is, but I know NRS 129 is an emancipation statute so nobody could have ever found this bill there. At this time, A.B. 288 is a one-way bill where children are not represented fairly or equitably.
Senator Nolan:
Sometimes in videoconference we lose a little bit in the translation, so it is hard to tell how you feel about this bill. Based upon the fervor of your testimony, I was wondering whether or not you have had actual experiences in this area and if that is why you are testifying before us.
Mr. Shafer:
My experience has to do with parents and children, not in the entertainment industry per se, but in any industry where funds are received from either a settlement or an inheritance or something and dissipated by the parents and addressed in the guardianship court; I do have a lot of experience in seeing this kind of proposal. This bill is too loosely organized to protect the children.
Senator Nolan:
In section 3, subsection 1, paragraph 3 (a), “A minor agrees to render artistic or creative services, directly or through a third party.” We understand, ultimately and legally, parents or guardians are responsible for the child. This was intended to try to protect those children whose parents are bringing the Shirley Temple look-alikes, dragging, screaming, and kicking, to a talent show or a movie stop. In those cases where parents force their children into these types of situations, should there not be the opportunity for the children to have something to say?
Mr. Shafer:
It is hard to say no to your question. The problem arises in the reverse, children cannot say yes to binding contracts. A good lawyer does not care what was intended. He will take what is written on the paper and turn it to whatever he needs it to read. The intention is fine, but down the road it is going to come back to bite us. We need to state exactly what is going on in the world in this area. We need to say minors cannot, without the approval of a court, enter into contracts and those contracts have to be approved by the court.
There are other methods. If the industry wants to come into Nevada, shoot a film, shoot something, and get out, that is fine. The kids coming into our state have guardianships in California, New York, or wherever they are from, and are governed by them. Labor laws are going to govern who can work 8 hours or 6 hours or 4 hours in the state of Nevada versus the same thing in other states. This bill should only be for Nevada residents as it is. I just see problems right through the whole bill. It does not help or protect children.
Senator Washington:
Did we not deal with contracts and petitions for minors participating in the movie industry during last session? Did the bill ever pass? What happened to it?
Bradley Wilkinson, Committee Counsel:
This was originally introduced last session as a bill coming out of a study committee. It did pass out of this committee and out of the Senate, but did not pass out of the Assembly.
Mr. Tratos:
I would like to respond to and clarify a couple of the questions and issues that were raised. The objective of A.B. 288 has not been to supplant guardianship laws in this State. In fact, the objective was to allow Nevada residents and children who are in the entertainment industry to have a secure way of making certain the contracts they are signing are fair and reasonable and within the industry standards. One of the reasons Las Vegas and Reno kids do not often get an opportunity to be in many of the productions is because no out-of-State producer could come into Nevada and contract with a child and be assured the contract would be enforceable. This resulted in producers doing all of their casting and all of their contracting outside the State. In the states with judicial approval provisions, California, New York, and Illinois, they all have judicial approval of contracts for minors. Producers who are producing films do not hire children from Nevada, because Nevada will not give them the same kind of protection afforded to them in other states.
There are a lot of minors in the shows in Reno and Las Vegas. A lot of minors are particularly being used in some of the newer, evolving, circus kind of shows now emerging in these venues. The objective is to accomplish one thing, for parents or guardians: to make sure the contract they are being presented by a producer or director is fair and has the opportunity to be reviewed by a competent court and be ensured the terms of the contract are fair and reasonable. Within the entertainment industry, it is routinely commonplace for children to have agents, managers, and/or publicists. One of the phenomena of this business is, without having a judicial review, too much of a child’s income is being taken away. This is precisely why we want to have the courts review the contracts.
Judges both in Reno and in Las Vegas supported this bill. After reviewing this bill, they testified to their support before the Assembly. It is peculiar that the judges, who will be engaged in the application of this law, have supported this law, have embraced it, and are willing to say they will apply it.
With respect to whether a review should be in the family court or in the district court, it has been the experience in some states that reviews are strictly before family courts. Courts like Illinois have reviews in the family court setting. In New York and in California they come before the district courts.
Mr. Tratos:
Because of the special nature of the business courts and because they are dealing with the complexities of the contracts in determining whether a child is being fairly treated, whether the compensation is fair, or whether the proposed schedule for work is fair, we need someone who is going to be familiar with the industry, not just guardianship, but specifically with the industry. If we do not do that, we are going to have judges approving contracts outside of the industry norm and that is going to be a disadvantage and the biggest injury a kid could have. On the one hand, we have a situation where we need to be able to afford minors living in Nevada the opportunity to be engaged in the industry and still assure them they are going to have an acceptable contract because we have knowledgeable judges.
Finally with respect to whether a hearing would be had or not, the original draft of this bill required a hearing. The Nevada Film Commission said California does not require a hearing. The hearing is voluntary and can be requested by the parents or the court. The Nevada Film Commission asked us not to make this bill any more restrictive than what it is in California because we will defeat the very purpose of this bill which is to encourage this kind of opportunity for Nevada residents. To this extent, the bill was modified at the Assembly level to comply with the Nevada Film Commission’s request which is why a hearing is no longer mandatory but optional.
Benjamin J. Blinn, Lobbyist, Self:
Earlier we had testimony to the fact we needed to eliminate the three-judge panel, so as far as holding judges up as the authority of the people in contracting for children; that is “horse manure.” It has been long established that all children are protected by the Children’s Cabinet, HEW (health, education and welfare) programs, and similar programs, and we do not need big business coming to Nevada and pushing around talented children like Elizabeth Taylor or others.
Chairman Amodei:
Let our official record reflect the support of A.B. 288 from Rick R. Loop, Lobbyist, Eighth Judicial District Court. We will close the hearing on A.B. 288 and open the hearing on A.B. 284.
ASSEMBLY BILL 284 (1st Reprint): Prohibits unfair lending practices for home loans and revises provisions governing sale of real property by trustee. (BDR 52-20)
Assemblywoman Barbara E. Buckley, Assembly District No. 8:
I am pleased to be the sponsor of A.B. 284, which has to do with predatory lending. Every year, United States borrowers lose an estimated $9.1 billion to predatory lending practices. Nevadans lose approximately $100 million. I have provided charts for your reference (Exhibit C. Original is on file in the Research Library.). In the first exhibit you will see, under existing federal and State law, many unfair or predatory practices are entirely legal. As a result of such predatory practices, many American homeowners face the loss of their homes and their economic security. Predatory lending is a financial epidemic attacking the core of the State of Nevada by putting our families at risk of losing their homes.
Predatory lending is a fast-growing practice concentrated in the subprime mortgage market. Financial institutions use an array of lending practices to strip the equity in someone’s home away from the owner. Such unfair practices include lending without regard for ability to repay, incomplete loan disclosure, excessive fees, unnecessary insurance, frequent refinancing, deceptive marketing, and sometimes, fraud and abuse. For example, someone may not have the income to repay, but it does not matter to the predatory lender because they can get the home, which usually has enough equity.
The explosive growth of the subprime market and the lack of industry regulation have created a fertile ground for predatory lending. In the second exhibit of this packet, the latest chart I received from the Woodstock Institute, shows the increase in predatory lending over the last 5 years. The unprecedented growth of the subprime market has opened many doors for historically underserved populations, but at the same time leaves these populations susceptible to unfair practices. Subprime lending affords access to credit for some people who have, in the past, been denied because they do not meet the credit standards of the prime market. The subprime market serves those with blemished credit histories, insufficient credit histories, and those with nontraditional credit sources. It also disproportionately serves individuals who are low income and minority, particularly in minority neighborhoods where traditional banking is in short supply.
Subprime lenders serve an important role in our neighborhoods by making home ownership a possibility. Homeownership represents the best opportunity for families to build wealth and economic security, move into the middle class, and develop a stake in their neighborhoods and their safety. However, it also leaves many new homeowners vulnerable to losing their dreams of owning their own homes.
Assembly Bill 284 addresses some of the most offensive and harmful practices associated with predatory lending. It should be noted this bill applies to high‑cost loans only. On page 2, section 5, line 17, “Constitutes a mortgage under §152 of the Home Ownership and Equity Protection Act of 1994.” These loans are where rates are 8 points over the treasury bill rate for a comparable term on a first mortgage, or 10 points for a second mortgage, or on which lender fees exceed 8 percent of the loan.
Assemblywoman Buckley:
Assembly Bill 284 seeks to prohibit the requirement a borrower must provide property insurance on improvements to home property in an amount exceeding the reasonable replacement value of these improvements. It also prohibits asset‑based lending. Asset-based lending is lending money to a borrower based solely on the equity of the home, with complete disregard for the ability to repay.
Seniors are most susceptible to this practice because their income is often from Social Security, but they have equity in their homes. I personally became acquainted with this when I had a woman come to our office and sit there until someone saw her, which is very effective. When we finally figured out no one could see her except me, I looked at her documents. She had received a telephone solicitation, “Refinance! Consolidate your debts! You will pay less each month!” The mortgage she ultimately got was at a higher rate than her previous mortgage. She could not afford the new payments and she was going into foreclosure. Fortunately, we were able to place the case pro bono with a local attorney who took her case to try to save her home. This really gave me a bird’s eye view of the explosion in predatory lending and how it is facing us in Nevada.
The second practice banned by A.B. 284 is what the industry refers to as “flipping.” Flipping occurs when a lender persuades a borrower to refinance with a newer loan designed to pay off the previous loan, finance fees, and costs of the new loan. The lender finances prepayment penalties, often with the same lender. They keep flipping the loan. They will say, “Oh! Why don’t you consolidate your debts? Do it yet again!” and then the fees are added again into the loan. The prepayment penalties are financed. Assembly Bill 284 prohibits the financing of multiple prepayment penalties.
The next practice banned by A.B. 284 is the financing of single, premium credit insurance. The issue of “packing” is probably not new to this committee. The price is “packed” with unneeded things such as financing the credit insurance. Such coverage is extremely profitable for the lenders who retain 40 to 70 percent of the premiums. It costs consumers four to five times as much as monthly paid credit insurance and over ten times as much as term life insurance because it is financed into the loan. This coverage typically lasts only 5 years, but the borrowers pay for it over the 30 years of the loan. Predatory lenders convince consumers to accept this insurance often by automatically including it in the loan without the borrower’s knowledge. They will also threaten to delay closing if the borrower tries to decline the coverage. Often, in a financial crisis, consumers cannot afford a delay.
Assemblywoman Buckley:
These types of insurances are rarely offered in the prime market, but are deceptively sold and packed into subprime loans. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) both refuse to purchase loans that include financed credit insurance. The 2000 joint report from the U.S. Department of Housing and Urban Development (HUD), and the U.S. Department of the Treasury on predatory lending recommended banning all home loans that financed credit insurance policies. The Consumer Federation of America called this practice the “worst insurance rip-off in the country”. Many large lenders, including Citigroup Incorporated and Household Financial Corporation, have agreed to stop selling these financed policies. Assembly Bill 284 will prohibit the financing of this type of credit insurance.
Another important aspect of A.B. 284 is it would require judicial foreclosure for high-cost loans. The purpose for this provision is to give judicial review for these high-cost loans to make sure, before someone loses his or her home, there is a court to look at it.
Assembly Bill 284 provides consumer protections to what is often the biggest investment in someone’s life, a home. Included in your packet is information from the National Conference of State Legislatures illustrating what various states have done. The first handout is legislation passed in 2001, and the second is legislation passed in 2002. Since 1999, 23 states and the District of Columbia have adopted predatory lending legislation. Thirteen additional states have passed legislation. Much like payday lending, it became an explosion none of us really anticipated and with that came some problems. No one is suggesting subprime lending does not play an important role. Not everyone has good credit, but we have to avoid some of the more abusive practices in the subprime market and we do this by providing commonsense consumer protection, which is what A.B. 284 offers.
I have a few witnesses. We have someone from staff who is not here to present a partisan view, but to talk about what happened to her mother. We have Ken Scruggs, of Household Financial Corporation, who, in my office, called this the fairest predatory lending bill in the country.
Assemblywoman Buckley:
I sponsored this legislation last session and it got through the Senate Committee on Commerce and Labor and through the Senate Committee on Finance and was about to be passed, but got caught up in the last hour. Since that time, new people who agreed to the bill last session came up with all sorts of concerns. One suggestion is we should change the effectiveness from someone who holds one of these loans to only someone who originates the loan. I would strongly oppose that change. The Federal Trade Commission (FTC) Holder in Due Course Rule allows the consumer to present any claims and defenses against anyone who holds the note. The reason we do this is clear; we transfer paper all the time. Just think of your own mortgage company. Most likely it may not be the same one you started with. It is typical to sell mortgage loans on the secondary market, which is why several years ago the FTC created the Holder in Due Course rule. Otherwise, you are done. You would never have an opportunity to protest against fraud. This change would reverse that long‑standing rule, so I would reject such a change.
I recognize there is a concern about judicial foreclosure. The judicial foreclosure concept came out of the model AARP home protection guide and is seen as being a good protection. There is nothing to prohibit people from doing it within the statutory deadline, even working with the judges to get the cases in and out, but this is to make sure someone fair and independent is looking at it.
Senator Washington:
Could you walk us through how section 8 would actually work?
Assemblywoman Buckley:
Section 8 describes the willful engagement of an unfair lending practice, where a prosecutor can prove beyond a reasonable doubt someone willfully said, “I am going to steal your home, even though I know you cannot make the payments,” and the legislation makes this practice a misdemeanor. Second, for the willful engagement in an unfair lending practice, the lender is liable for three times actual damages and, if successful, costs and fees. The final paragraph says the borrower has as a defense it was asset-based lending, and the lender packed in the credit insurance or whatever the violations. For example, say the consumer never sues, does not want to sue, but there is a foreclosure action and the lender says “Okay, we want to take your house away and hold you liable for the remainder of the note.” Then, the consumer can bring asset-based lending as a defense, and say, “Whoa, this should cancel and be a defense on my loan.” What the court has to do is measure the damages to find the person’s damages offset the action brought by the lender in the first place.
Senator Care:
I am one member of this committee who keeps hollering about the white-collar crime bills being misdemeanors. I am not going to do anything or suggest anything to disturb this bill. What I find problematic about a misdemeanor, although it is a start, is the person responsible this may be somebody who never does any time or could serve 6 months, but in fact will not get anything except maybe have to pay a fine or do some community service.
The civil action, actual damages, is triple and that is fine, but the two are independent of each other. You have a criminal case on one hand and a civil action on the other. In section 9 it says the “Attorney General” and that is consistent with subsection 3, which says, “A local government shall not regulate any activity to which the provisions of this chapter apply.” This is very much something for the attorney general. Could you explain a little bit about the State and not the local jurisdictions being involved?
Assemblywoman Buckley:
First, I will vent and then I will move into section 9 concerning the white-collar crime issue. You are absolutely right. The state of affairs right now on predatory lending is no one gets any help. No one gets help to stop from losing her or his home, unless they just accidentally run into some help like the woman in our lobby. Financial institutions are not doing anything in this area and it is extremely frustrating. I really commend those lenders, brokers, and others who are working in this area. We have Leo Davenport who is working with Assemblyman David E. Goldwater, Assembly District No. 10, to try to work on a commission that is still in the Assembly to try to get more action in here. We are not seeing any prosecutions or any investigations and people are losing their homes and receiving no help. Misdemeanor is the first step. Right now we have nothing on the books and I am already getting a firestorm from people who assert we do not need any regulation in this area. I wanted to see us get something through, so misdemeanor is a first step.
The Attorney General has primary jurisdiction over crimes relating to financial institutions. The right place to go is with our State regulatory system. Sections 30 and 31 were put in at the request of the Nevada Consumer Finance Association, getting at the issues of payday lending and predatory loans, problems some communities are beginning to notice. That makes them extremely uncomfortable because they may crop up anywhere. We deal with this all the time, whether it is cell phones or whatever. People want State preemption and that is what section 9 does. I agreed to it because regulation of financial institutions is properly at the State level. This regulation is not happening, which is why the civil side of A.B. 284 is so strong and why lawyers cannot just rely on fraud. It would then be like the little old lady who lost her house, “Well, did they tell you that you would? Did they make it an affirmative misrepresentation?” There is no flat prohibition on asset-based lending and that person is left without a remedy. This makes a first step and the jurisdiction is in the right spot.
Senator Care:
When I first read about the State having exclusive jurisdiction, I wondered, are you talking about the prosecution?
Assemblywoman Buckley:
Correct.
Senator Wiener:
You made a statement I was pondering before you put it on record. You said there have not been enforcements up to this point, and then you later mentioned the word “fraud.” Without this vehicle, what would be used to enforce and what would be enforced? The lady who came into your office was without this; what tools are out there currently?
Assemblywoman Buckley:
Fraud, just common, garden-variety fraud laws such as unfair and deceptive trade practices under NRS 598 are available, but nothing specific. Certainly you would look for truth-in-lending violations under federal law, but if the numbers are right, it then becomes the person’s word against the lender’s word. With elderly people, memories start to go and they are not going to be the best witnesses, which is why, across the country, states are adopting specific predatory lending practices legislation.
Gail Burks, Executive Director, Nevada Fair Housing Center, Incorporated:
I have submitted a copy of my testimony (Exhibit D). We support A.B. 284. We have worked diligently with the industry to come up with compromise positions. I would like to highlight a couple of items directly relating to Nevada in terms of the ways we are trying to address predatory lending. Assemblywoman Buckley is correct. We currently have a patchwork of federal law and some state statutes that get to the symptoms, but not the overall problem. During fiscal year 2001 in southern Nevada alone, 417 clients came to our office with predatory lending issues. In 2002, that number rose to 585, approximately 47 percent of those occurred in the area of sales and marketing. The other 42 percent were involved in servicing, meaning they occurred after the loan was assigned to another holder. It is important we not give up on section 10, and we keep that potential defense for judicial foreclosure on high-cost loans.
The other issue with the bill is giving disclosure and trying to give more notice to consumers about where they can go for help. I agree the Division of Financial Institutions has not done a good job helping consumers. If we required lenders to notify counseling agencies and legal services programs which can assist consumers, that would be very helpful in trying to prevent some of this. On the average, it takes about 42.3 hours per client to deal with a foreclosure issue involving a predatory loan, assuming the client contacts us in time. Currently there are cases pending in federal court is which we have had to get temporary restraining orders to stop the foreclosures, in order to assist the clients. When consumers raise an issue, lenders are required to respond to their requests under what is called a qualified written request for verification of mortgage. Traditionally, lenders will just let a clock run.
I want to address the economic impact of not having a predatory lending bill in Nevada similar to those in other states. Currently, our foreclosure rate on Federal Housing Administration (FHA) loans alone is up to 7 percent. There are some lenders who have received or purchased mortgages with a 20 percent foreclosure rate. One of those companies is Fairbanks Capital Corporation, which currently has a class action pending in Nevada.
We think A.B. 284 is a good step. We think it does not go too far. It will allow subprime lending to continue in Nevada, which is needed, and it is a great compromise. We urge your support of the bill.
The last handout (Exhibit D) provided gives examples of what happens to a loan when it is flipped. In the top box we have loans that started out as first-time homebuyer loans involving some type of government subsidy. Later, those loans were flipped over. As you can see, not only did the interest rate go up, but the amount of equity stripped from the home went up also.
Lawrence Weekly, Ward 5, City Council, City of Las Vegas:
I come to the microphone this morning to strongly show my 100 percent support for majority leader, Assemblywoman Buckley. As a representative of a district that falls victim to many of these predatory loans, I agree protection should be in place to assist individuals who do not understand these lending practices. Also, several programs not only here in northern Nevada, but also in southern Nevada, are offered as first-time buyer programs. Many of the constituents I represent are jumping at the idea of achieving what we call the American Dream of becoming a homeowner, only to find they are headed down the street called Nightmare on Elm Street. Many victims cannot afford legal assistance. For the lady who sat in Assemblywoman Buckley’s office, how many people would be fortunate enough to have an Assemblywoman Buckley? I would appreciate your support today. In my district, with a high population of low-income residents, as well as seniors, who become victims to predatory loans, A.B. 284 would be of great assistance.
In the interest of time, I would like to also strongly show my support for A.B. 337 with Assemblywoman Giunchigliani.
Mr. Scruggs:
I am a lobbyist for Household International. Our two companies, Household Financial Corporation and Beneficial are the two best-known names in subprime lending. Here is a quick background on the subprime lending industry to offset the other side of the coin from the predatory lending issue. Subprime lending refers to loans to people who do not qualify for prime loans. Generally, they have weak credit or some credit problems, or income difficult to verify, or irregular income streams. It is an oversimplification, but nonetheless true that subprime borrowers have less money than prime borrowers generally have, because they behave differently than prime borrowers, which has to be taken into account by subprime lenders.
Therefore, the subprime lending business is different from the prime lending business. We cannot look at the two as using the same lending criteria. Because our customers have less money than prime borrowers, it is important to them we keep their monthly payments as low as possible. Because they have less disposable income, they find a need to borrow more often than prime borrowers. Subprime customers pay off their accounts more frequently than prime customers and move around from company to company. For that reason, subprime lenders use prepayment penalties in order to protect ourselves against people paying off their accounts before we have had time to collect the expenses of putting their loans on the books. That is one example of something happening in subprime lending which does not happen very often in prime lending and is often called a predatory practice, when in fact it is not.
I mentioned this because trying to regulate the subprime industry is a more complicated thing than just simply taking a look and saying this is good, this is bad, and moving forward. Having said that, I want to say again this is the fairest bill we have seen in a long time and we wholeheartedly support passage of A.B. 284. We supported it in the Assembly and we support it now as written, or with our proposed amendments (Exhibit E).
There are a couple of areas we have continued to discuss since the Assembly hearing and I wanted to raise these issues. One is the question of assignee liability. It has become common for lenders to package the volumes of loans they have made and then sell them on the secondary market in order to improve liquidity. Assignee liability refers to the idea the person who buys those loans is as responsible as the person who made the loan for any violations of this law or any other law. The problem is assignee liability statutes have recently been written poorly in a number of states particularly Georgia, New Jersey, and New York. Just last week Standard and Poor’s (S&P) retail investor service announced it would not rate high-cost loans in New Jersey. They had previously taken the same position in Georgia, and New York is up in the air. We have to be very careful when we write assignee liability statutes that we not impose responsibility on third-party buyers of bulk loans for things they cannot control. We are still talking to Assemblywoman Buckley, and whether or not we are able to resolve this issue, we still continue to support the bill.
Mr. Scruggs:
We are suggesting something along the lines of what the Housing for Older Persons Act of 1995 (HOPA) does. If the third-party buyer, the assignee, performs normal due diligence, buys a thousand loans, and looks at 20 or 100 loans or whatever the industry standard is for due diligence on purchasing pools of loans, then the buyer is are in the clear as far as the whole pool is concerned. If an individual loan violates something, then the assignee should make the customer whole in whatever way; if he does not make the customer whole, then all of the sanctions would apply. We think that is a better way to go and will not scare Fannie Mae and S&P and all the other lenders who do not come here to testify, but just comment on what comes out of the Legislature.
The other issue is judicial foreclosure which we all agree is a very expensive, very time consuming, and a very bad thing both for the lender and the borrower. We understand the concern when a customer we are about to foreclose upon has stopped reading notices from us months ago and is probably not going to even open the mail we send saying we are thinking about foreclosing. Our suggestion is to send a notice, devised by all of us, to those customers 60 days prior to commencement of foreclosure. One of the Senators suggested a great idea: the letter be delivered by a process server, a human being who hands this to the borrowers. We think they will open this notice containing information on places they can go and people they can talk to about their accounts. The consumers then have the option of either working out an agreement with the lender, going to consumer credit counseling and getting a debt restructuring, or deciding to file suit against the lender who is contemplating foreclosure. We think these are better ways of looking at the issue and will cause a lot less grief, both to the lenders and to the borrowers. I want to be really clear, Household International very much supports Assemblywoman Buckley’s efforts. We support A.B. 284. We support whatever you decide to do. We are totally in support of the bill and think these are ways to make it better, which is a decision for all of us to make.
Keith L. Lee, Lobbyist, Responsible Mortgage Lenders Coalition:
Responsible Mortgage Lenders Coalition (RMLC) is a coalition of large, national mortgage lenders including Countrywide Financial Corporation and Irwin Financial Corporation, both of which have large presences in Reno, Las Vegas, and throughout the State of Nevada. The RMLC also believes A.B. 284 is the fairest predatory lending bill in the United States and we appreciate the Assembly Majority Leader who has worked with us through a great many of these issues.
A few bad lawyers, a few bad doctors, and a few bad contractors reflect poorly on their respective professions. Likewise, a few very bad mortgage lenders reflect poorly on the entire mortgage lending industry. What we are trying to address in the predatory lending bill before you are practices done by very bad mortgage brokers and lenders who take advantage of people in circumstances not always of their own making. Therefore, this kind of legislation is required. Section 7 sets forth the definition of predatory acts and is both fair and necessary. Likewise, we think section 8, which sets forth the remedies, is a fair and necessary set of remedies we need to put on the books, specifically with respect to predatory lending. It is very difficult to use the old common law doctrine of fraud and misrepresentation to try to establish a case and we have set the appropriate remedies forth in section 8.
My clients have some concern with section 6 and section 10 with respect to what I like to call the doctrine of unintended consequences. Section 6 allows mortgage lenders to go into the secondary market of mortgage-backed securities where the mortgage companies are able to get their pool of money, which they then lend to the consumer.
Several jurisdictions have passed predatory lending bills, effectively causing the national underwriters, S&P, Moody’s, and Fitch’s, not to rate them. When the national underwriters do not rate those securities, it is impossible to put them into the secondary market to sell. The State of Georgia had to redo its statutes in a special session, or at the end of the regular session, because S&P announced it was not going to rate any mortgage-backed securities out of the state of Georgia. Those issues are still pending.
I have offered an amendment changing the word “holds” to “originates” on page 2, section 6, line 23, and I concur with the majority leader: this probably is not where we want to go, but I wanted to put it out as a suggestion for a place to start. We would like to continue discussing the issue of assignee liability. We looked at language used in other states, and Mr. Scruggs’ overview of this issue is a good one for us to try to resolve. Likewise, in section 10, we are concerned with the doctrine of unintended consequences. Judicial foreclosure can sometimes take up to 2 years.
In a judicial foreclosure proceeding, the lender seeks a deficiency judgment. If there were a difference between the value received in selling the home and the value of the note, a judgment would be entered against the borrower. That is the doctrine of “unintended consequences.” It is also a timing issue because sometimes it takes 2 years and then the parties are both disadvantaged, particularly the lender. In that instance, the lender is not receiving any payment whatsoever.
I have proposed an amendment with respect to section 10 that would delete the entire section as it is before you. Senator Washington suggested we personally serve a notice on the borrower at least 60 days prior to the trustee sale. That notice puts the borrower on notice. We can provide the notice in several languages, as it should be saying, “Attention, you may very well lose you home. We suggest you contact one or more of the following ...,” and we will have a listing of agencies with phone numbers the buyer may contact to seek assistance.
One of the remedies often sought in addition to filing the lawsuit is to seek a delay in the trustee’s sale. You will see under subsection 3 of section 8, the court is granted equitable powers to do everything including curing the existing default so it gets them in the court with this type of notice, 60 days before the trustee sale served on the borrower, we would hopefully get the borrower to take the notice to one or more counseling agencies or legal aid or to a lawyer and prompt them to counsel the borrower to initiate litigation which then gets an independent third party, the judiciary, to look at this. Our proposal in section 10 is an early look by the judiciary rather than a later look, 2 years down the road. The remedies provided in section 8, particularly in subsection 3, are excellent and provide the borrower the remedy the borrower may need. I would be pleased to continue to try to work toward resolution of a couple of these issues as we see them, but we think A.B. 284 is a good and necessary bill addressing those few bad apples in the mortgage business and many of the concerns raised here today.
Susan Furlong Reil:
Although I am an employee of the Legislative Counsel Bureau (LCB), I am here as an individual today. I have received permission from Lorne Malkiewich, the LCB director, and Bob Erickson, my boss, to share with you a story of my mom’s refinance of her home shortly before her death.
My mother was not a stranger to financing. She was married at 17 and she handled the family finances. In order to keep us at home, she started taking care of kids; she owned and operated a child care facility. She was licensed for 30 children and she did the books. She was neither a stranger to financial matters nor the type of wife who let her husband handle all of the finances.
I am also going to tell you a little bit about my mom’s health and her state of mind. It will tell you how she came to refinance her home. She was initially diagnosed with cancer in January 1999. My father had passed away. He had retired from the State, so Mom had the self-funded insurance. Even with insurance, her medical bills were pretty high. She underwent chemotherapy and radiation, and 6 months later the doctor said she looked good.
According to my mother’s records, a little over a year later, April 10, 2000, she received a phone solicitation from a mortgage representative to refinance her home. She told him she had a $56,000 line of credit with her bank for some time and had life insurance on it. She was interested in refinancing her house, but she wanted to keep the life insurance. He told her the insurance company did not care what her health history was. Given that reassurance, she went ahead and applied for the loan. She did not tell anyone in the family she was going to refinance her loan. The interest on her equity line was 10.75 percent.
In later conversations with my mother, I asked her why she decided to refinance the loan, and she told me that she was paying 10.75 percent on her equity line and the mortgage representative gave her a quote of 10.74 percent. In her mind at that time, she thought she would be saving a lot of money. Also, she had charged a lot of her medical bills on her credit cards and she wanted to pay those off. She thought she would be saving money.
One week after receiving the mortgage solicitation, she had a follow-up visit with her oncologist. Everything looked great. A week later she signed the loan application. Four days after she signed the loan application, I got a call from her hairdresser who told me Mom was in today and something was wrong. I visited with my mother and it was obvious something was wrong. She was having trouble. She did not have any stroke symptoms, but she could not find the words to express herself. That was on a Saturday. Two days later I started making phone calls so we could have some tests run and find out what was going on with her. Unknown to anyone else in the family, on the same day I was scheduling tests, the loan funded and all the payments went out to pay off her creditors. Three days later, we learned my mother had a brain tumor. It was likely malignant. The neurosurgeon told us her difficultly in finding words, her confusion, and her inability to understand was caused by the swelling in her brain. The day after Mom found out she had a brain tumor, she received a notice from the mortgage company her life insurance had been declined.
Mom was really upset. She asked me what she could do and I suggested she talk to the Division of Insurance and check with her attorney. She did both of those things and she was pretty much told it was her word against that of the mortgage representative, who had left the company in that short time. She had the tumor removed, was okay for a couple of months, and still continued to be really upset about this. My sister took the loan papers to a friend who was a lawyer in the Bay Area. After a review, the settlement charges on the mortgage loan of $130,000 were $853. Charges included in the total mortgage showed my mother paid the lender an application fee of $300, a loan origination fee of 5 percent or $6542, and another $6542 as a loan discount fee to lock in the rate at 10.74 percent, which was pretty high at that time. The credit insurance premium for the life insurance was $6353. The settlement charges on her loan were almost $20,000, or about 16 percent of the loan. Eventually, Mom did get a refund of the credit insurance premium since her life insurance had been declined, but we also learned later the life insurance company was a subsidiary of the mortgage company.
Senator Amodei:
I remember your testimony; was it in the Senate Committee on Commerce and Labor last session? I know you were asked this question last time, what was the name of the company?
Ms. Reil:
The company was Conseco Finance Servicing Corporation.
Senator Amodei:
Are they still around?
Mr. Reil:
Yes, it is a large company. They are approved by the FHA and the Veterans Administration.
Leo Davenport, Past President, Nevada Association of Mortgage Brokers:
Working with Assemblywoman Buckley, we did make the change to the HOPA triggers in relation to foreclosures. For that reason, the Nevada Association of Mortgage Brokers could support A.B. 284. Regarding some of the comments, which I had not heard before on the noticing, my suggestion would be rather than to wait for the foreclosure to start, let us give the borrowers a 15- or 30‑day process server before we can start the process. This gives legal services the ability, before the foreclosure is even started, to start their procedure, if they wish.
Chairman Amodei:
With no further testimony on A.B. 284, we will close the hearing. Before we provide the rest of the hearing time today for A.B. 337, is there anyone who wants to claim sponsorship of A.B. 117 and testify?
ASSEMBLY BILL 117: Makes various changes to provisions governing withholding of income which is ordered to enforce payment of child support. (BDR 3-901)
Keith M. Lyons, Jr., Attorney, Nevada Trial Lawyers Association:
I am speaking in regard for A.B. 117. While this bill does not deal with mortgages where people steal hundreds of thousands of dollars, this bill does have a drastic impact on people’s lives. I practice primarily in two fields, employment law and family law. While Nevada law states someone cannot be terminated if a wage garnishment is entered, unfortunately, many times that is just what happens. While the employers are usually not so blunt as to state that is why they are firing somebody, it is oddly coincidental how when the garnishment is ordered, the employee just happens to get terminated.
Assembly Bill 117 attempts to give parents who are willing to pay their child support a chance to meet their obligation without the threat of a wage garnishment. In light of the impact wage garnishments have on people’s lives and the fact we want parents to voluntarily self-pay, something should be done. This bill attempts to address an issue arising under the Uniform Interstate Family Support Act. If someone files an action with the district attorney’s office, the district attorney and the court system automatically input a wage garnishment. The wage garnishment not only costs the employee, if that individual gets terminated, the wage garnishment is also a cost to the district attorney’s office in processing fees and things of a similar nature.
Assembly Bill 117 allows exceptions for the individual who has been identified as the parent of the child who typically would be the father. If the parent was not aware of the child support obligation, meaning aware the child was hers or his, or the parent has paid child support for the prior 12 months without a court order, the court would not automatically order a wage garnishment. Obviously, if the obligor does not make payments, the court can then step in and automatically order a wage garnishment.
This bill is in the public interest because there are just too many people who automatically get tagged with a wage garnishment when it is not needed. They are good, upstanding people who are paying their child support.
Janet Serial:
I am a parent and I live in the east Sparks area. As a constituent, a parent of children who do receive child support, and a social worker who worked for several years in child welfare services, I have strong feelings in opposition to changing any laws which would hold parents less responsible for meeting certain child support obligations. I wanted to testify because I actually receive child support from her father in Florida for my second oldest child, who is 19 and disabled. I would be less likely to receive this child support were it not for current laws on the books forcing him to meet his child support obligations or face the alternative of having his wages attached. It is already very difficult to get child support with those laws on the books. If there were any proposed laws making it easier to circumvent child support laws, as a parent, I would be in direct opposition to that legislation.
Senator Nolan:
I take it you see this bill is something that potentially could erode the existing statute with respect to collecting child support.
Ms. Serial:
Yes sir, and I would have to take the opportunity to read the full bill. Based on the gentleman’s testimony in Las Vegas, it sounds like the proposal allows for certain latitudes currently not existing in law, unless I am misinformed.
Chairman Amodei:
We will close the hearing on A.B. 117 and open the hearing on A.B. 337.
ASSEMBLY BILL 337 (1st Reprint): Makes various changes concerning rights of ex-felons. (BDR 14-63)
Assemblywoman Christina R. Giunchigliani, Assembly District No. 9:
With the support of this Senate Committee on Judiciary and the Assembly Committee on Judiciary last session, we made great strides in the area of restoring felon rights. The law was changed to allow an ex-felon to apply to either the pardons board or parole and probation for restoration of rights. Unfortunately, that bill did not make it easier. It was still cumbersome and hard to navigate. In fact, the term “crazy quilt” was advanced by the U.S. Department of Justice as a depiction of the arbitrary patchwork of various procedures and an absence of uniform provisions governing disenfranchisement and its restoration in many other states.
As a brief historical overview, I have drawn on the Advancement Project entitled “Re-enfranchisement.” Although disenfranchisement laws date back to the founding of this country, it was not until the Reconstruction Era and the ratification of the 15th Amendment that these laws took on their present day significance and racial impact. The 15th Amendment prohibited the states from denying voting rights to U.S. citizens based on race, color, or previous condition of servitude. However, Southern states were opposed to the reconstruction and enfranchisement of those formally held as slaves and sought to legally deny them this newly recognized right during their constitutional conventions. Their aim was to deny as many African Americans as possible the franchise while not running afoul of the 15th Amendment. Their constitutional conventions instituted a number of voting barriers including literacy tests, poll taxes, understanding clauses, grandfather clauses, and felony disenfranchisement. Over time, all of the barriers to voting have been struck down except for the felony disenfranchisement.
In 38 of the states and in Washington D.C., persons with felony convictions either never lose their right to vote or automatically have their right restored at some point after they are released from incarceration. Research from the re‑enfranchisement document states that in permanent disenfranchisement states, former felons are not commonly informed of the procedures necessary in order to regain their right to vote. Many incorrectly believe they can never vote again. Persons in these states who are aware of the existence of a discretionary restoration process often face a myriad of cumbersome conditions, prerequisites, rules and regulations.
Although disproportionately affecting African American people, disenfranchisement crosses racial, ideological, and political lines. Because of the transparency of race, issues impacting African Americans often serve as the “miner’s canary”; in other words, these issues provide an early signal to problems that will impact other groups as well.
And so it is with felon disenfranchisement, an issue which disproportionately impacts African Americans, signaling a deleterious effect on democracy as a whole. While the disproportionate effect of felon disenfranchisement in African Americans and Latinos is troubling in its own terms, the reasons for this disproportion are even more so. Scholars have consistently reported people of color are often targeted, prosecuted, convicted, and incarcerated at higher rates than those similarly situated whites. For example, Latinos are incarcerated at rates of 7 to 17 times greater than those of whites in some states. Such discriminatory actions are inherent in the criminal justice arena and they translate into discriminatory results in the voting rights area. This damaging structural impact is compounded when one considers the role of historical discrimination in terms of poverty, limited educational and employment opportunities, as well as residency. Moreover, the proliferation of mandatory minimum sentencing laws, including the 3 strikes laws and the crack-powder cocaine disparity, have dramatically increased the numbers of African Americans incarcerated. All of these factors result in disproportionately high numbers of people of color being disenfranchised.
Assemblywoman Giunchigliani:
Assembly Bill 337 tries to get at the very confusing patchwork quilt many people have to deal with as well as tries to eliminate the issue of disenfranchisement.
Assembly Bill 337, as amended in the first reprint, does the following. Section 1 defines civil rights. As we did not have a definition, we narrowly defined civil rights to include having voting rights restored, and the ability to hold office and to serve on a jury after being discharged for 2 years. Section 2 clarifies if records are sealed, civil rights are automatically restored. Section 3 is gaming language the State Gaming Control Board worked with me on to clarify the procedures for who may receive a gaming card. Section 4 deals with registration of ex-felons. Currently, all states require registration of sex offenders; this stays the same under this bill. In Nevada, we were the strictest state as far as registration of ex-felons. This legislation would still have us as the most stringent state next to Alabama and Florida, where those who have two and three felonies still have to register. Ours says with two or more felonies offenders would still have to register in this State as ex-felons. Section 5 states a sheriff shall not require a card to be carried. Only one county in the State of Nevada required this and there was an attorney general’s opinion it was not allowed by law. Assembly Bill 337 makes this clearer. Counties should not be able to require a felony card.
Section 6 clarifies felons cannot sit on a jury until their rights are restored. Sections 7 through 12 and then 20 through 75 deal with occupations by trying to take felony issues, which are very global in many licensing board occupations, to make sure they were related to the actual type of jobs. An offender writing a bad check should not be penalized from being licensed as a land surveyor. However, if they were in child care facilities and there were some instances, the ex-felons probably should not be allowed to be licensed for child care.
In section 13, if offenders are pardoned, then their civil rights are automatically restored. If they are honorably discharged, their civil rights are automatically restored in section 14. If they serve their full sentence and are released, it will say so in the document, and their civil rights will be fully restored in section 15.
An ex-felon cannot run for sheriff by section 16, cannot run for constable by section 17, and may not be hired as a peace officer, category I, II, or III by section 18.
I have handed out a suggested amendment (Exhibit F. Original is on file in the Research Library.). After a discussion with Assemblyman Hardy when the bill passed out of committee, we added his concept that language would be added to state ex-felons with category A felonies in the State of Nevada would not have their rights automatically restored, but could directly petition the court. Even though only three people might even have been released under category A, there was a concern. I am also suggesting deleting the language regarding a public officer in section 11. If we are going to allow other people to run for office, we should allow felons to run as well, once they have completed their time.
Lucille Lusk and I were just talking and noted for the occupations related to practice or position in athletic training ability, the material said “fitness” to act. I looked at what the State Gaming Control Board with Scott Scherer helped write, which dealt with suitability or qualifications. Maybe that is the best language to consistently use throughout the bill. I offer this just for discussion purposes. I do not think it is an issue one way or the other. If we want clear language, I had suggested the fitness issue in my amendment, but suitability or qualifications may also blend and be a bit clearer as far as occupational licensing boards are concerned.
I also have numerous cards I have received in support of A.B. 337 and will submit them for the record (Exhibit G. Original is on file in the Research Library.)We have tried to make this bill simpler this session, but we did not. This is the maze ex-felons have to currently go through after they have been paroled, pardoned, honorably discharged, or have served their term and are automatically certified. The individual still has to assume the responsibility to register to vote if they choose to do so. This will make the maze much simpler.
Dennis McMullen, Proprietor, Denny’s Dependable Automotive:
I have been a resident of Nevada since 1978. I had a good career in California; I lost it in 1978. In 1979 I was arrested for a nonviolent crime, pled guilty in 1981, and served time in Carson City with a short parole with no incident. Usually, many convictions are needed to get to prison; I had one.
After being discharged, I found my options were limited. I would no longer be going into management of any sort, but I had a fallback talent. I was an auto mechanic. I went to work as an auto mechanic and worked my way up, met my wife who was one of the biggest reasons for my success, and stayed out of trouble. We opened a business in Reno and eventually, Denny’s Dependable Automotive became popular around Reno.
I miss my right to vote. I wanted to be a good member of the community and a productive member of the community. It was embarrassing to admit to anybody I had been in prison. In 1994, 15 years after I had been arrested, I applied to get my civil rights restored and was turned down informally by the Governor’s office. In 1996 I got an attorney, and after 3 years and $8000 I finally got my right to vote returned. It was an arduous process with many fingerprintings, surprise visits by probation and parole to my home, and letters written. To get community support, I had to admit to many of my friends I had been a felon.
It could be done more easily, and it should be. If a person has proven to be a good member of the community and not a recidivist and is a responsible person, she or he ought to at least have the right to vote and to employment opportunities. If we want felons integrated back into the community, we have got to give them the opportunity to do so. Otherwise, it is a never-ending cycle. I was lucky. I made lemonade. Not everybody can do that. It was an expensive, arduous process and should be made easier.
Norma Gaeta:
I am here to speak on behalf of my brother. He was released from prison about 2 years ago around Christmas. I noticed the economic hardships he has been going through. He has been job searching for 2 years. He goes to the interview and the people like him. They do a background check and find out he is an ex-felon and then all of a sudden he does not have a job anymore.
This is not right. He has paid his debt to society. Why is he still paying 2 years later? Felons cannot be veterinarians or architect designers. What harm is that? Some of the best artists are in prison. We expect ex-felons to act like citizens, yet we do not give them the chance to be citizens.
Laura M. Mijanovich, Lobbyist, American Civil Liberties Union of Nevada:
I am submitting my written testimony in support of A.B. 337 (Exhibit H).
Senator Care:
As to the restoration of the civil rights listed in section 2, I personally do not have a problem with them, but I want to go beyond and talk about employment. There are two things about this bill I would like to hear in testimony. If this bill passes and I go into a job interview and the employer asks me, “Have you ever been convicted of a felony?” The way I read the bill is I can say, “No,” and that legal fiction stands. That would be the correct answer. On the other hand if the employer says, “Have you ever been convicted of a felony and they had your record sealed and your civil rights restored?” I guess the answer has to be, “Yes.”
Are we putting employers in a position where it becomes a violation for employers not to hire ex-felons only on the basis they are ex-felons, or fire them? Maybe somebody has been an admirable, at-will employee for 2 or 3 years, has not made a mistake, has not missed a day of work, and then the employer finds out he is an ex-felon and it makes the employer uncomfortable. So the employer says, “You know, I really do not like this and therefore I am going to have to let you go.” I do want to get into that issue if we are putting a public policy burden on the employer when it comes to this.
Ms. Mijanovich:
This question exceeds me other than I think we have to find a proper balance. It should not be a violation of public policy. In the balance, we have to consider that the ex-felons have fulfilled their conditions and we need to think of the important need to reintegrate them into regular life and A.B. 337 would be a way to accomplish this.
Senator Care:
I would not dispute what you just said, I am just asking what are we requiring of the employer, if anything, who finds himself in that position?
Larry D. Struve, Lobbyist, Lutheran Advocacy Ministry:
I am here representing the Religious Alliance in Nevada (RAIN). We are a coalition of five jurisdictions: Catholic, Presbyterian, Episcopalian, Methodist, and Lutheran. Our congregations are all over the State. In most of the congregations we offer 12 step programs and are working with the category of citizens who are the subject of A.B. 337. The RAIN board has reviewed this bill and is very strongly in support of the thrust of this bill. The work of our congregations is about rehabilitation. It is about restoring people to a sense of dignity that makes it possible for them to be productive, fulfilled human beings, which is the greatest guarantee they will not re-offend.
Senator Care’s question raises some interesting issues, which perhaps may be beyond the scope of this particular bill. The focus of A.B. 337 is about how we treat those who have paid their debt to society and who want the right to vote or the right to hold office restored. Certainly, the right to employment and the rights of employers to be comfortable with those they hire are significant issues which might be addressed in another bill or through some further study.
The RAIN coalition would very much want to work with employers to hire these people or to work with ex-felons, because the cost we are paying as a society to keep these people in a segregated class or in prison is infringing on our ability to provide many other needed services in society. Perhaps there is going to have to be an educational effort. The stigma of having a felony conviction has been like the infamous scarlet letter that has kept people from being able to achieve fulfillment. Human dignity is the key to keep ex-felons from re-offending and to reduce the cost of dealing with these people in society. We want the opportunity to work with employers from our congregations, who are in a position to help these people, so that stigma does not prevent them from being reintegrated into society.
Assemblywoman Giunchigliani:
Section 2 is the current law regarding sealing of records. If your records are sealed, you may answer “no” on your form. This does not change nor expand current law. If you have your civil rights restored, but you do not seal your records, you may not answer, “No, I have never been convicted of a felony,” you must still answer “yes.” Those two issues are separate. A person could have gone to get their record sealed, but never requested their civil rights be restored. Now the document can state your records are sealed and your civil rights are restored. They can then provide proof to the voter registrar. This is just in line on the automatic language, so the bill is not changing what currently exists and therefore does not bind an employer, because it only affects a very narrow group of people who have made the effort to get their records sealed. In Nevada, it takes a long time; if you had a category A or B felony you have to wait 12 years, a category C felony is 7 years. Records cannot even be sealed for quite some time after release from incarceration, providing there is no re‑offense.
Senator Care:
When we start throwing records in there affecting employers, to me it becomes an issue. When it comes to the licenses, there is a provision saying you can still attack the credibility of an ex-felon as a witness or a party who is testifying at trial. Normally this arises in the context of the believability of the witness. You will usually see this where the crime has had something to do with voracity or dishonesty. Nothing about the crime of murder is necessarily dishonest as opposed to embezzlement or larceny. In that context, as in section 65 which talks about being an accountant, does this mean the board can say someone convicted of armed robbery or other violent crime does not necessarily relate to the ability to be an accountant or a number of the other professions listed? On the other hand, if somebody has been convicted of a white-collar crime such as embezzlement, is that then a consideration for the particular board when they are thinking about whether or not this person should receive that license? She or he has never been an accountant before, so you cannot associate what was done with being an accountant unless it was a crime involving dishonesty, then it is something that leaps out, as I read this bill.
Assemblywoman Giunchigliani:
I would say the board could still deny. We were so broad in many of the occupational boards and A.B. 337 said convicted of any crime that was a felony. What does that mean? Should you lose your license to practice as an attorney because you had a driving under the influence (DUI) one time? That is a judgment call. What we were trying to do is to at least give people the opportunity to argue on behalf of still being suitable. The board can still choose not to grant the license, but it was to try to not just have a broad brush, painting everybody exactly the same, because not all felonies are the same. There are those more egregious than others. We would all probably disagree on which felony actually outweighs the other, but at least the bill refocused the board. That is what we were attempting to do. That is why I suggested looking at the language on suitability or qualifications for particular occupations giving the board the opportunity to make a judgment call which is not just arbitrary.
Senator Washington:
Within section 1 or section 2 of the bill concerning the restoration of rights and the ability to hold an office based on honorable discharge from probation, after the honorable discharge is received and then a re-offense occurs, would rights be lost again?
Assemblywoman Giunchigliani:
Yes.
Senator Washington:
Then, if you were discharged and again on probation, would those rights be restored?
Assemblywoman Giunchigliani:
Correct.
Senator Washington:
So, you could create a cycle for yourself?
Assemblywoman Giunchigliani:
Unfortunately, yes, and that is what tends to happen. This bill only affects a very small number of people because unfortunately we have a higher recidivism rate. The higher recidivism rate comes because we do not allow people to reenter and participate in their community and we make it very difficult to get employment. Therefore, in many instances people tend to hang out with the wrong people and re-offend.
This could be an incentive to individuals who feel they have paid their debt, and done their time and parole or probation. They still have to make the choice to go down and reenter by taking the document to the registrar. This gives them the opportunity to prove they can be part of society.
Senator Washington:
As we go through and process this bill, I have a problem with re-offenders or recidivists, when once if their rights are restored, they perpetrate another crime, again go on probation, and then get another honorable discharge and restoration of rights. If they get one bite of the apple, that should be enough.
Assemblywoman Giunchigliani:
We will agree to disagree on that part. If you think about it, when they re‑offend, some can be very minor offenses where they are picked up in a sweep and dumped back in. We have to be careful and prevent against that. Even more importantly, if they did re-offend in a serious manner and are back in for 10 or 15 years, they are going to be back on probation and back on parole. It is not wrong to say, “Okay, you screwed up the first time, you screwed up the second time, you get another bite.” It is still their initiative to even choose to register to vote. The issue of running for office was greatly discussed, but the Assembly said, “You know what? I would actually like to have an ex-felon run against me.” They felt it was reasonable to allow ex-felons to be able to run for office after they have paid their debt to society. Stan Olsen had some concerns about the jury issue and that is why we adopted the two years. This bill has been worked out and agreed to by the Nevada District Attorneys’ Association north and south, the Nevada Sheriff’s and Chief’s Association, the Las Vegas Metropolitan Police, the American Civil Liberties Union (ACLU), RAIN, and a variety of other groups.
We tried to bring you something workable and easier by not forcing people to have to work through a maze. It also got at the issue of allowing ex-felons to be able to hold a job in many other circumstances where they are currently barred from doing so.
Senator Washington:
I understand and appreciate the provisions of the bill, but my problem is when you have rights restored and you have the ability to vote or hold office or even serve on a jury, and then you go out and commit another offense upon those restorations. Are we doing a disservice to the community, to the ones who have never offended whose rights are still intact? We give offenders the opportunity to have their rights restored and then they may go out and perpetrate another crime, after being honorably discharged?
Assemblywoman Giunchigliani:
It is a philosophical discussion. Our society has created prison systems for the purpose of making offenders pay their debts. It is time to stop being hypocritical in our policies so once they have paid their debt to society, have met all of the things we have told them to meet, then they may came back and start participating. Like” Dependable Denny,” he is a contributing member of society. We all mess up, some of us just happen to get caught and not everybody does. This bill recognizes our system, while imperfect, works pretty well. There are two states where felons can vote while they are in prison; we did not go to that extreme. I understand we are independent so I did not go in that direction, but we modeled ourselves after the overwhelming majority who say “All right, you have paid your debt, come back in, we will give you this opportunity to show us you can be part of our society.” Voting is very near and dear to many people and maybe part of what they get in the prison system is reidentifying how you assimilate into an area and also acculturate as well.
It is a policy and a philosophical discussion.
Senator Washington:
We are a forgiving society, but there comes a time when you have got to be accountable for something and even within that forgiveness, there are consequences you have to face. Those consequences, whatever they may be, are still out there because you have violated the statutes or you have violated the law. If this committee processes A.B. 337, it gives an offender an opportunity to regain her or his rights. This is the committee’s decision; my concern is once you have been given that right and you go out and perpetrate another crime or you re-offend, should we give you another opportunity, and this bill kind of says we do.
Senator Wiener:
If I could pursue the employment part, I was on the corrections study committee appointed by the Governor, and we have one of our staff from the committee. I am trying to recall. Have you looked into how many jobs are really blocked because of a felony conviction? I was thinking there was like 90 or 100 jobs an ex-felon cannot get.
Assemblywoman Giunchigliani:
I have not counted the number in a couple of years. It is huge. Most public employment and transportation jobs are totally barred. What do we do? Where do people go? Unfortunately, many individuals were incarcerated when they were young so they did not have their education put together. They did not have a vocational background. What do we do? We just dump them out the door, give them $22 and say hit the street and good luck. Assembly Bill 337 anticipates giving ex-felons an opportunity to be successful and not re‑offend. It is a very high number as far as provisions and restrictions on the available occupations.
Senator Wiener:
If I can throw a pitch into the other House, we do have a bill processing, S.B. 317, which came out of the study committee. I sponsored it to help on the educational side. That also was a very sensitive collaboration and we worked long hours to provide for educational and vocational opportunities so offenders have something to work with when they are released.
Assemblywoman Giunchigliani:
It is an excellent idea and very much needed. Someone from the Department of Corrections will be here to testify.
Ray Valdez:
I am an artist and a muralist living in Reno. It has been 15 years since I have sat in such a formal setting. I am also a schoolteacher in the community. I am also an ex-felon. Fifteen years ago, I was sentenced in federal court to a non‑parolable sentence with minimum mandatory guidelines. Upon serving 9 1/2 years of an 11-year sentence, I was released from federal prison. I came to Reno on a 5-year probation. Through good conduct, 500 urinalysis tests, all clean, I was released early from probation.
I came to a halfway house in Reno for 6 months. I had to find a job. I am a high school graduate with college education. I had 6 months to find a job or they were going to send me back. I cannot drive, so I got bus passes. I had never been to Reno. Through family support, I persevered and found a job after 35 interviews. The only reason I got that job was because the manager of the warehouse was an ex-felon. In a small sense that was a violation because I was not supposed to associate with ex-felons, but non-felons would not hire me.
Since then, with a dream to come back to society and through the tool of art, I now teach at Wittenberg Hall helping to keep young juveniles from following the same path as I did. I have been blessed and fortunate that even without my rights, the community has still given me autonomy, trust, and the ability to succeed. I currently teach sixth through ninth grades at a charter school and I teach at a transitional learning center. Those students are special education, handicapped, and labeled by society as losers.
It has been a long road. I come before you, with all due respect for law enforcement, not because I want to be sheriff or run against Senator Washington. I come before you with a passion. People make mistakes. I spent 7 years in the penitentiaries in Lompoc, California and Phoenix, Arizona. I worked my way out of the pen. I ended up somewhere on a mountain near Las Vegas where bombs are guarded. These bombs are more secure than we are. I painted murals for the military while I was there. As I was painting the murals, a three-star general approached me. I did not know what a three-star general really looked like with the stars and all, they looked good, but I had no idea he ran the whole base. The general told me he thought I was a pretty good painter and asked where I learned to paint, at school, college, prison? I replied I had been painting since I was a boy. When I went away, I used my art to escape and people liked it. He encouraged me to keep painting the murals and asked how much longer I had. I replied I did not know, a year or so. He said, well you keep painting. He asked about what happened and how much time I got. I told him I had made a mistake, a nonviolent drunk case, drug case, conspiracy case, went to trial, was convicted and got a minimum mandatory 11 years, no parole, no good time. I told him I was human, I had made a mistake and I got caught. He said he did not understand.
I agree with Senator Washington. I do not think you should have double chances. I have been out 5 years, clean, no offenses, no seat belt ticket. I agree, if I fall again, I should not have my full rights as a citizen back. I agree, people make mistakes, but must move forward. I teach this to the juveniles with whom I work. It is not so much the mistakes we make, it is what we do with them and how they change our lives in positive ways.
Jeffery Henderson:
I am an ex-offender and am here on behalf of A.B. 337. I did not come today to jump on a victims’ bandwagon or to get anyone to feel sorry for me or other ex‑offenders. I am here on behalf of the voiceless people who have made wrong choices in life. I have paid my dues, along with a lot of other people. As Ray Valdez just said, some people may not deserve a third or fourth chance. We are asking for one chance.
Young people who come from urban poverty may not have had a lot of opportunities a lot of other young people from middle-class America may have had. They learned how to survive early and many times made choices based on economic and social conditions they faced. I am not trying to justify committing crimes or doing illegal activities, but for myself, prison made me a better person. It made me a better person in society and now I am contributing to society.
Success did not come easy for me. I was released from federal prison in 1996. As a first-time, nonviolent offender, I received a 10-year 7-month sentence under the new federal sentencing guidelines. I went to prison and it was in there I realized I was intelligent and I was smart. I decided I wanted to change my way of thinking. I educated myself and had the opportunity to learn how to cook. From my prison experience, I am a successful chef today. Many people coming out of prison may not have the drive or the tenacity I have and not everybody wants to be a chef, but everybody wants a chance to contribute to society and be productive. Most of us who are working pay our taxes, but we are not allowed to vote and we have to carry felon registration cards.
I have been out 7 years and I still have to carry a convicted felon card. I have not been in any trouble. I am a successful chef in Las Vegas. I manage five managers; most of them went to college. I have 92 employees in my restaurant, which does $1 million a month. I have changed and I want the opportunity to be able to vote, as do a lot of other reformed ex-offenders. All we ask for is a chance. If we get the chance and we mess up again, there will be no sad face for us.
I have witnessed rehabilitation. I have witnessed success for people who have been incarcerated. There are a lot of good people who are doing a lot of good things in the community, saving lives, helping people, as well as educating people, and we need a chance. There are payoffs for restoring our rights. There are payoffs for giving us a chance, but there are also payoffs for not giving us a chance. When we get out of prison, have children, have a family, are trying to make a living, and the door is closed in our faces, then we are not able to seek employment to provide for our children, provide for our family, and the survival mode kicks in. A lot of young people go back to doing what they know how to do, what they were raised up doing, which is surviving at the expense of other people. It is a sad thing. Giving us some of these rights and making some changes by making it easier for us to be able to make that transition, would give hope to people in prison. It costs $35,000 to $40,000 a year to house an inmate. If you can take $25,000 or $28,000 and give some of us jobs, the money would be better spent.
Liz moore, Southern Nevada Coordinator, Progressive Leadership Alliance of Nevada:
I am submitting my written testimony in support of A.B 337 for your record (Exhibit I).
Fritz Schlottman, Economist, Department of Corrections:
The Department of Corrections has sent me to express our support of A.B. 337 and to discuss the aspects of recidivism and economics. Recidivism is one of those very hard to define, very hard to calculate aspects of the criminal justice system. However, there is a consensus of knowledge forming around the impact of employment on recidivism.
If you look at all of the carrots and sticks available to the Department of Corrections for addressing this issue, some of them have absolutely no effect on recidivism. For instance, we currently have two sticks, the intensity of incarceration and the length of incarceration, and they have no effect on recidivism. I could put you at a camp, I can pump sunshine to you at Ely, and it has no effect when you come out. I can keep you there for 1 year, or I can keep you there for 50 years, and it has no effect on recidivism.
If I were going to choose the one most effective option available to us to keep people from re-offending, it would be employment. Study after study has shown employment is the silver bullet. For instance, research from Texas in 1990 indicated an unemployed offender is three times more likely to return to prison than an employed offender. In a New York study, 83 percent of the offenders who return to prison are unemployed; this is pretty convincing evidence. We know it is not just employment. Offenders not only face barriers to entry into employment, but the kinds of employment they receive are characterized by low wages, high turnover, high quit rates, fewer number of days actually worked during the year, and fewer numbers of earnings, and those jobs are conducive to quits and failures. To this extent, A.B. 337 allows people to return to their careers as long as their crime was not related to their occupation. This has been demonstrated in study after study to have a positive effect on recidivism.
If offenders were employed for 4 years prior to the date of their offense, the chances they will recidivate are very small. If they are employed after their offenses, they are three times less likely to recidivate. The quality of employment affects recidivism. The more they earn, the more days they work, means the less chance they have to recidivate. What is amazing about this is we have already heard testimony on the racial differences within our prisons and in our population at large. One of the great things about employment is African Americans disproportionately benefit from post-conviction employment. Their recidivism rates drop greatly. There is an Australian study demonstrating those recidivism rates dropped greatly when they are employed after corrections. There seem to be significant barriers, not only to employing ex-felons, but the racial barriers to employment increase much more when we are talking about an offender.
From the perspective of the Department of Corrections, to any extent we can get people out of prison and get them employed in substantial and continued employment, will not only have a positive effect on society, meaning there will be less victims, but there will be a substantial, positive effect on the finances of the State because we are not going to be paying for as many people to return to prison. In the long term we are going to save a chunk of money. A 1977 to 1978 study indicated 25 percent of our population are ex-offenders. That was before the drug war. We are talking about substantially more people now. It would be difficult to determine the future positive fiscal impact of this, which depends on how many people take advantage to return to their careers after incarceration. We could have a fairly substantial fiscal impact on the State.
Senator Wiener:
How many job or job categories are blocked because of that felon status?
Mr. Schlottman:
It is well over a hundred and applies to almost anything that is public sector related; particularly in Nevada, where the best jobs and the most substantial and the most long-term jobs require people to get a card as a condition of employment, such as in the casino industry. Getting public sector employment in transportation or in the construction industry is not currently an option. Study after study has shown there is little chance to make it without employment.
Senator McGinness:
This bill relates to employment because you are talking about the people who would have their cases sealed, then they would be able to answer they did not have a felony.
Mr. Schlottman:
That is correct, and to the aspect if they had a felony unrelated to their occupation in the licensing sense, they could go back and resume work. For example, we had a multimillion-dollar real estate person from Las Vegas who was incarcerated. She was able to return to the community and pick right up where she left off and is doing quite well. Consider if she had not been able to go into her field; she would probably be looking at one of our training programs within the Department of Corrections. We would be training her to be a maid. Which does society benefit more from, people with the talent to make millions of dollars or using their talent to change beds?
Gene Munnings:
I will submit my written testimony in support of A.B. 337 for the record (Exhibit J).
Mijahid Ramadan:
While echoing some of the sentiments of our colleagues here in reference to support of A.B. 337, I want to speak briefly on the issue of what we call collateral damage. Many times the population we are dealing with, while even being prepared for coming out, come out to families and children. That is a part of the collateral damage we see when these individuals are unsuccessful in making the transition back into public life and back into being a successful, contributing factor to a family. We know when we work with men, we work with individuals, and when we work with women we work with entire families.
To the degree we can enhance the likelihood of these individuals to sustain themselves with the help of community organizations and faith-based organizations and employment from the business community, we increase the likelihood of their success. The right to vote would be an additional piece.
The people who are working or who are with families are less likely to recidivate. Those who are involved in civic opportunities and duties are less likely to fail. One commander from the Department of Corrections facility in southern Nevada said he is now seeing second and third generations of men. He said he knows we are doing something wrong. Anything we can do to reduce the number of recidivisms and the more we can add into the equations in terms of helping people successfully make that transition and establish themselves, the safer our public is going to be.
Senator Care, in reference to your question, it certainly underscores the serious need about the ability of individuals, after completing their sentences and returning to public life, to be able to get jobs. We know they are faced with certain restraints and barriers which may not be included in the idea and concept of this bill, but that difficulty is something we hope the Legislature will eventually engage. We also think many of the individuals we are speaking of who have been successfully oriented in terms of work, in making transition, and with the access to holistic care, when families and jobs and employment and support groups have been available, we certainly think many times government plays a role to put further barriers out there by work restraints and card requirements; that is something we are concerned about. Successfully passing this bill will enhance family life, reduce the cost of social programs, and improve our tax base because many of these people work, pay taxes, and contribute to the well‑being of our overall community.
Ronald Thomas, Chairman, Project Fresh Start:
I am a local pastor in the city of Las Vegas. I am also a chairman and founder of a nonprofit corporation called Project Fresh Start, which works in conjunction with an organization here called Nevada Partners Incorporated, specifically created to assist ex‑felons with counseling, job coaching, and employment opportunities.
Section 3 has raised some concerns. When we do our job coaching and job interviewing with ex-felons, we never tell them to be fictitious and say they have never been convicted of a felony. But they never even have the opportunity to sit in an interview with individuals who would be able to ask them that question, “Have you ever been convicted of a felony?” If they cannot be issued work cards, specifically as it pertains to the employment opportunities in the City of Las Vegas with the gaming institutions, then they do not have the chance at many jobs.
We are in favor of A.B. 337, which would at least give individuals an opportunity to be able to sit across from an employer who would interview them, and have employment based upon ability and qualifications, and not because of the fact they have been ex-felons. They cannot even apply for many of the jobs in the casino industry. This is the major struggle we have as individuals because institutions, not just the church, but other organizations, are willing to work with ex-felons in assisting them with housing issues, with rental assistance, as well as preparing them to be trained. Nevada Partners, Incorporated, conducts culinary training and various other training for maids and all these things. If we are hindered from helping ex-felons have opportunities or affording them the opportunity to receive a work card to work in the gaming employment field, then it makes it harder for me, as an individual in the community willing to serve our ex-felon population, to do my job. It makes it harder for ex-felons to even want to come to places that will say we can assist them because of the limits to the opportunities for employment.
We are in support of A.B. 337 and hope it will not
cause individuals to be fictitious and lie by saying they have never been
convicted of a felony. It will
give them an opportunity to be able to present themselves before employers in
our industries and in our casinos. They can demonstrate they have abilities,
have gone through training, have made turnarounds in their personal lives, and
are able to present themselves based on their qualifications for employment.
Onie Cooper, Reverend, Chairman, Northern Nevada martin Luther King Jr. Commission, and Associate pastor, Second Baptist Church, Reno:
There are 28 days before things wind up here for all of you. I trust each of you received a letter from me dated April 10, 2003 having to do with what I am going to briefly talk about in part (Exhibit K). If you have not read it, I hope you will.
Two people out of all of the Senators and Assemblymen and Assemblywomen wrote a letter back to me. One of them was Assemblyman Geddes. He let me know this bill had passed out of the Assembly and I appreciated that. The only person in the Senate who wrote a letter back to me and in part wrote:
I have not yet had a chance to consider the specific provisions of A.B. 337. I agree with you, that persons who have paid their social debt and who do not pose any threat to the public should be able to find meaningful work. I will give serious consideration to the issue of restoring full civil rights.
This was from Senator Raggio, whom I have known for quite awhile.
This is the course I am taking. From the community in which I live, many complaints come to me about voting and jobs. Jobs are number one. You have to have a way of feeding your family. I recently had a young woman come to me with two children to feed. She had looked and looked for jobs. Finally, she was hired to a job without even getting the old ex-felon question. After she had worked for about 2 weeks, she was given a form to fill out about if she was an ex-felon. She filled it out and was let go. The job she was doing had nothing to do with what her conviction. She was not working as a person who handled medicines, she was not working in any dangerous way within the community, she was operating a computer and answering telephones, yet they fired her.
Businesses and owners have the right not to hire someone, I
understand. With this in mind, it says a person’s livelihood is very important
and I am glad
Senator Raggio agreed with the essence of what I was saying.
I ask all of you, if you have to, make amendments to expedite A.B. 337 and allow it to be passed this session. Twenty-eight days, I say, and I know things can get bogged down, but I am asking for special effort on this for the benefit of those citizens who have come out and have paid their debt to society.
As a biblical statement, you ask how often should you forgive these people or should you let them come back? Since I am in the preaching business, it says Peter got concerned about that one time and he asked Jesus, “How often should I forgive my brother if he sinned against me?” This should be considered when someone makes these complaints. Jesus replied, in essence, not just 7 times 7, but as often as needed, 70 times 7, in one day, if they do the same thing over and over.
I am asking us to think about the benefits we can give to the citizens of our community and of our State in order to make it a better place. People will not be lying around like deadwood. When you leave and go to work, they wait and break into your house to take what you have and sell it because they cannot find a decent job. Back to the young lady who had given up, she came to me crying and saying she was tired because everywhere she goes she is asked if she is an ex-felon and they will not hire her, not that she is not capable of working. It is a serious problem. If you do not believe it, talk to some of your constituents or come to Reno and talk to some of the people; I will point them out to you. I ask you to pass this bill, whatever you have to do.
Jerome Lewis, Minister, Business Agent, Teamsters Local 631, Las Vegas:
There was an issue raised about employment. I am here to state a couple of facts about the employment scene. I represent Republic Service Industry, which is the sanitation department where I have been employed over 13 years. When I first started, they were hiring ex-felons, those who had broken laws. That was between the 1960s and 1970s and until the 1980s and 1990s when they were recently bought out by Republic Service. It went from a mom-and-pop-owned shop to a corporation-owned industry. The corporation got away from hiring ex‑felons.
Recently I had taken over the business agent position and I wanted to know why they would not give ex‑felons another opportunity in the State of Nevada since, to my recollection, Republic Services or previously, Old Silver State, did the most hiring of ex-felons for a number of years.
It is that chance to get a very good, well-paying job with benefits, insurance package plus a pension. Being a part of Teamsters, the industry rate of giving a guy a second opportunity has bothered me in our hiring hall within the last couple of years. We represent the convention business, which in Las Vegas is a large market. Our 631 local has over 6000 members. We also represent the movie industry, construction, ready mix, and a number of other industries all within Teamsters Local 631. Throughout all of my graphs and speaking to the other business agents, we all have the same problems. Most people will not hire ex-felons. They are not given a second chance.
I am here on behalf of A.B. 337 to give you what I see in the industry from the employment side. I am disturbed because our hiring hall cannot send someone to Republic Services for the opportunity to interview for a very good-paying job, a wage-earning job that would not only take care of her or him, but would also take care of her or his family. This is an ongoing problem throughout our local. I ask you today to consider going through with this bill. I ask also that you, from a minister’s standpoint, and from what my fellow collaborator just said, consider Peter and 70 times 7.
In every state and county we know of, most ex-felons are given a second opportunity. We are the only state I know of that will not look at an ex-felon as someone who is able to be productive. The bulk of ex-felons I know coming out of prison to the local to trying to look for a job are looking for a job wholeheartedly, because they do not want to take the chance of going back into prison to be incarcerated again. I ask you to look at this openly and look at this morally. What would be better for the State of Nevada, for the citizens in Nevada? I have learned about many existing programs that help those who get out of the system, but there are very few programs that help with job placements.
I ask this from the standpoint as a native of Las Vegas,
born and raised here, went to high school, college, and also convicted of a
felony offense. I was
fortunate; I never did any prison time. I was stopped by an incident occurring
in my younger days. Since then I have made miraculous changes in my life. I am
a father, am married, and I am a business agent for one of the largest
teamsters locals in the world. I also sit as an associate minister for one of
the wonderful interdenominational churches. I serve on numerous boards. I serve
also in my community with participation to help out in community assistance
programs. I am proud of the City of Las Vegas, but the one thing that
saddens me is the fact the City of Las Vegas will not give people who need an
opportunity a second chance. I am in support of A.B. 337 and I ask
your support for this bill. Whatever you need to do to help this bill go
forward as soon as possible, I ask you have a God-fearing heart and make
it happen.
Mr. Blinn:
I am a citizen and an ex-felon. For three sessions I have met all of you and consider it a privilege to count your friendships and to know you. Mr. Washington, I know you are a reverend and I would like to bring to your attention, remember how many times Naaman had to dip in the River Jordan before he got clean? Seven times he was forgiven.
Assembly Bill 337 says an ex-felon can achieve the right to vote with an honorable discharge. This is probably the best piece of legislation to ever have come across your career by the number of votes it affects.
Lucille Lusk, Lobbyist, Nevada Concerned Citizens:
You have before you some amendments I am suggesting (Exhibit L). Thank you for allowing me the time to bring these issues to your attention.
Senator Wiener:
Just for clarification, in your letter and in Assemblywoman Giunchigliani’s testimony, in your No. 3 second option, you refer to fitness and in your oral testimony you said suitability. Just to make sure we have the same language suitability or qualifications, would that also be added?
Ms. Lusk:
The suitability or qualifications is the language with
regard to the gaming
employees in the current bill and we would see that as an option of either
related to fitness or related to his suitability or qualification.
Senator Wiener:
I was just making sure, because you said suitability and that was all you said and in your letter you are pulling out suitability or qualifications. I want to know if you wanted both of those.
Ms. Lusk:
The suitability or qualifications is the language with regard to the gaming employees in the current bill. We would see that as an option either related to fitness or related to suitability or qualifications.
Gary Peck, Lobbyist, American Civil Liberties Union of Nevada:
I am the executive director of the ACLU of Nevada. I want to commend this Legislature and the representatives from law enforcement, the Department of Corrections and the district attorney’s offices around the State for recognizing the obvious flaws in the current system of ex-offender re-enfranchisement and for working with lawmakers in Carson City to move Nevada in a positive direction benefiting all of us.
The principle at the core of your deliberations is a straightforward one. Once a person has paid their debt to society, they should be invited to participate fully in their society. The benefits of this type of policy are obvious to everyone. Representatives from the Department of Corrections, particularly the economist, spoke very eloquently and forcefully to those benefits in hard-nosed public policy terms and made it clear we are all much better off when people reintegrate than when they recidivate. People are much less likely to recidivate when they are allowed to fully participate.
Senator Care’s questions raised a number of very important
issues and questions beyond the scope of our deliberations with respect to A.B.
337, but issues needing to be undertaken at some future date with respect
to employment, the proper role of government in determining who is qualified
and able and suitable for employment, and the role that ought to be played by
private employers. Ours is a State with a very long, very rich, and very good
history of being skeptical about government involvement and intrusiveness,
which is why schemes like the work card system in some way looked to be so much
at odds with our political culture and our values. The questions raise some
important issues, making it plain A.B. 337 is an important first step
this Legislature ought to take in moving us in the direction of making it
easier for people who have paid their debt to society to reintegrate and avoid
recidivating, which is not in anyone’s best interest. I would welcome the
opportunity to be a part of any future discussions about such issues
relating to employment and who makes those decisions and how.
Shawn Smith, Guiding Individuals from Trouble Incorporated:
I am from Guiding Individuals from Trouble Incorporated, an extensive coaching program for the ex-offenders coming out of the system. I am an ex-offender. I am here to support A.B. 337, in reference to who is coming out of the system on the concept “fail bail,” which means for ex-offender by ex-offender. This concept will assist offenders as they come out, by reeducating and motivating them, as they reintegrate back into society.
I am working with a number of community agencies; Nevada Partners Incorporated has been a big contributor. They have a large amount of ex-offenders who come through their program. I work closely with them and have at least a minimum of 500 clients who I see personally. We try to help these individuals so they can receive employment, training, and consultations to reintegrate into society. We try to put out all of the small fires from the reintegration process, such as domestic violence. The program has been successful. I am definitely in support of A.B. 337. Being as I am an ex-offender, I am still serving time. The time I am serving is to help the ex-offenders.
Diane Loper, Nevada Women’s Lobby:
I am here because I am a founding member of the Nevada
Women’s Lobby and we wholeheartedly support this bill. I remember clearly when
we formed how important it was that our mission statement reflect our support
and our total commitment to equity and justice. If there ever was a bill that
reflects this commitment, A.B. 337 is the one. When someone has paid
their debt to society, it does not seem right or just that they continue to
spend the rest of their life paying the debt when they have already paid. We
all pledge justice for
all and do we really mean justice for all? Or do we mean those who have not
walked in ex-felon shoes?
Spencer Barrett, Pastor, President, National Association for the Advancement of Colored People, Las Vegas Chapter:
I am the president of the Las Vegas branch of the National Association of Colored People (NAACP) and am also pastor of the First African Methodist Episcopal Church. Assembly Bill 337 is a needed bill. There are a number of people in our community from all ethnic backgrounds and economic statuses who are ex-felons, disenfranchised from our society and from having their say, even though they have paid their debt to society. It is important we push this bill forward and do all we can to make sure persons who have paid their debt and have done what has been required by the State get their rights fully reinstated so they can participate in this great country and this great State of ours. This bill goes along with the national agenda of the NAACP and is something we hope will reflect, not only in our State, but also in other states around the country.
Mary Valencia Wilson, Political Action Chair, National Association for the Advancement of Colored People, Reno-Sparks Chapter:
I am the political action chair for the Reno-Sparks NAACP and strongly urge you to pass A.B. 337, and am submitting my written testimony for your record (Exhibit M).
Laurel A. Stadler, Lobbyist, Mothers Against Drunk Driving, Lyon County Chapter:
I am president of Mothers Against Drunk Driving, Lyon County
Chapter. I come before you today opposed to A.B. 337. I have heard a lot
of groups mentioned here today that support this group, but I am representing
the voice of the victim. There are victims of crime out there and they need to
have a voice at this hearing also. To think someone has paid their debt to
society and changed their behavior just because they have completed probation,
parole, or expired their sentence is not a very realistic look, when you do
look at the recidivism rate and the reestablishment of rights for offenders for
something they should take the responsibility for doing. Part of why they are
incarcerated is because of a lack of responsibility. When they come out, if
they have truly changed and
want to take responsibility for their life, then they should go through
whatever procedures are in place to complete reestablishment of rights. It
would also help with their own personal self-esteem to know they have done
something for themselves. If the procedures are too complicated, maybe
simplifying those procedures would be something to look at, but automatic
restoration of rights is not what we can support.
As a victim advocate, I have seen a lot of offenders, specifically DUI offenders. So many of the offenders are asking what the system can do for them. We would like to see the offenders ask what can they do for themselves and what responsibility can they accept. People who have their driver’s license revoked or suspended often do not get it reinstated. In many cases, this is due to a continued lack of responsibility and lack of respect for the law.
The sponsor of A.B. 337 said it was a burdensome process for the offenders to get their rights reinstated. It is burdensome for victims of crime to deal with injuries and deaths in their families and losses of property, and losses and losses and losses they will deal with for lifetimes. When you are thinking about this, you must remember those innocent victims of crimes and let them also have a voice in your deliberations.
In addressing the sections relating to the governing boards and positions, it is hard to think a felony does not affect every part of a person’s life or any job or any position they may want to hold in the future. Felonies are not mistakes. Felonies are crimes that have been committed. To downplay the seriousness of a felony conviction in this State is to disregard all of the hard work done over the years to define what crimes are, which crimes are misdemeanors, which crimes are gross misdemeanors and which crimes are felonies. I get so tired of hearing DUI offenders say, “I made a mistake.” Let me correct them, they committed a crime. The same goes with felony offenders. They have committed crimes. Crimes have been defined by legislatures and by the federal government and those crimes need certain sanctions to be handled. There are so many innocent victims of those crimes out in our society who are serving long, long sentences and who will never be made whole again.
On the felonies relating to positions, who will define which
ones relate and which do not? Recently, in this committee, when you were
looking at restoring
rights, it was looking at longer periods of time before rights would be
restored. This and that were brought up and I was asked what time it would be
and I brought up the fact of restitution to victims. When people say they
have completed their sentences, a lot still have restitution and the victims
are not getting it, so a lot have not really completed their time.
Chairman Amodei:
With no further testimony for today, the hearing on A.B. 337 is closed. There being no further business to come before the committee, the meeting is adjourned at 11:32 a.m.
RESPECTFULLY SUBMITTED:
Lora Nay,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: