Colorado Legislative Council Staff

STATE AND LOCAL

REVISED FISCAL IMPACT

(replaces fiscal impact dated January 18, 1999)

TITLE:            CONCERNING PROHIBITIONS AGAINST THE PERPETRATION OF FRAUD THROUGH THE USE OF ELECTRONIC MEDIA.

Rationale for Revision of Fiscal Note

            More complete information was received indicating that this bill would result in more than one conviction every five years, as estimated in the original fiscal note. According to the Judicial Department, without the new crime of wire fraud, district attorneys would likely prosecute such offenses as "fraudulent and deceptive sales and business practices,"(Section 18-5-301, C.R.S.) considered to be class 2 misdemeanors. This bill changes what would have been prosecuted as a class 2 misdemeanor to a minimum of a class 5 felony. Historical information regarding this similar offense provides a more reliable forecast of the expected conviction rate of this new crime.

Summary of Legislation

            The bill adds wire fraud to the criminal code and to the list of activities considered to be deceptive trade practices under the "Consumer Protection Act" (Sections 6-1-101 to 6-1-115 C.R.S.). Theft by wire fraud is defined as deception when committed in the presence of the victim and accomplished, wholly or in part, by wire transmission or writings, signs, signals, pictures, or sounds via wire, radio, telephone, or television. This crime is a class 3 felony if the value of the item is more than $500 and a class 5 felony if the value of the item is less than $500. If fraud is committed against an at-risk juvenile or adult, this crime is a class 4 felony, regardless of the item's value.

State Revenues

            According to the Colorado District Attorney's Database, there were 4 charges and convictions of "fraudulent and deceptive business practices" in FY 1997-98. Of those convicted, three received fines between $250 and $1,000. This fiscal note assumes that, with this bill, 2 of the 4 convictions could be prosecuted as wire fraud. Because this bill changes what would have been a class 2 misdemeanor to a minimum of a class 5 felony, state revenue would decrease by $250 to $1,000 for every convicted offense of wire fraud.

State Expenditures

            Department of Corrections (DOC), FY 1999-00, $138,934 GF — According to the District Attorney's Database, there were four convictions of "fraudulent and deceptive business practices" in FY 1997-98. This fiscal note assumes that, with this bill, 2 of the 4 convictions would be prosecuted as wire fraud. Therefore, this fiscal note estimates that this crime would occur twice every five years, once against an at-risk adult or juvenile (class 4 felony) and once for an item with a value of less than $500 (class 5 felony). The estimated length of stay for a class 4 felon would be 2.48 years (29.8 months) and the estimated length of stay for a class 5 felon would be 1.40 years (16.8 months).

Five-Year Fiscal Impact on Correctional Facilities

            Section 2-2-703, C.R.S. requires that bills that result in a net increase in periods of imprisonment must be accompanied by five years of appropriations for prison bed construction and operating costs. Table I on page 3 shows the impact on average daily attendance (ADA), construction costs, and operating costs in state correctional facilities. This analysis estimates construction costs at $69,467 per bed and operating costs at $24,105 per bed. This fiscal note assumes that it will take a year from the felony filing to the beginning of the prison stay. Therefore, construction costs of $69,467 GF will be needed in FY 1999-00 for the additional bed when the offender enters the correctional facility in FY 2000-01.

Table I: Five-year Fiscal Impact on Correctional Facilities

            The above table can be interpreted by following the estimated length of stay of each offender. One class 4 felon serves an estimated 2.48 years and one class 5 felon serves an estimated 1.40 years. In FY 2000-01, when both offenders enter the system, ADA increases by 2.00 offenders. In FY 2001-02, the felony 4 offender servers the full year and the felony 5 offender only serves 0.40 years for a total ADA of 1.40 offenders. In FY 2002-03, the felony 4 offender occupies a bed for 0.48 years and finishes the expected length of stay.

Local Government Impact

            This bill changes what would have been considered a class 2 misdemeanor to a minimum of a class 5 felony for any person who commits wire fraud. The penalty for a class 2 misdemeanor carries a possible jail sentence, to be served in the county jails, for 3 to 12 months. Because the jail sentence and term are at the discretion of district courts, it is not possible to determine the exact impact on local government.

Spending Authority

            The fiscal note implies that for FY 1999-00, the Department of Corrections would require an additional General Fund appropriation of $138,934 for construction costs and a five-year remaining General Fund appropriation of $93,608 through FY 2003-04 for operating costs, pursuant to Section 2-2-703, C.R.S.

Departments Contacted

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