Becerra, Gonzalez announce bill to combat ‘underground economic crimes’

Becerra, Gonzalez announce bill to combat ‘underground economic crimes’
Assemblywoman Lorena Gonzalez, D-San Diego, announced a bill today that would increase resources for battling underground economic practices. Photo by Jordan P. Ingram

REGION — California Attorney General Xavier Becerra and Assemblywoman Lorena Gonzalez, D-San Diego, today announced legislation to help the state combat “underground economic crimes” like human trafficking and illegal pharmaceutical schemes.

The bill would expand the state’s multi-agency Tax Recovery and Underground Economy team, currently based out of Sacramento and Los Angeles.

Investigative teams would be added in San Diego, the Bay Area and Fresno to further delegate the state’s efforts to stop crimes like human trafficking and illegal pharmaceutical schemes.

“With underground economic crime, our workers get exploited, business owners face unfair competition, consumers get ripped off, and taxpayers bear the burden,” Becerra said. “AB 1296 expands on successful efforts to prosecute violators and recover funds involved in wage theft, tax evasion, counterfeit commerce and other economic crimes.”

Gonzalez cited a recent report by the UCLA Labor Center, which found that the state’s underground economic activity produces between $60 billion and $140 billion each year, all of which goes unreported.

Consequently, the state loses roughly $8.5 billion annually in sales and use tax dollars.

The state launched the TRUE pilot program in 2014 in its two current cities, which will become permanent law enforcement teams if the bill is codified.

Since launching, the program’s investigative teams have identified roughly $482 million in unreported economic activity, a $60 million tax revenue loss.

The program has also recovered an additional $25 million in tax revenue and investigation costs, according to Gonzalez’s office.

“The underground economy hurts everyone: workers who are left without
protection, consumers who are sold dangerous or fake products, and the
state as we lose tax money,” she said. “This task force is a unique, collaborative approach for law enforcement to breakdown its usual silos and execute wider solutions for targeting the underground economy.”

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