July 22, 2019

HB 16-1129: Strengthening Measures Against Charitable Fraud

On January 20, 2016, Reps. Polly Lawrence & Beth McCann and Sens. Larry Crowder & Rollie Heath introduced HB 16-1129Concerning Measures for Enhanced Enforcement Against Acts of Charitable Fraud, And, In Connection Therewith, Making An Appropriation. The bill was assigned to the House Judiciary Committee, where it was amended and referred to Appropriations. The Appropriations Committee amended the bill and referred it for Second Reading, where it passed with amendments, and passed Third Reading. The bill has now been introduced in the Senate and assigned to the Senate Judiciary Committee.

This bill is proposed in four sections. Section 1 of the bill would create enhanced penalties under the Colorado Consumer Protection Act for committing acts of charitable fraud involving knowledge or intent under the Colorado Charitable Solicitations Act. The bill proposes a penalty of $10,000 for each violation with no cap for a related series of violations.

Sections 2 and 4 of the bill would require two things. First, a statement on applications for registration by a paid solicitor to the Secretary of State, stating that neither the paid solicitor nor any officer, director, or employee serves on the board of directors of a charitable organization or directs the operations of a charitable organization in which the paid solicitor solicits contributions. Furthermore, the statement shall state that no officer, director, or employee of the paid solicitor’s charitable organization clients have any financial interest in the paid solicitor.

Second, Sections 2 and 4 of the bill require paid solicitors to have either a bond or savings account, deposit, or certificate of deposit in a financial institution payable to the State of Colorado. This is conditional upon the performance of the paid solicitor in good faith without fraud or fraudulent representation and without the violation of any provision of the Colorado Charitable Solicitations Act.

Lastly, Section 3 of the bill proposes to make it charitable fraud to misrepresent that a charitable organization, for which a paid solicitor solicits, has a significant membership of a certain type, such as active police, sheriff, patrol, firefighters, first responders, or veterans. Additionally, Section 3 of the bill proposes to make a charitable organization liable with a paid solicitor if the charitable organization knew or should have known that the paid solicitor was engaged in charitable fraud on behalf of the charitable organization.

Mark Proust is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.

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