By Willis                                             H.B. No. 1899
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to solicitations for veterans organizations; providing
    1-3  penalties.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Title 132, Revised Statutes, is amended by adding
    1-6  Article 9023b to read as follows:
    1-7        Art. 9023b.  SOLICITATION IN NAME OF VETERANS ORGANIZATION
    1-8        Sec. 1.  DEFINITIONS.  In this article:
    1-9              (1)  "Person" means an individual, corporation,
   1-10  organization, business trust, partnership, association, or other
   1-11  private legal entity.
   1-12              (2)  "Solicitor" means a person who receives monetary
   1-13  compensation for the person's solicitation services on behalf of a
   1-14  veterans organization and who:
   1-15                    (A)  solicits a contribution of financial support
   1-16  or a purchase of goods or services on behalf of a veterans
   1-17  organization in person, by telephone, or by mail; or
   1-18                    (B)  solicits membership in a veterans
   1-19  organization from individuals who are not veterans.
   1-20              (3)  "Veteran" means a person who has served on active
   1-21  duty in the armed forces of the United States or in the state
   1-22  military forces as defined by Section 431.001, Government Code.
   1-23              (4)  "Veterans organization" means a nongovernmental
   1-24  entity that:
    2-1                    (A)  is formed formally or informally and
    2-2  purports to include or represent veterans; or
    2-3                    (B)  includes in its name a term that would lead
    2-4  a reasonable person to assume that the organization is associated
    2-5  with veterans or concerned with veterans' issues.
    2-6        Sec. 2.  REGISTRATION REQUIRED.  (a)  A veterans organization
    2-7  may not use a solicitor unless:
    2-8              (1)  the veterans organization has:
    2-9                    (A)  filed a registration statement as required
   2-10  by Section 4 of this article; and
   2-11                    (B)  filed and maintains a bond as required by
   2-12  Section 5 of this article; and
   2-13              (2)  the solicitor has:
   2-14                    (A)  filed a registration statement as required
   2-15  by Section 6 of this article; and
   2-16                    (B)  filed and maintains a bond as required by
   2-17  Section 7 of this article.
   2-18        (b)  A person may not act as a solicitor for a veterans
   2-19  organization unless the person has:
   2-20              (1)  filed a registration statement as required by
   2-21  Section 6 of this article; and
   2-22              (2)  filed and maintains a bond as required by Section
   2-23  7 of this article.
   2-24        Sec. 3.  ELIGIBILITY.  (a)  A veterans organization is
   2-25  eligible to register under Section 4 of this article and use a
   2-26  solicitor if the organization:
   2-27              (1)  consists of members:
    3-1                    (A)  who are individuals;
    3-2                    (B)  of whom at least 90 percent or 500,
    3-3  whichever is less, are veterans; and
    3-4                    (C)  who have signed written membership
    3-5  agreements with the organization.
    3-6        (b)  A veterans organization is not eligible to use a
    3-7  solicitor if the organization has forfeited on three or more
    3-8  occasions a bond filed under this article.
    3-9        (c)  A solicitor is not eligible to solicit on behalf of a
   3-10  veterans organization if the solicitor has forfeited on three or
   3-11  more occasions a bond under this article.
   3-12        Sec. 4.  VETERANS ORGANIZATIONS REGISTRATION STATEMENT.  (a)
   3-13  Before beginning solicitations, a veterans organization must have
   3-14  on file with the secretary of state for public disclosure a
   3-15  registration statement containing:
   3-16              (1)  the name, street address, and telephone number of
   3-17  each solicitor that solicits on behalf of the veterans
   3-18  organization;
   3-19              (2)  the name, street address, and telephone number of
   3-20  each veterans organization or fund on behalf of which all or part
   3-21  of the contributions will be used, or, if there is no organization
   3-22  or fund, a statement describing the manner in which the
   3-23  contributions will be used;
   3-24              (3)  a statement of whether the veterans organization
   3-25  or fund for which the contributions are solicited has a charitable
   3-26  tax exemption under both federal and state law;
   3-27              (4)  the name of each veteran who serves on the board
    4-1  of directors or governing body of the veterans organization or fund
    4-2  for which the contributions are solicited, if any;
    4-3              (5)  the number of members who are veterans and the
    4-4  percentage of members of the veterans organization who are
    4-5  veterans, as determined on December 31 preceding the year in which
    4-6  the statement is filed;
    4-7              (6)  the name of each local, chapter, lodge,
    4-8  association, or group of veterans that is a member of the veterans
    4-9  organization for which contributions are solicited, if any;
   4-10              (7)  a copy of the Internal Revenue Service Form 990,
   4-11  or its successors, the veterans organizations most recently filed
   4-12  with the Internal Revenue Service, if any; and
   4-13              (8)  the name, address, and telephone number of the
   4-14  surety bond required by Section 5 of this article.
   4-15        (b)  The registration statement required by Subsection (a) of
   4-16  this section must be accompanied by a registration fee in the
   4-17  amount of $150 and the original copy of the bond required by
   4-18  Section 5 of this article.
   4-19        (c)  A veterans organization that has filed a registration
   4-20  statement under Subsection (a) of this section and that continues
   4-21  to make solicitations through a solicitor shall file an updated
   4-22  statement with the secretary of state on or before January 15 of
   4-23  each year during which solicitations will occur.
   4-24        Sec. 5.  VETERANS ORGANIZATION BOND.  (a)  A veterans
   4-25  organization that uses a solicitor shall post a surety bond with
   4-26  the secretary of state in the amount of:
   4-27              (1)  $1,000 if the organization is a veterans
    5-1  organization chartered by the United States Congress; or
    5-2              (2)  if the organization is not chartered by the United
    5-3  States Congress:
    5-4                    (A)  $5,000 if the organization solicits in not
    5-5  more than one county;
    5-6                    (B)  $10,000 if the organization solicits in more
    5-7  than one county but fewer than six counties; or
    5-8                    (C)  $25,000 if the organization solicits in six
    5-9  or more counties.
   5-10        (b)  The bond must be payable to the state and conditioned on
   5-11  compliance with this article.
   5-12        Sec. 6.  SOLICITOR REGISTRATION STATEMENT; FEE.  (a)  Before
   5-13  beginning solicitations for a veterans organization, a solicitor
   5-14  must have on file with the secretary of state for public disclosure
   5-15  a registration statement containing:
   5-16              (1)  the name, address, and telephone number of the
   5-17  solicitor;
   5-18              (2)  the name, address, and telephone number of each
   5-19  veterans organization on whose behalf the solicitor solicits or
   5-20  will solicit; and
   5-21              (3)  the name of each other state in which the
   5-22  solicitor is registered as a solicitor and the status of that
   5-23  registration.
   5-24        (b)  The registration statement required by Subsection (a) of
   5-25  this section must be accompanied by a registration fee in the
   5-26  amount of $500 and a bond as required by Section 7 of this article.
   5-27        (c)  A solicitor that has filed a registration statement
    6-1  under Subsection (a) of this section shall file an updated
    6-2  statement with the secretary of state on or before January 15 of
    6-3  each year during which the solicitor will solicit on behalf of a
    6-4  veterans organization.
    6-5        Sec. 7.  SOLICITOR BOND.  (a)  A solicitor shall post a
    6-6  surety bond with the secretary of state in the amount of:
    6-7              (1)  $5,000 if the solicitor solicits in not more than
    6-8  one county;
    6-9              (2)  $10,000 if the solicitor solicits in more than one
   6-10  county but fewer than six counties; or
   6-11              (3)  $25,000 if the solicitor solicits in six or more
   6-12  counties.
   6-13        (b)  The bond must be payable to the state and conditioned on
   6-14  compliance with this article.
   6-15        Sec. 8.  DISCLOSURE AT TIME OF SOLICITATION.  A solicitor
   6-16  shall disclose at the time each solicitation is made, orally if the
   6-17  solicitation is in person or by telephone and by printed notice in
   6-18  any printed matter distributed by the solicitor, the following
   6-19  information:  "The secretary of state has on file important
   6-20  information about persons that seek contributions in the name of
   6-21  veterans, and the number to call about that information is the
   6-22  Solicitation Information Hotline (the number maintained by the
   6-23  secretary of state)."
   6-24        Sec. 9.  SOLICITATION INFORMATION HOTLINE.  The secretary of
   6-25  state shall establish and operate a toll-free telephone line known
   6-26  as the Solicitation Information Hotline.  A member of the public
   6-27  may telephone the hotline number to:
    7-1              (1)  obtain information concerning a veterans
    7-2  organization or solicitor that has filed a statement with the
    7-3  secretary of state under this article; or
    7-4              (2)  report an alleged violation of this article by a
    7-5  solicitor or a veterans organization.
    7-6        Sec. 10.  SOLICITOR REPORTS.  (a)  At the end of each
    7-7  calendar quarter, a solicitor who raises more than $5,000 for a
    7-8  veterans organization during that calendar quarter shall file with
    7-9  the secretary of state a report that includes:
   7-10              (1)  the name, address, and telephone number of the
   7-11  solicitor;
   7-12              (2)  the gross amount raised by the solicitor for the
   7-13  veterans organization;
   7-14              (3)  the amount paid to the veterans organization; and
   7-15              (4)  the name and address of the person representing
   7-16  the veterans organization to which the amount was paid.
   7-17        (b)  A filing fee of $50 must accompany each report filed
   7-18  under this section.
   7-19        Sec. 11.  VETERANS ORGANIZATION REPORTS.  (a)  Before January
   7-20  15 of each year, each veterans organization that received more than
   7-21  $500 in solicited funds during the preceding calendar year shall
   7-22  file with the secretary of state a report that includes:
   7-23              (1)  the name and address of the veterans organization
   7-24  and each officer who is authorized to spend funds of the
   7-25  organization; and
   7-26              (2)  the total amounts from all sources spent by the
   7-27  organization for each of the following:
    8-1                    (A)  administrative expenses;
    8-2                    (B)  travel expenses of officers of the
    8-3  organization;
    8-4                    (C)  travel expenses of each member of the
    8-5  organization;
    8-6                    (D)  gifts to veterans or other veterans
    8-7  organizations;
    8-8                    (E)  gifts to nonveterans;
    8-9                    (F)  payments for the purchase, rental, or lease
   8-10  of and repairs to facilities used by the organization; and
   8-11                    (G)  any other expenditures.
   8-12        (b)  A filing fee of $50 must accompany each report filed
   8-13  under this section.
   8-14        (c)  A veterans organization that is chartered by the United
   8-15  States Congress and that has subsidiary organizations may:
   8-16              (1)  collect the reports of the subsidiary
   8-17  organizations; and
   8-18              (2)  file its report and the reports of its subsidiary
   8-19  organizations at one time and pay a single filing fee.
   8-20        (d)  If funds of a veterans organization are given to an
   8-21  individual for the individual's personal use, the organization
   8-22  shall require the individual to sign a receipt for the funds before
   8-23  the funds are delivered.  The organization shall keep receipts for
   8-24  all expenditures on file for a period of seven years.
   8-25        (e)  The reports and receipts to which this section applies
   8-26  are public records and the veterans organization shall make them
   8-27  available to any person who requests them in writing.
    9-1        Sec. 12.  PROHIBITED PRACTICES.  (a)  A solicitor may not
    9-2  solicit on behalf of a veterans organization in counties other than
    9-3  counties that the veterans organization serves unless the solicitor
    9-4  discloses the county or counties actually served by the
    9-5  organization.
    9-6        (b)  A contribution or membership fee solicited at a person's
    9-7  residence in person or by telephone may not be collected except
    9-8  through the United States mail or parcel post courier.
    9-9        (c)  A solicitor may not make a materially false or
   9-10  misleading statement of fact during a solicitation that would lead
   9-11  a responsible person to believe that proceeds of the solicitation
   9-12  are being used or will be used for a purpose other than the purpose
   9-13  for which the proceeds are actually used.
   9-14        (d)  A solicitor or a veterans organization may not make a
   9-15  material misrepresentation in a registration statement filed under
   9-16  this article.
   9-17        (e)  For purposes of Subsection (d) of this section,
   9-18  overreporting the number of veterans who are members of the
   9-19  veterans organization by more than three percent of the
   9-20  organization's total membership is a material misrepresentation.
   9-21        Sec. 13.  OFFENSES; PENALTIES.  (a)  A person commits an
   9-22  offense if the person knowingly violates this article.
   9-23        (b)  An offense under this section is a Class B misdemeanor,
   9-24  except that if it is shown on trial of the offense that the
   9-25  defendant has been convicted previously under this section, the
   9-26  offense is a Class A misdemeanor.
   9-27        (c)  A corporation or association may be held criminally
   10-1  responsible for the conduct of a person acting on its behalf if the
   10-2  person's conduct constitutes an offense under this section.
   10-3        (d)  It is a defense to prosecution under this section that:
   10-4              (1)  the defendant is a veterans organization;
   10-5              (2)  the person whose conduct constitutes the offense
   10-6  was acting on behalf of a corporation or association with which the
   10-7  veterans organization had contracted for services; and
   10-8              (3)  the person committed the conduct without the
   10-9  knowledge of the veterans organization.
  10-10        Sec. 14.  AUDIT POWERS OF THE ATTORNEY GENERAL.  (a)  The
  10-11  attorney general may request reasonable and necessary information
  10-12  from a veterans organization or a solicitor for the purpose of
  10-13  auditing or verifying the representations contained in a
  10-14  registration statement required by this article.
  10-15        (b)  The attorney general may audit representations made by a
  10-16  solicitor during a solicitation to determine whether the
  10-17  solicitation complies with this article.
  10-18        Sec. 15.  INJUNCTION.  The attorney general may sue in a
  10-19  district court of Travis County to enjoin a person from violating
  10-20  this article.  The attorney general shall notify the defendant of
  10-21  the alleged prohibited conduct not later than the seventh day
  10-22  before the date the suit is filed, unless the attorney general
  10-23  intends to request that the court issue a temporary restraining
  10-24  order, in which event notice is not required.
  10-25        Sec. 16.  CIVIL PENALTIES.  A person who violates any
  10-26  provision of this article is liable to the state for a civil
  10-27  penalty of not more than $10,000 per violation.  A person who
   11-1  violates an injunction issued under this article is liable to the
   11-2  state for a civil penalty of not less than $100,000.  The attorney
   11-3  general shall bring suit to recover the civil penalty.  If the
   11-4  violator has filed a bond under this article, the suit may be
   11-5  brought against the bond.
   11-6        Sec. 17.  SUIT ON BOND BY INJURED PARTY.  (a)  A person who
   11-7  is injured by a violation of this article may bring and maintain a
   11-8  suit or join in a suit brought by the state to recover against a
   11-9  bond filed under this article.  In a suit brought under this
  11-10  article, the court may assess costs of litigation and reasonable
  11-11  attorney's fees incurred by a plaintiff other than the state or by
  11-12  a defendant who substantially prevails.
  11-13        (b)  In a suit brought by a private plaintiff and the state
  11-14  under this article, if the amount claimed exceeds the amount of the
  11-15  bond, a bond forfeiture first pays the private plaintiff's damages
  11-16  and attorney's fees and any remaining amount is forfeited to the
  11-17  state.
  11-18        (c)  Nothing in this article prevents the state or an injured
  11-19  party from suing to recover a contribution obtained by
  11-20  misrepresentation or limits other causes of action available to a
  11-21  plaintiff by statute or common law.
  11-22        Sec. 18.  LOCAL ORDINANCES.  This article does not preempt or
  11-23  supersede any municipal ordinance applicable to a veterans
  11-24  organization or a solicitor.
  11-25        SECTION 2.  This Act takes effect September 1, 1993.
  11-26        SECTION 3.  The importance of this legislation and the
  11-27  crowded condition of the calendars in both houses create an
   12-1  emergency and an imperative public necessity that the
   12-2  constitutional rule requiring bills to be read on three several
   12-3  days in each house be suspended, and this rule is hereby suspended.