1-1 By: Willis (Senate Sponsor - Rosson) H.B. No. 1899 1-2 (In the Senate - Received from the House May 12, 1993; 1-3 May 13, 1993, read first time and referred to Committee on State 1-4 Affairs; May 20, 1993, reported favorably by the following vote: 1-5 Yeas 9, Nays 0; May 20, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Harris of Dallas x 1-9 Rosson x 1-10 Carriker x 1-11 Henderson x 1-12 Leedom x 1-13 Lucio x 1-14 Luna x 1-15 Nelson x 1-16 Patterson x 1-17 Shelley x 1-18 Sibley x 1-19 West x 1-20 Whitmire x 1-21 A BILL TO BE ENTITLED 1-22 AN ACT 1-23 relating to solicitations for veterans organizations; providing 1-24 penalties. 1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-26 SECTION 1. Title 132, Revised Statutes, is amended by adding 1-27 Article 9023b to read as follows: 1-28 Art. 9023b. SOLICITATION IN NAME OF VETERANS ORGANIZATION 1-29 Sec. 1. DEFINITIONS. In this article: 1-30 (1) "Person" means an individual, corporation, 1-31 organization, business trust, partnership, association, or other 1-32 private legal entity. 1-33 (2) "Solicitor" means a person who receives monetary 1-34 compensation for the person's solicitation services on behalf of a 1-35 veterans organization and who: 1-36 (A) solicits a contribution of financial support 1-37 or a purchase of goods or services on behalf of a veterans 1-38 organization in person, by telephone, or by mail; or 1-39 (B) solicits membership in a veterans 1-40 organization from individuals who are not veterans. 1-41 (3) "Veteran" means a person who has served on active 1-42 duty in the armed forces of the United States or in the state 1-43 military forces as defined by Section 431.001, Government Code. 1-44 (4) "Veterans organization" means a nongovernmental 1-45 entity that: 1-46 (A) is formed formally or informally and 1-47 purports to include or represent veterans; or 1-48 (B) includes in its name a term that would lead 1-49 a reasonable person to assume that the organization is associated 1-50 with veterans or concerned with veterans' issues. 1-51 Sec. 2. REGISTRATION REQUIRED. (a) A veterans organization 1-52 may not use a solicitor unless: 1-53 (1) the veterans organization has: 1-54 (A) filed a registration statement as required 1-55 by Section 4 of this article; and 1-56 (B) filed and maintains a bond as required by 1-57 Section 5 of this article; and 1-58 (2) the solicitor has: 1-59 (A) filed a registration statement as required 1-60 by Section 6 of this article; and 1-61 (B) filed and maintains a bond as required by 1-62 Section 7 of this article. 1-63 (b) A person may not act as a solicitor for a veterans 1-64 organization unless the person has: 1-65 (1) filed a registration statement as required by 1-66 Section 6 of this article; and 1-67 (2) filed and maintains a bond as required by Section 1-68 7 of this article. 2-1 Sec. 3. ELIGIBILITY. (a) A veterans organization is 2-2 eligible to register under Section 4 of this article and use a 2-3 solicitor if the organization: 2-4 (1) consists of members: 2-5 (A) who are individuals; 2-6 (B) of whom at least 90 percent or 500, 2-7 whichever is less, are veterans; and 2-8 (C) who have signed written membership 2-9 agreements with the organization. 2-10 (b) A veterans organization is not eligible to use a 2-11 solicitor if the organization has forfeited on three or more 2-12 occasions a bond filed under this article. 2-13 (c) A solicitor is not eligible to solicit on behalf of a 2-14 veterans organization if the solicitor has forfeited on three or 2-15 more occasions a bond under this article. 2-16 Sec. 4. VETERANS ORGANIZATIONS REGISTRATION STATEMENT. 2-17 (a) Before beginning solicitations, a veterans organization must 2-18 have on file with the secretary of state for public disclosure a 2-19 registration statement containing: 2-20 (1) the name, street address, and telephone number of 2-21 each solicitor that solicits on behalf of the veterans 2-22 organization; 2-23 (2) the name, street address, and telephone number of 2-24 each veterans organization or fund on behalf of which all or part 2-25 of the contributions will be used, or, if there is no organization 2-26 or fund, a statement describing the manner in which the 2-27 contributions will be used; 2-28 (3) a statement of whether the veterans organization 2-29 or fund for which the contributions are solicited has a charitable 2-30 tax exemption under both federal and state law; 2-31 (4) the name of each veteran who serves on the board 2-32 of directors or governing body of the veterans organization or fund 2-33 for which the contributions are solicited, if any; 2-34 (5) the number of members who are veterans and the 2-35 percentage of members of the veterans organization who are 2-36 veterans, as determined on December 31 preceding the year in which 2-37 the statement is filed; 2-38 (6) the name of each local, chapter, lodge, 2-39 association, or group of veterans that is a member of the veterans 2-40 organization for which contributions are solicited, if any; 2-41 (7) a copy of the Internal Revenue Service Form 990, 2-42 or its successors, the veterans organizations most recently filed 2-43 with the Internal Revenue Service, if any; and 2-44 (8) the name, address, and telephone number of the 2-45 surety bond required by Section 5 of this article. 2-46 (b) The registration statement required by Subsection (a) of 2-47 this section must be accompanied by a registration fee in the 2-48 amount of $150 and the original copy of the bond required by 2-49 Section 5 of this article. 2-50 (c) A veterans organization that has filed a registration 2-51 statement under Subsection (a) of this section and that continues 2-52 to make solicitations through a solicitor shall file an updated 2-53 statement with the secretary of state on or before January 15 of 2-54 each year during which solicitations will occur. 2-55 Sec. 5. VETERANS ORGANIZATION BOND. (a) A veterans 2-56 organization that uses a solicitor shall post a surety bond with 2-57 the secretary of state in the amount of: 2-58 (1) $1,000 if the organization is a veterans 2-59 organization chartered by the United States Congress; or 2-60 (2) if the organization is not chartered by the United 2-61 States Congress: 2-62 (A) $5,000 if the organization solicits in not 2-63 more than one county; 2-64 (B) $10,000 if the organization solicits in more 2-65 than one county but fewer than six counties; or 2-66 (C) $25,000 if the organization solicits in six 2-67 or more counties. 2-68 (b) The bond must be payable to the state and conditioned on 2-69 compliance with this article. 2-70 Sec. 6. SOLICITOR REGISTRATION STATEMENT; FEE. (a) Before 3-1 beginning solicitations for a veterans organization, a solicitor 3-2 must have on file with the secretary of state for public disclosure 3-3 a registration statement containing: 3-4 (1) the name, address, and telephone number of the 3-5 solicitor; 3-6 (2) the name, address, and telephone number of each 3-7 veterans organization on whose behalf the solicitor solicits or 3-8 will solicit; and 3-9 (3) the name of each other state in which the 3-10 solicitor is registered as a solicitor and the status of that 3-11 registration. 3-12 (b) The registration statement required by Subsection (a) of 3-13 this section must be accompanied by a registration fee in the 3-14 amount of $500 and a bond as required by Section 7 of this article. 3-15 (c) A solicitor that has filed a registration statement 3-16 under Subsection (a) of this section shall file an updated 3-17 statement with the secretary of state on or before January 15 of 3-18 each year during which the solicitor will solicit on behalf of a 3-19 veterans organization. 3-20 Sec. 7. SOLICITOR BOND. (a) A solicitor shall post a 3-21 surety bond with the secretary of state in the amount of: 3-22 (1) $5,000 if the solicitor solicits in not more than 3-23 one county; 3-24 (2) $10,000 if the solicitor solicits in more than one 3-25 county but fewer than six counties; or 3-26 (3) $25,000 if the solicitor solicits in six or more 3-27 counties. 3-28 (b) The bond must be payable to the state and conditioned on 3-29 compliance with this article. 3-30 Sec. 8. DISCLOSURE AT TIME OF SOLICITATION. A solicitor 3-31 shall disclose at the time each solicitation is made, orally if the 3-32 solicitation is in person or by telephone and by printed notice in 3-33 any printed matter distributed by the solicitor, the following 3-34 information: "The secretary of state has on file important 3-35 information about persons that seek contributions in the name of 3-36 veterans, and the number to call about that information is the 3-37 Solicitation Information Hotline (the number maintained by the 3-38 secretary of state)." 3-39 Sec. 9. SOLICITATION INFORMATION HOTLINE. The secretary of 3-40 state shall establish and operate a toll-free telephone line known 3-41 as the Solicitation Information Hotline. A member of the public 3-42 may telephone the hotline number to: 3-43 (1) obtain information concerning a veterans 3-44 organization or solicitor that has filed a statement with the 3-45 secretary of state under this article; or 3-46 (2) report an alleged violation of this article by a 3-47 solicitor or a veterans organization. 3-48 Sec. 10. SOLICITOR REPORTS. (a) At the end of each 3-49 calendar quarter, a solicitor who raises more than $5,000 for a 3-50 veterans organization during that calendar quarter shall file with 3-51 the secretary of state a report that includes: 3-52 (1) the name, address, and telephone number of the 3-53 solicitor; 3-54 (2) the gross amount raised by the solicitor for the 3-55 veterans organization; 3-56 (3) the amount paid to the veterans organization; and 3-57 (4) the name and address of the person representing 3-58 the veterans organization to which the amount was paid. 3-59 (b) A filing fee of $50 must accompany each report filed 3-60 under this section. 3-61 Sec. 11. VETERANS ORGANIZATION REPORTS. (a) Before January 3-62 15 of each year, each veterans organization that received more than 3-63 $500 in solicited funds during the preceding calendar year shall 3-64 file with the secretary of state a report that includes: 3-65 (1) the name and address of the veterans organization 3-66 and each officer who is authorized to spend funds of the 3-67 organization; and 3-68 (2) the total amounts from all sources spent by the 3-69 organization for each of the following: 3-70 (A) administrative expenses; 4-1 (B) travel expenses of officers of the 4-2 organization; 4-3 (C) travel expenses of each member of the 4-4 organization; 4-5 (D) gifts to veterans or other veterans 4-6 organizations; 4-7 (E) gifts to nonveterans; 4-8 (F) payments for the purchase, rental, or lease 4-9 of and repairs to facilities used by the organization; and 4-10 (G) any other expenditures. 4-11 (b) A filing fee of $50 must accompany each report filed 4-12 under this section. 4-13 (c) A veterans organization that is chartered by the United 4-14 States Congress and that has subsidiary organizations may: 4-15 (1) collect the reports of the subsidiary 4-16 organizations; and 4-17 (2) file its report and the reports of its subsidiary 4-18 organizations at one time and pay a single filing fee. 4-19 (d) If funds of a veterans organization are given to an 4-20 individual for the individual's personal use, the organization 4-21 shall require the individual to sign a receipt for the funds before 4-22 the funds are delivered. The organization shall keep receipts for 4-23 all expenditures on file for a period of seven years. 4-24 (e) The reports and receipts to which this section applies 4-25 are public records and the veterans organization shall make them 4-26 available to any person who requests them in writing. 4-27 Sec. 12. PROHIBITED PRACTICES. (a) A solicitor may not 4-28 solicit on behalf of a veterans organization in counties other than 4-29 counties that the veterans organization serves unless the solicitor 4-30 discloses the county or counties actually served by the 4-31 organization. 4-32 (b) A contribution or membership fee solicited at a person's 4-33 residence in person or by telephone may not be collected except 4-34 through the United States mail or parcel post courier. 4-35 (c) A solicitor may not make a materially false or 4-36 misleading statement of fact during a solicitation that would lead 4-37 a responsible person to believe that proceeds of the solicitation 4-38 are being used or will be used for a purpose other than the purpose 4-39 for which the proceeds are actually used. 4-40 (d) A solicitor or a veterans organization may not make a 4-41 material misrepresentation in a registration statement filed under 4-42 this article. 4-43 (e) For purposes of Subsection (d) of this section, 4-44 overreporting the number of veterans who are members of the 4-45 veterans organization by more than three percent of the 4-46 organization's total membership is a material misrepresentation. 4-47 Sec. 13. OFFENSES; PENALTIES. (a) A person commits an 4-48 offense if the person knowingly violates this article. 4-49 (b) An offense under this section is a Class B misdemeanor, 4-50 except that if it is shown on trial of the offense that the 4-51 defendant has been convicted previously under this section, the 4-52 offense is a Class A misdemeanor. 4-53 (c) A corporation or association may be held criminally 4-54 responsible for the conduct of a person acting on its behalf if the 4-55 person's conduct constitutes an offense under this section. 4-56 (d) It is a defense to prosecution under this section that: 4-57 (1) the defendant is a veterans organization; 4-58 (2) the person whose conduct constitutes the offense 4-59 was acting on behalf of a corporation or association with which the 4-60 veterans organization had contracted for services; and 4-61 (3) the person committed the conduct without the 4-62 knowledge of the veterans organization. 4-63 Sec. 14. AUDIT POWERS OF THE ATTORNEY GENERAL. (a) The 4-64 attorney general may request reasonable and necessary information 4-65 from a veterans organization or a solicitor for the purpose of 4-66 auditing or verifying the representations contained in a 4-67 registration statement required by this article. 4-68 (b) The attorney general may audit representations made by a 4-69 solicitor during a solicitation to determine whether the 4-70 solicitation complies with this article. 5-1 Sec. 15. INJUNCTION. The attorney general may sue in a 5-2 district court of Travis County to enjoin a person from violating 5-3 this article. The attorney general shall notify the defendant of 5-4 the alleged prohibited conduct not later than the seventh day 5-5 before the date the suit is filed, unless the attorney general 5-6 intends to request that the court issue a temporary restraining 5-7 order, in which event notice is not required. 5-8 Sec. 16. CIVIL PENALTIES. A person who violates any 5-9 provision of this article is liable to the state for a civil 5-10 penalty of not more than $10,000 per violation. A person who 5-11 violates an injunction issued under this article is liable to the 5-12 state for a civil penalty of not less than $100,000. The attorney 5-13 general shall bring suit to recover the civil penalty. If the 5-14 violator has filed a bond under this article, the suit may be 5-15 brought against the bond. 5-16 Sec. 17. SUIT ON BOND BY INJURED PARTY. (a) A person who 5-17 is injured by a violation of this article may bring and maintain a 5-18 suit or join in a suit brought by the state to recover against a 5-19 bond filed under this article. In a suit brought under this 5-20 article, the court may assess costs of litigation and reasonable 5-21 attorney's fees incurred by a plaintiff other than the state or by 5-22 a defendant who substantially prevails. 5-23 (b) In a suit brought by a private plaintiff and the state 5-24 under this article, if the amount claimed exceeds the amount of the 5-25 bond, a bond forfeiture first pays the private plaintiff's damages 5-26 and attorney's fees and any remaining amount is forfeited to the 5-27 state. 5-28 (c) Nothing in this article prevents the state or an injured 5-29 party from suing to recover a contribution obtained by 5-30 misrepresentation or limits other causes of action available to a 5-31 plaintiff by statute or common law. 5-32 Sec. 18. LOCAL ORDINANCES. This article does not preempt or 5-33 supersede any municipal ordinance applicable to a veterans 5-34 organization or a solicitor. 5-35 SECTION 2. This Act takes effect September 1, 1993. 5-36 SECTION 3. The importance of this legislation and the 5-37 crowded condition of the calendars in both houses create an 5-38 emergency and an imperative public necessity that the 5-39 constitutional rule requiring bills to be read on three several 5-40 days in each house be suspended, and this rule is hereby suspended. 5-41 * * * * * 5-42 Austin, 5-43 Texas 5-44 May 20, 1993 5-45 Hon. Bob Bullock 5-46 President of the Senate 5-47 Sir: 5-48 We, your Committee on State Affairs to which was referred H.B. 5-49 No. 1899, have had the same under consideration, and I am 5-50 instructed to report it back to the Senate with the recommendation 5-51 that it do pass and be printed. 5-52 Harris of 5-53 Dallas, Chairman 5-54 * * * * * 5-55 WITNESSES 5-56 FOR AGAINST ON 5-57 ___________________________________________________________________ 5-58 Name: Samuel Bier x 5-59 Representing: VFW 5-60 City: Austin 5-61 -------------------------------------------------------------------