| 1 | 1 | | 81R13572 JE-D |
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| 2 | 2 | | By: Fletcher, Gallego, King of Parker, H.B. No. 3769 |
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| 3 | 3 | | Solomons, Turner of Harris, et al. |
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| 4 | 4 | | |
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| 5 | 5 | | |
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| 6 | 6 | | A BILL TO BE ENTITLED |
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| 7 | 7 | | AN ACT |
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| 8 | 8 | | relating to certain fraudulent investment schemes; providing |
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| 9 | 9 | | penalties. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Chapter 27, Business & Commerce Code, is amended |
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| 12 | 12 | | by adding Section 27.03 to read as follows: |
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| 13 | 13 | | Sec. 27.03. FRAUDULENT PONZI SCHEME. (a) In this section: |
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| 14 | 14 | | (1) "Fraudulent Ponzi scheme" means any fraudulent |
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| 15 | 15 | | investment operation that is managed in a manner that provides |
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| 16 | 16 | | investors with returns derived substantially from investments made |
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| 17 | 17 | | by other investors rather than from profits. |
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| 18 | 18 | | (2) "Promoting a fraudulent Ponzi scheme" means: |
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| 19 | 19 | | (A) inducing or attempting to induce one or more |
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| 20 | 20 | | other persons to participate in a fraudulent Ponzi scheme; or |
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| 21 | 21 | | (B) assisting another person in inducing or |
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| 22 | 22 | | attempting to induce one or more other persons to participate in a |
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| 23 | 23 | | fraudulent Ponzi scheme, including by providing references. |
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| 24 | 24 | | (b) A person commits an offense if the person contrives, |
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| 25 | 25 | | prepares, establishes, operates, advertises, sells, or promotes a |
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| 26 | 26 | | fraudulent Ponzi scheme. An offense under this subsection is a |
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| 27 | 27 | | felony of the first degree. |
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| 28 | 28 | | (c) Whenever it appears that a person has violated, or that |
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| 29 | 29 | | reasonable cause exists to believe that a person is likely to |
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| 30 | 30 | | violate, this chapter, the following persons may bring an action to |
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| 31 | 31 | | enjoin the violation or enforce compliance with this chapter: |
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| 32 | 32 | | (1) the attorney general; |
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| 33 | 33 | | (2) the district attorney of Travis County; or |
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| 34 | 34 | | (3) the prosecuting attorney of a county in which the |
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| 35 | 35 | | violation is alleged to have occurred. |
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| 36 | 36 | | (d) An action for injunctive relief brought by the attorney |
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| 37 | 37 | | general or the district attorney of Travis County must be brought in |
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| 38 | 38 | | a district court in Travis County. An action brought by a |
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| 39 | 39 | | prosecuting attorney under Subsection (c)(3) must be brought in a |
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| 40 | 40 | | district court in a county in which all or part of the violation is |
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| 41 | 41 | | alleged to have occurred. |
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| 42 | 42 | | (e) On a proper showing, the court may issue a restraining |
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| 43 | 43 | | order, an order freezing assets, a preliminary or permanent |
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| 44 | 44 | | injunction, or a writ of mandate, or may appoint a receiver for the |
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| 45 | 45 | | defendant or the defendant's assets. |
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| 46 | 46 | | (f) A receiver appointed by the court under Subsection (e) |
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| 47 | 47 | | may, with approval of the court, exercise all of the powers of the |
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| 48 | 48 | | defendant's directors, officers, partners, trustees, or persons |
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| 49 | 49 | | who exercise similar powers and perform similar duties. |
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| 50 | 50 | | (g) An action brought under this section may include a claim |
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| 51 | 51 | | for ancillary relief, including a claim for costs or civil |
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| 52 | 52 | | penalties authorized under this chapter, or for restitution or |
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| 53 | 53 | | damages on behalf of the persons injured by the act constituting the |
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| 54 | 54 | | subject matter of the action, and the court has jurisdiction to |
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| 55 | 55 | | award that relief. |
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| 56 | 56 | | (h) An investor in a fraudulent Ponzi scheme may recover up |
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| 57 | 57 | | to 50 percent of the investor's investment in a fraudulent Ponzi |
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| 58 | 58 | | scheme from the liquidation of assets owned by persons convicted of |
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| 59 | 59 | | contriving, preparing, establishing, operating, advertising, |
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| 60 | 60 | | selling, or promoting the fraudulent Ponzi scheme. |
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| 61 | 61 | | (i) The attorney general may seize and liquidate an asset of |
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| 62 | 62 | | a person convicted of violating this section that is located in any |
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| 63 | 63 | | state if the asset was purchased with funds derived substantially |
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| 64 | 64 | | from investments in the fraudulent Ponzi scheme by residents of |
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| 65 | 65 | | this state. |
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| 66 | 66 | | (j) The attorney general may investigate any transaction |
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| 67 | 67 | | involving a person charged with violating this section that |
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| 68 | 68 | | occurred up to six months before the indictment of the person. |
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| 69 | 69 | | (k) The attorney general may seize and liquidate any assets |
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| 70 | 70 | | transferred or sold to a third party with the intent to evade, |
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| 71 | 71 | | hinder, delay, or prevent the seizure and liquidation of assets as |
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| 72 | 72 | | prescribed by Subsection (i) by a person convicted of violating |
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| 73 | 73 | | this section. |
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| 74 | 74 | | SECTION 2. Chapter 17, Code of Criminal Procedure, is |
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| 75 | 75 | | amended by adding Article 17.153 to read as follows: |
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| 76 | 76 | | Art. 17.153. MINIMUM BAIL FOR PROMOTION OF FRAUDULENT PONZI |
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| 77 | 77 | | SCHEME. The minimum amount of bail required for a person charged |
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| 78 | 78 | | with a violation of Section 27.03, Business & Commerce Code, may not |
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| 79 | 79 | | be less than $500,000. |
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| 80 | 80 | | SECTION 3. This Act takes effect September 1, 2009. |
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