Bill Text: NJ A2419 | 2010-2011 | Regular Session | Introduced
Bill Title: Creates the criminal offense of affinity fraud.
Spectrum: Moderate Partisan Bill (Democrat 11-2)
Status: (Introduced - Dead) 2010-03-04 - Introduced, Referred to Assembly Judiciary Committee [A2419 Detail]
Download: New_Jersey-2010-A2419-Introduced.html
Sponsored by:
Assemblywoman ELEASE EVANS
District 35 (Bergen and Passaic)
Assemblyman JOSEPH CRYAN
District 20 (Union)
Assemblyman GORDON M. JOHNSON
District 37 (Bergen)
Assemblywoman BONNIE WATSON COLEMAN
District 15 (Mercer)
Co-Sponsored by:
Assemblymen Caputo, Mainor, Assemblywoman Tucker, Assemblymen Wilson, Moriarty, Bramnick, Giblin, Rible and Assemblywoman Pou
SYNOPSIS
Creates the criminal offense of affinity fraud.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning penalties for certain theft crimes committed against targeted organizations and supplementing chapter 21 of Title 2C of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares:
a. Each year millions of dollars are invested in fraudulent investment schemes in New Jersey. According to the Securities and Exchange Commission, Office of Investor Education and Advocacy affinity fraud refers to a specific category of investment scams that prey upon members of identifiable groups such as religious or ethnic communities, the elderly or professional groups. The perpetrator of affinity fraud often exploits trust and friendships that exist in such groups or trade upon membership in or affinity with members of the group that is targeted.
b. Charitable and altruistic groups bound by common, identifiable characteristics often promote and encourage individuals to commit financial resources for investment to support other group members and institutions of the community, as well as the community at large. In order to promote and encourage these charitable and altruistic endeavors it is necessary to prosecute and deter the commission of affinity fraud.
c. Under the current law, it is difficult to prosecute and deter affinity fraud because members of affinity groups are often reluctant to report instances of investment abuse to the authorities for investigation and prosecution, preferring to handle matters privately, and, on an individual investor basis, the theft may be small.
d. It is, therefore, necessary to establish the crime of "affinity fraud" to enable more efficient prosecution of criminally culpable persons who knowingly, or with criminal recklessness, submit false or fraudulent statements of material fact relating to an investment opportunity to a targeted identifiable group. It is not the intent of this act to facilitate the prosecution of those persons who may make negligent errors in presenting investment opportunities to an affinity group targeted by another.
2. As used in this act:
"Affinity fraud" means making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omitting a material fact from, or causing a material fact to be omitted from, any written securities or investment document, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted to an identifiable group, such as a religious or ethnic community, the elderly or professional group, which group was targeted because of a dominant or identifiable characteristic of the group.
3. a. Any person who is registered or regulated by the New Jersey Bureau of Securities pursuant to the "Uniform Securities Law (1997)," P.L.1967, c.93 (C.49:3-47 et seq.), or registered or regulated by the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, 15 U.S.C. s.77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. s.78a et seq., the Investment Company Act of 1940, 15 U.S.C. s.80a-1 et seq., or the Investment Advisers Act of 1940, 15 U.S.C. s.80b-1 et seq. is guilty of a crime of the second degree if that person knowingly commits affinity fraud in the course of providing securities or investment services. In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.
b. Any person who is registered or regulated by the New Jersey Bureau of Securities pursuant to the "Uniform Securities Law (1997)," P.L.1967, c.93 (C.49:3-47 et seq.), or registered or regulated by the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, 15 U.S.C. s.77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. s.78a et seq., the Investment Company Act of 1940, 15 U.S.C. s.80a-1 et seq., or the Investment Advisers Act of 1940, 15 U.S.C. s.80b-1 et seq is guilty of a crime of the third degree if that person recklessly commits affinity fraud in the course of providing professional services. In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.
c. An unregistered person or an unregulated person, who is not subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the third degree if that person knowingly commits affinity fraud. In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.
d. A person, who is not subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the fourth degree if that person recklessly commits affinity fraud. In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.
e. Each act of affinity fraud shall constitute an additional, separate and distinct offense. Multiple acts of affinity fraud which are committed to induce investment shall each constitute an additional, separate and distinct offense for purposes of this section.
f. (1) The falsity, fictitiousness, fraudulence or misleading nature of a statement may be inferred by the trier of fact in the case of a person who attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted any securities or investment document, in writing, electronically or in any other form.
(2) Proof that a person has signed or initialed a record, bill, claim or other document gives rise to an inference that the person has read and reviewed that record, bill, or other document.
g. In order to promote the uniform enforcement of this act, the Attorney General shall develop affinity fraud prosecution guidelines and disseminate them to the county prosecutors within 120 days of the effective date of this act.
h. (1) Nothing in this act shall preclude an indictment and conviction for any other offense defined by the laws of this State.
(2) Nothing in this act shall preclude an assignment judge from dismissing a prosecution of affinity fraud if the assignment judge determines, pursuant to N.J.S.2C:2-11, the conduct charged to be a de minimis infraction.
(3) If any provisions of the act, or any application of any provision, is held invalid, the invalidity would not affect other applications of the provision or other provisions of the act which reasonably can be given effect despite the invalidity.
4. This act shall take effect on the 180th day following the date of enactment, except that the Attorney General may take such anticipatory administrative action as shall be necessary for the implementation of this act.
STATEMENT
This bill creates the new criminal offense of affinity fraud. Under the bill, "affinity fraud" is making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omitting a material fact from, or causing a material fact to be omitted from, any securities or investment document, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted to an identifiable group, such as a religious or ethnic community, the elderly or professional group, which group was targeted for solicitation because of a dominant or identifiable characteristic of the group.
Under the bill, a registered or otherwise regulated security agent under state or federal law is guilty of a crime of the second degree if that person knowingly commits affinity fraud in the course of providing securities or investment services to any person. That person is guilty of a crime of the third degree if he acts in a reckless manner. An unregistered or unregulated person is guilty of a crime of the fourth degree if that person recklessly commits an act of affinity fraud.
In all instances, in addition to all other criminal penalties allowed by law, a convicted person may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.
Under the bill, each act of affinity fraud shall constitute an additional, separate and distinct offense. Multiple acts of affinity fraud which are committed to induce investment shall each constitute an additional, separate and distinct offense.
The bill would authorize the Attorney General to develop affinity fraud prosecution guidelines. The Attorney General would be required to disseminate those guidelines to county prosecutors within 120 days of the effective date of the bill. The bill provides nothing in the act would preclude an assignment judge from dismissing a prosecution of affinity fraud if the judge determines that the conduct charged to be a de minimis infraction pursuant to N.J.S.2C:2-11.
Finally, if any provisions of the act, or any application of any provision, is held invalid, the invalidity would not affect other applications of the provision or other provisions of the act which reasonably can be given effect despite the invalidity.
