MISSISSIPPI LEGISLATURE
2011 Regular Session
To: Finance
By: Senator(s) Yancey
AN ACT TO AMEND SECTION 79-11-505, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT CHARITABLE ORGANIZATIONS THAT CONDUCT BINGO UNDER THE CHARITABLE BINGO LAW SHALL NOT BE EXEMPT FROM THE REQUIREMENT THAT CHARITABLE ORGANIZATIONS MUST REGISTER WITH THE SECRETARY OF STATE; TO AMEND SECTION 79-11-509, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE SECRETARY OF STATE TO DENY, SUSPEND OR REVOKE THE REGISTRATION OF A CHARITABLE ORGANIZATION FOR VIOLATIONS OF THE CHARITABLE BINGO LAW; TO AMEND SECTION 79-11-519, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT IT SHALL BE A VIOLATION OF THE LAW THAT REQUIRES CHARITABLE ORGANIZATIONS TO REGISTER WITH THE SECRETARY OF STATE FOR A REGISTERED CHARITABLE ORGANIZATION TO VIOLATE THE PROVISIONS OF THE CHARITABLE BINGO LAW; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 79-11-505, Mississippi Code of 1972, is amended as follows:
79-11-505. (1) Except as otherwise provided in subsection (3) of this section, the registration provisions of Section 79-11-503 and the reporting provisions of Section 79-11-507 shall not apply to the following organizations:
(a) All educational institutions that are recognized by the State Board of Education or that are accredited by a regional accrediting association or by an organization affiliated with the National Commission on Accrediting, any foundation having an established identity with any of the aforementioned educational institutions, any other educational institution which makes the solicitation of contributions solely by its student body, alumni, faculty and trustees and their families or a library established under the laws of this state.
(b) Fraternal, patriotic, social, educational, alumni organizations and historical societies when solicitation of contributions is made solely by their membership; however, posts of the American Legion and posts of the Veterans of Foreign Wars of the United States may utilize nonmembers to assist designated supervisors in the conduct of bingo under the Charitable Bingo Law and qualify for this exemption. This exemption shall be extended to any subsidiary of a parent or superior organization if such solicitation is made solely by the membership of the subsidiary, parent or superior organization.
(c) Persons requesting any contributions for the relief or benefit of any individual, specified by name at the time of the solicitation, if the contributions collected are turned over to the named beneficiary, first deducting reasonable expenses for costs of banquets or social gatherings, if any, provided all fund-raising functions are carried on by persons who are unpaid, directly or indirectly, for such services.
(d) Any charitable organization which does not intend to solicit and receive and does not actually receive contributions in excess of Twenty-five Thousand Dollars ($25,000.00) during any twelve-month period ending June 30 of any year or on such other date as prescribed by rule, provided all of its fund-raising functions are carried on by persons who are unpaid for such services. However, if the gross contributions received by such charitable organization during any twelve-month period ending June 30 of any year or other date as prescribed by rule shall be in excess of Twenty-five Thousand Dollars ($25,000.00) it shall, within thirty (30) days after the date it shall have received total contributions in excess of Twenty-five Thousand Dollars ($25,000.00), register with and report to the Secretary of State as required by this chapter.
(e) Any charitable organization receiving an allocation from an incorporated community chest or united fund, provided such chest or fund is complying with the provisions of Sections 79-11-501 through 79-11-529 relating to registration and filing of annual reports with the Secretary of State, and provided such organization does not actually receive, in addition to such allocation, contributions in excess of Twenty-five Thousand Dollars ($25,000.00) during any twelve-month period ending June 30 of any year or such other date as prescribed by rule, and provided further, that all the fund-raising functions of such organization are carried on by persons who are unpaid for such services. However, if the gross contributions other than such allocation received by such charitable organization during any twelve-month period ending June 30 of any year or on such other date as prescribed by rule shall be in excess of Twenty-five Thousand Dollars ($25,000.00), it shall, within thirty (30) days after the date it shall have received such contributions in excess of Twenty-five Thousand Dollars ($25,000.00), register with and report to the Secretary of State as required by this chapter.
(f) All volunteer fire departments or rescue units, rural or otherwise, chartered under the laws and statutes of the State of Mississippi as nonprofit corporations.
(g) Any humane society organized under the laws of Mississippi which contracts with counties or municipalities for the care and keeping of estrays.
(h) Any other organization which the Secretary of State by rule or order exempts from the registration requirements of this chapter upon finding that (i) such registration is neither necessary in the public interest nor for the protection of contributors, or (ii) such exemption shall further the objectives of compatibility with uniformity among the states.
(2) Prior to any solicitations for contributions, each charitable organization claiming to be exempt shall file a Notice of Exemption on the forms prescribed by the Secretary of State. In any proceeding under this chapter, the burden of proving an exemption, or an exception from a definition, is upon the person claiming it.
(3) The provisions of subsection (1) of this section shall not apply to charitable organizations that fund-raise through the conduct of bingo under the Charitable Bingo Law.
SECTION 2. Section 79-11-509, Mississippi Code of 1972, is amended as follows:
79-11-509. (1) The Secretary of State shall deny, suspend or revoke a registration or an exemption for the following reasons:
(a) The application for registration or renewal is incomplete.
(b) The application or renewal fee (where applicable) has not been paid.
(c) A document filed with the Secretary of State contains one or more false or misleading statements or omits material facts.
(d) The charitable contributions have not been or are not being applied for the purpose or purposes stated in the documents filed with the Secretary of State.
(e) The applicant or registrant has violated or failed to comply with any provisions of this chapter or any rule or order thereunder.
(f) Any applicant, registrant, officer, director, or partner of the applicant or registrant, or any agent or employee thereof who has been convicted of a felony or a misdemeanor involving misrepresentation, misapplication or misuse of the money or property of another maintains a position where he or she has access to or control over the funds of the charitable organization.
(g) The applicant or registrant has engaged in the use or employment of dishonesty, fraud, deception, misrepresentation, false promise or false pretense.
(h) The applicant or registrant has had the authority to engage in charitable or fund-raising activities denied, revoked or suspended by the Secretary of State or any other state or jurisdiction.
(i) The applicant or registrant has been convicted of any criminal offense committed in connection with the performance of activities regulated under Sections 79-11-501 through 79-11-529 or any criminal offense involving untruthfulness or dishonesty or any criminal offense relating adversely to the registrant's or applicant's fitness to perform activities regulated by Sections 79-11-501 through 79-11-529. For the purposes of this paragraph, a plea of guilty, non vult, nolo contendere or any other similar disposition of alleged criminal activity shall be deemed a conviction.
(j) Any applicant, registrant, officer, director, or partner of the applicant or registrant, or any agent, volunteer or employee thereof, who has been convicted under federal or state law of any criminal offense involving acts against children maintains a position where he or she is in close contact with children.
(k) Any officer, director, partner, employee, agent or volunteer has accrued three (3) or more unremediated citations issued by the Secretary of State pursuant to this section.
(l) The applicant or registrant has engaged in other forms of misconduct as may be determined by the rules adopted by the Secretary of State.
(m) The applicant or registrant has violated the provisions of the Charitable Bingo Law.
(2) The Secretary of State shall notify the applicant or licensee of his intent to deny, suspend or revoke a license. The notification shall contain the reasons for the action and shall inform him of his right to request an administrative hearing within thirty (30) days of receipt of the notification. The denial, suspension or revocation shall become effective thirty (30) days after receipt of the notification unless a request for an administrative hearing is received by the Secretary of State before the expiration of the thirty (30) days. If a hearing is requested and the denial, suspension or revocation is upheld, the denial, suspension or revocation shall become effective upon the service of the final administrative decision on the applicant or licensee.
(3) Registration shall become effective no later than noon of the thirtieth day after a completed application is filed, if no denial order is in effect and no proceeding is pending under this chapter. The Secretary of State may, by rule or order, specify an earlier effective date, and the Secretary of State may, by order, defer the effective date until noon of the thirtieth day after the filing of any amendment.
(4) Whenever it appears to the Secretary of State that any person has engaged in or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule or order hereunder, he may, in his discretion, seek one or more of the following remedies in addition to other remedies authorized by law:
(a) Issue a cease and desist order, with or without a prior hearing against the person or persons engaged in the prohibited activities, directing them to cease and desist from further illegal activity;
(b) Administratively dissolve or seek the judicial dissolution of a domestic corporation that is a charitable organization, or revoke the certificate of authority of a foreign corporation that is a charitable organization; or
(c) Issue an order imposing an administrative penalty up to a maximum of Twenty-five Thousand Dollars ($25,000.00) for each offense, each violation to be considered as a separate offense in a single proceeding or a series of related proceedings;
(d) For the purpose of determining the amount or extent of a sanction, if any, to be imposed under paragraph (b) or (c) of this subsection, the Secretary of State shall consider, among other factors, the frequency, persistence and willfulness of the conduct constituting a violation of this chapter or a rule promulgated thereunder or an order of the Secretary of State, the number of persons adversely affected by the conduct, and the resources of the person committing the violation.
(5) In addition to the above remedies, the Secretary of State may issue a citation to any person engaging in any act or practice constituting a violation of any provision of this chapter or any rule or order hereunder. The Secretary of State shall establish rules providing remediation of certain citations, and the decision whether to allow such remediation will be within the Secretary of State's discretion.
(6) Whenever it appears to the Secretary of State or Attorney General that any person has engaged in or is about to engage in any act or practice constituting a violation of any provision of Sections 79-11-501 through 79-11-529 or any rule or order thereunder, either official may, in his discretion, take any or all of the following actions: bring an action in chancery court to obtain a temporary restraining order or injunction to enjoin the acts or practices and enforce compliance with Sections 79-11-501 through 79-11-529 or any rule or order thereunder; collect administrative penalties imposed under this section; or obtain on behalf of a charitable organization the return or repayment of any property or consideration received as private inurement or an excess benefit in violation of Section 79-11-519(3)(j). Upon a proper showing a permanent or temporary injunction, restraining order or writ of mandamus shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. In addition, upon a proper showing, the court may enter an order of rescission, restitution or disgorgement directed to any person who has engaged in any act constituting a violation of any provision of Sections 79-11-501 through 79-11-529 or any rule or order thereunder. In addition the court may impose a civil penalty up to a maximum of Twenty-five Thousand Dollars ($25,000.00) for each offense, and each violation shall be considered as a separate offense in a single proceeding or a series of related proceedings. The court may not require the Secretary of State or Attorney General to post a bond.
SECTION 3. Section 79-11-519, Mississippi Code of 1972, is amended as follows:
79-11-519. (1) It is the duty of the district attorneys and county prosecuting attorneys of this state to prosecute all violations of the provisions of Sections 79-11-501 through 79-11-529. In addition, actions for violations of Sections 79-11-501 through 79-11-529 may be prosecuted by the Attorney General.
(2) Sections 79-11-501 through 79-11-529 shall not be construed to limit or restrict the exercise of the powers or the performance of the duties of the Attorney General which he otherwise is authorized to exercise or perform under any other provision of law by statute or otherwise except the rendering of interpretative opinions in accordance with Section 79-11-503 which shall be limited to the Secretary of State.
(3) It shall be a violation of Sections 79-11-501 through 79-11-529 for any person:
(a) To misrepresent:
(i) The purpose or beneficiary of a solicitation;
(ii) The purpose or nature of a charitable organization; or
(iii) That any other person sponsors or endorses a solicitation;
(b) To use or exploit the fact of registration so as to lead the public to believe that such registration constitutes an endorsement or approval by the state;
(c) To use the name of a charitable organization, or to display any emblem, device or printed matter belonging to or associated with a charitable organization without the express written permission of the charitable organization;
(d) To make any false or misleading statement on any document required by Sections 79-11-501 through 79-11-529 or any rule or order thereunder;
(e) To fail to comply with the requirements of Sections 79-11-501 through 79-11-529 or any rule or order thereunder;
(f) To commit any unfair or deceptive act or practice; to employ any device, scheme or artifice to defraud; to engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person; or to obtain money or property by means of any false pretense, representation or promise;
(g) To fail to provide complete and timely payment to a charitable organization of the proceeds from a solicitation campaign or a charitable sales promotion;
(h) To make any false or misleading statements in the solicitations of contributions in this state or to omit to state any fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;
(i) To refuse or fail, after notice, to produce any records required to be kept under Sections 79-11-501 through 79-11-529, or any rule or order promulgated thereunder;
(j) To benefit, directly or indirectly, from any transaction in which an economic benefit is provided by a charitable organization where the value of the benefit provided by the organization exceeds the fair market value of the consideration received by the organization.
(4) It shall be a violation of Sections 79-11-501 through 79-11-529 for any charitable organization:
(a) To engage in any financial transaction which is not related to the accomplishment of a charitable purpose, or which jeopardizes or interferes with the ability of the charitable organization to accomplish a charitable purpose;
(b) To expend an unreasonable amount of money for solicitation or management;
(c) To use the name which is the same as or confusingly similar to the name of another charitable organization unless the latter organization shall consent in writing to its use;
(d) To represent itself as being associated with another charitable organization without the express written acknowledgment and endorsement of such other charitable organization;
(e) To use the services of an unregistered professional fund-raiser or fund-raising counsel or professional solicitor;
(f) To fail to comply with any provisions of Sections 79-11-501 through 79-11-529 or any rule or order thereunder;
(g) To employ as an officer, director, partner, employee, agent or volunteer any person who has accrued three (3) or more unremediated citations issued by the Secretary of State pursuant to Section 79-11-509;
(h) To employ as an officer, director, partner, employee or agent any person who has been convicted of a felony or misdemeanor involving misrepresentation, misapplication or misuse of the money or property of another, in a capacity where that person has access to or control over the funds of the charitable organization;
(i) To employ as an officer, director, partner, employee, volunteer or agent any person who has been convicted under federal or state law of any criminal offense involving acts against children, where such position will bring the person into close contact with children; * * *
(j) To apply the charitable organization's funds or assets for private inurement or excess benefits which exceed the fair market value of the property or services received in return from directors, officers, or those persons who are deemed disqualified persons or insiders under applicable federal law for tax-exempt organizations; or
(k) To violate the provisions of the Charitable Bingo Law.
(5) It shall be a violation of Sections 79-11-501 through 79-11-529 for any professional fund-raiser, professional fund-raising counsel or any professional solicitor:
(a) To perform any services on behalf of an unregistered charitable organization; or
(b) To fail to comply with any provisions of Sections 79-11-501 through 79-11-529 or any rule or order thereunder.
(6) It shall be a violation of Sections 79-11-501 through 79-11-529 for any person, in connection with a public safety organization solicitation:
(a) To use any representation that implies that the contribution is for or on behalf of a public safety agency or a public safety organization, or using any emblem, device, or printed matter belonging to or associated with a public safety agency or organization, unless authorized in writing to do so by the agency or organization;
(b) To use a name, symbol, or statement that is similar to that used by a public safety agency or organization in a manner that is intended to confuse or mislead a person being solicited;
(c) To represent or imply that the solicitor is a peace officer or member of a public safety agency or public safety organization if the solicitor is not;
(d) To solicit for a public safety organization, independent promoter, public safety publication, or cause by representing that those who respond affirmatively to the solicitation will receive favored treatment by public safety personnel; or
(e) To fail to comply with any provisions of Sections 79-11-501 through 79-11-529 or any rule or order thereunder.
(7) A misrepresentation may be accomplished by words or conduct or failure to disclose a material fact. Regardless of a person's intent or the lack of injury, the above acts and practices are prohibited in the planning, conduct or execution of any solicitation or charitable sales promotion.
(8) The Secretary of State or the Attorney General may exercise the authority granted in this section against any charitable organization or person which or who operates under the guise or pretense of being an organization exempted by the provisions of Section 79-11-505, and is not in fact an organization entitled to such an exemption.
SECTION 4. This act shall take effect and be in force from and after July 1, 2011.