Thursday, February 2, 2012
Bill Targeting Investment Scammers Clears Senate Committee
Posted By Eric S. Peterson on February 2, 2012, 8:30 PM
Sen. Ben McAdams, D-Salt Lake City, had a bill clear committee Thursday that would allow for courts to offer triple damages in civil court for those scammed by investment fraudsters who use a position of trust or common association to bilk their victims out of their money.---
McAdams previously passed a package of securities-fraud-related bills in the 2011 session, including one that created an enhanced penalty to be wielded against shysters who dupe investors through “affinity fraud” or the practice of using a common affinity like religious membership as a means of convincing investors to trust them.
For McAdams, the trusting nature of Utahns is a strength in the community -- but also one that scammers turn against the community. “There are those in the community that would use our strength against us to prey upon us in pursuit of financial fraud,” McAdams said. “What this bill does is bring an added tool for victims of such fraud to recover compensation.”
McAdams’ Senate Bill 91 ups the ante against such schemers by making it easier to recover civil damages against these kinds of frauds. Current law allows for securities-fraud victims to recover triple the amount of their original investment in a civil action if the fraud was intentionally committed. McAdam’s bill would modify the law so that it could be brought against scammers who use affinity fraud in their machinations. It also lowers the standard so that if it can’t be proven that the scammer intentionally defrauded their victims, it need only be proven that the affinity fraudster’s scheme to defraud was negligent by clear and convincing evidence.
“You don’t have to show the smoking gun,” McAdams said. “Just that there were red flags everywhere.”
The bill was passed favorably out of the committee by a 13 to 1 vote.
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