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S.B. 182





Chief Sponsor: Mark B. Madsen

House Sponsor: Michael E. Noel

             6      Cosponsors:
             7      Curtis S. Bramble
             8      Allen M. Christensen
             9      Thomas V. HatchParley G. Hellewell
John W. Hickman
Ed MayneDarin G. Peterson
Howard A. Stephenson
David L. Thomas              10     
             11      LONG TITLE
             12      General Description:
             13          This bill amends Title 76, Chapter 6a, Pyramid Scheme Act.
             14      Highlighted Provisions:
             15          This bill:
             16          .    defines "compensation" to exclude commissions earned for the sale of goods or
             17      services for actual consumption;
             18          .    makes participation in a pyramid scheme only by receiving compensation for
             19      recruiting another person a class B misdemeanor; and
             20          .    makes technical changes.
             21      Monies Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          76-6a-2, as enacted by Chapter 89, Laws of Utah 1983
             28          76-6a-3, as enacted by Chapter 89, Laws of Utah 1983

             29          76-6a-4, as last amended by Chapter 38, Laws of Utah 1993
             31      Be it enacted by the Legislature of the state of Utah:
             32          Section 1. Section 76-6a-2 is amended to read:
             33           76-6a-2. Definitions.
             34          As used in this chapter:
             35          [(2)] (1) (a) "Compensation" means money bonuses, [commissions,] overrides, prizes,
             36      or other real or personal property, tangible or intangible.
             37          (b) "Compensation" does not include payment based on the sale of goods or services to
             38      anyone purchasing the goods or services for actual use or consumption.
             39          [(1)] (2) "Consideration" does not include payment for sales demonstration equipment
             40      and materials furnished at cost for use in making sales and not for resale, or time or effort spent
             41      in selling or recruiting activities.
             42          (3) "Person" includes a business trust, estate, trust, joint venture, or any other legal or
             43      commercial entity.
             44          (4) "Pyramid scheme" means any sales device or plan under which a person gives
             45      consideration to another person in exchange for compensation or the right to receive
             46      compensation which is derived primarily from the introduction of other persons into the sales
             47      device or plan rather than from the sale of goods, services, or other property.
             48          Section 2. Section 76-6a-3 is amended to read:
             49           76-6a-3. Schemes prohibited -- Violation as deceptive consumer sales practice --
             50      Prosecution of civil violations.
             51          (1) A person may not participate in, organize, establish, promote, or administer any
             52      pyramid scheme.
             53          (2) A criminal conviction under this chapter is prima facie evidence of a violation of
             54      Section 13-11-4 , the Utah Consumer Sales Practices Act.
             55          (3) Any violation of this chapter constitutes a violation of Section 13-11-4 , the Utah
             56      Consumer Sales Practices Act.
             57          (4) All civil violations of this chapter shall be investigated and prosecuted as
             58      prescribed by the Utah Consumer Sales Practices Act.
             59          Section 3. Section 76-6a-4 is amended to read:

             60           76-6a-4. Operation as felony -- Investigation -- Prosecution.
             61          (1) Any person who knowingly organizes, establishes, promotes, or administers a
             62      pyramid scheme is guilty of a third degree felony.
             63          (2) Any person who participates in a pyramid scheme only by receiving compensation
             64      for the introduction of other persons into the pyramid scheme rather than from the sale of
             65      goods, services, or other property is guilty of a class B misdemeanor.
             66          [(2)] (3) The appropriate county attorney or district attorney has primary responsibility
             67      for investigating and prosecuting criminal violations of this chapter.

Legislative Review Note
    as of 1-26-06 12:16 PM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel

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