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Charitable Fraud Could Soon Lead To Bigger Penalties

DENVER (CBS4) - An effort is underway to crack down on people who take advantage of donors wanting to help a good cause.

A bill at the state capitol would toughen the punishment for fraud involving charities such as fraudulent national breast cancer charity Boobies Rock!, which was based in Colorado.

Under the proposal, which just passed out of committee at the state capitol, a person found guilty of charitable fraud would face a civil penalty of up to $10,000 for each violation, with no cap. Right now it's $2,000 per incident with a $500,000 cap.

Paid solicitors would also have to register with the Colorado Secretary of State.

The charitable organization has to have at least 10 percent of its membership associated with the cause its benefiting.

"People in Colorado are very generous with their money and there are great causes out there, and we just want to make sure that a paid solicitor is not misrepresenting where that money is going. We want the public to be confident that if they donate money to a charity, it's actually going to that charity," said Rep. Polly Lawrence, a Republican representing Douglas County.

Lawrence says the measure is needed because the federal government isn't enforcing its charitable fraud laws. So, she says, it has fallen to the states to enforce the Consumer Protection Act.

The bill is sponsored by a Republican and Democrat.

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