California Attorney General Targets Annual Minutes "Scam"

California's attorney general has filed suit against a nyumber of individuals and companies to combat what he calls a scam targeting small businesses:

News Release
October 08, 2009
For Immediate Release
Contact: (916) 324-5500

Brown Sues 8 Individuals and 6 Businesses Operating Scams Targeting California Small Businesses

San Diego - Continuing his fight against "rip-off artists" operating in California, Attorney General Edmund G. Brown Jr. filed suit today against eight individuals and six businesses that operated scams targeting small business owners. The lawsuits, filed today in San Diego Superior Court, seek to recover more than $3 million.

Schedule note: Brown is in San Diego this morning and is available to speak about these cases at approximately 10:30 -- at the Hilton Bayfront Hotel - downtown (Indigo A Room, 1 Park Blvd in San Diego 92101.

"These cases will send a powerful signal that small business owners must be on the alert," Brown said. "These rip-off artists sent official-looking documents through the mail for the sole purpose of duping small business owners into paying them money - for no value in return."

The three cases are separate scams, each following a similar theme. The defendants mailed to small businesses solicitations that appeared to be government documents featuring an official-looking seal, an official-sounding name, citations to the Corporations Code and a "reply by" date. The forms claimed that the business was in danger of losing its corporate or limited liability status if payment was not made within a short period of time.

In the first case, Anthony Williams operated Compliance Annual Minutes Board that mailed to California businesses official-looking forms demanding that the recipient complete the form and return it with payment of an "Annual Fee" of $150 or risk loss of corporate status. Williams claimed that in exchange for payment, he would provide corporate minutes. Instead, he prepared generic fictitious minutes for the business owners who paid his fee.

The next case involved George Alan Miller, Rebecca Miller, Arghisti Keshishyan and Kristina Keshishyan who together operated two corporations and one limited liability company: Annual Review Board, Inc., Business Filings Division and Corpfilers.com, LLC. Miller and his co-conspirators mailed solicitations to California limited liability companies and corporations, demanding that the recipients complete the form and return it with payment or risk penalties, fines and suspension. The payment amounts varied from $195 to $239, but all mailers were designed to be official-looking government documents that misled the recipients into sending money.

In the third case, Maria Jones operated Corporate Filings Division and Corporate Compliance Filings, Inc., which mailed official-looking forms entitled "Annual Minutes Disclosure Statement" to California businesses, implying that the recipient business was required to complete the form and return it with payment of an "Annual Fee" of $175 or risk loss of corporate status. In exchange for payment, Jones agreed to provide corporate minutes. The information she solicited, however, was inadequate for legitimate corporate minutes, and she instead provided fictitious minutes.

All defendants are accused of violating:

- Business and Professions Code section 17533.6 (Deceptive Solicitation Statute)
- Civil Code section 1716 (Phony Billing Statute)
- Business and Professions Code section 17500 (False Advertising Statute)
- Unfair business practices within the meaning of Business and Professions Code section 17200.

In all three cases, the Attorney General's Office seeks civil penalties, injunction and other equitable remedies and costs.

Since 2004, the Attorney General's Office has received more than 5,000 complaints against a growing number of individuals who mailed solicitations made to look like governmental forms to small businesses in California. Today's announcement adds to the five cases the office has already successfully handled since these scams were brought to the office's attention....

See also: California Corporate Compliance Annual Minutes

Employment Law in a Social Networking, New Media World

I am quoted in a FOXBusiness small business article on how employers can protect their intellectual property rights in a Facebook/Twitter social networking world:

In an age of way-too-much information and widespread social-networking addiction, businesses are finding it increasingly difficult to protect trade secrets and practices. It’s important to know your rights as an employer and/or as an employee.

If you are neither of the above at the moment, and are instead on the job hunt, you should keep in mind that potential employers have the right to (and will) research your online living activities. In one quick Google search, what might a recruiter learn about you? It’s important to always keep your professional goals in mind when posting personal details on sites that are publicly accessible.

If you pass the test and find yourself employed, you’ll then have to follow company policy regarding Internet activities. Because privacy is often a top concern for employer and employee, companies are adjusting to the new online environment and adopting rules and regulations accordingly to ensure protection.

Anita Campbell, founder and CEO of Smallbiztrends.com, said there’s a major difference between large corporations and small businesses when it comes to social media sites. Large corporations are more likely to block all social media sites, such as Facebook and Twitter, from being accessed on the company network.

However, she said most small businesses do not block these sites at work and, in some cases, require employees to participate in them for company benefits. Jonas M. Grant, a business attorney and expert, said some employers rightfully worry about the disclosure of confidential company information by employees who are either posting on Web sites under their own names or anonymously. But he said employers do have the right to legally prohibit certain social-networking activities involving the business to avoid a slip of an idea or secret.

According to Campbell, small businesses using social media networks can have advantages and disadvantages. Recommending your employees take full advantage of the power of social media for “free” marketing is a definite plus. But allowing employees to have access to social media all day can deter them from actually working, decreasing productivity.

“But the stickier issue is one of inappropriate communications by employees,” Campbell said.

Grant recommends companies have an employee manual and training program in place specifying acceptable workplace use of the Internet in general. He said employers should expressly tell their employees what they can and cannot talk about, especially in an age with constant Internet communication.
“Employers are also wise to have employees sign employee loyalty and confidentiality agreements at the time of hire,” Grant said.

Experts agree that prevention is key for small businesses, and preparing for “what-ifs” is the best protection. Grant said communicating concerns with employees, outlining company rules and restrictions, while implementing appropriate policies and agreements in conjunction with employment law counsel, is the best method of prevention.

What Rights Do Employers, Employees Have in Internet Age? by Hope Holland, FOXBusiness.com, October 22, 2009

Intellectual Property Protection in a Social Networking World

I am quoted in a FOXBusiness small business article on protecting intellectual property rights in a Facebook/Twitter social networking world:

Friend it, follow it or link to it. Brainstorming, would-be entrepreneurs around the world are continuously connecting through social networking sites such as Facebook, Twitter and LinkedIn. But, legal experts warn, users should beware of setting themselves up for Information-Highway robbery.

You can lock the doors on your home and your vehicle. You almost need to rent storage space to store your many login and passwords in today’s Internet age. But, what about your revolutionary ideas for starting your own company or launching a new product line? Do you have any rights when it comes to protecting things you carry in your head?

Yes, the experts say. And they advise that you take them seriously, especially your most basic right for protecting your literally un-touchable valuables.
Remember, you have the right to remain silent.

“If you post a business idea on Twitter, someone could beat you to the punch,” said Jonas M. Grant, a small business lawyer and entertainment intellectual property attorney. “If your idea is what makes your for-profit business special, you should consult with an attorney to see what, if any, protections are available and save the Tweeting for when the business has launched. By posting an idea to a social networking site, you have contributed it to the public domain.”

It seems like a simple concept, but choosing how to protect your ideas can be a difficult and confusing process. Do you need a copyright? A trademark? A patent? What are trade secrets? FOXBusiness.com asked the legal experts to translate the legal jargon regarding intellectual property rights.

Anita Campbell, founder and CEO of Smallbiztrends.com, an online resource for small businesses and entrepreneurs, said if your creation is a book, blog post, artwork, cartoon, software, podcast recording, video, or anything along these lines, than a copyright is right for you. A copyright protects original creative works and the “expression of an idea,” she said. You can simply register for copyright protection with the U.S. Copyright Office.

So, you weren’t born yesterday – and you know better than to Tweet about your idea or write about it on your Facebook page. But what about the people you are including on your launch team? Or, how about if you’d like to discuss your brainchild with any consultants or potential future business partners and/or clients? Can you trust them to keep it off their online world?

The experts say no. If you don’t protect yourself ahead of time, you could wake up to an e-mail announcing the successful launch of your long-time-planned dream company -- and have no legal means to get back what is rightfully yours.

With start-ups predominantly using the cross-globe-reaching Internet and social networking sites to get things moving, Grant said no small business is “too small” to invest in protecting company information. He said this is the reason to have anyone you share your grand plan with sign a non-disclosure agreement (NDA), also known as a confidentiality agreement, confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement. He said to always protect your trade secrets or confidential business information to avoid losing an idea or strategy to another company.

In fact, Grant said small businesses should act like the largest companies in the world, and keep all future business plans secret until all available intellectual property protections are in place and it is time to launch to the public....

Protect Your Business Ideas From Information-Highway Robbery by Hope Holland, FOXBusiness.com, October 22, 2009

Home Loan Modification Advance Fees Now Illegal in California

As of October 11, 2009, advance fees for home loan modification services are illegal in California, even if charged by licensed attorneys. For more information, see California Department of Real Estate Announcement [PDF]

Tax Increases Expected by 2011

Higher Taxes Are Coming. Are You Prepared? Wall Street Journal, September 13, 2009:

As the recession and bailout have pushed this year's federal budget deficit to an unheard-of $1.6 trillion, an unpleasant reality has dawned: Taxes are going up. The only questions are when, how much, and for whom?

The answers depend on the shifting sands of wealth politics and the scope of health-care revision. "But everybody thinks that by 2011 tax rates will be higher, at least for those with higher incomes," says Thomas Ochsenschlager, a tax official at the American Institute of Certified Public Accountants.

This certainty turns traditional tax-planning logic upside-down. Taxpayers have long been advised to defer taxes as long as possible, especially by making contributions to tax-sheltered IRAs and 401(k)s or holding assets for years in order to postpone realizing gains.

Now taxpayers should reconsider this rule. The current top capital-gains rate of 15% on most assets is the lowest in living memory and the Obama administration has proposed raising it to 20%. Another proposal might tack on a 4.5% surtax for the wealthiest taxpayers. So it may make sense to realize long-term gains now, says Robert Gordon, who advises clients on sophisticated tax matters at Twenty-First Securities in New York....

See also: Barack Obama's Tax Policies