Forced Arbitration

Posted by Da’Naysia Aarons.

In an article called “Forced Arbitration,” Gordon Gibb, describes how citizens in the United States are taken advantage of by popular rich companies, such as, Time Warner Cable, T-Mobile, Wells Fargo and several others. Many consumers who buy products from these companies do not realize that they are facing forced arbitration.

Companies forced arbitration through a contractual clause that waives any rights to purse a dispute through courts. For example, a consumer decides to purchase a phone from T-Mobile. Before the consumer can buy the product he or she has to sign a document. In many cases, the force arbitration clause occurs in fine print at the bottom of the page, so many consumers are not aware of what they are signing. If the consumer does not sign the contract, they are not able to purchase their item. However, if the consumer signs the contract they receive their item.

If the consumer decides that he or she wants to sue the company, because something went wrong with the product, that consumer will never get their day in court because he or she signed the contract giving over that right. In the article, an appellate attorney, Deepak Gupta, states, “[Forced arbitration] is really an exit clause from the civil justice system and people aren’t aware that they’re even entering into these contracts.”

Force arbitration has become a popular issue in the United States. Several people are now starting to challenge its use. It is not right on how the government and companies are taking advantage of these consumers.

Da’Naysia is an international business major at Montclair State University, Class of 2017.

Tax Avoidance, Tax Fraud, and Tax Evasion

Posted by Issam Abualnadi.

Tax is a sum of money levied on incomes, property, sales, etc., by a government for its support or for specific services. (The American Heritage Dictionary). According to the IRS website, the origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, history, it actually goes back even further. During the Civil, War Congress passed the Revenue Act of 1861, which included a tax on personal incomes to help pay war expenses. The tax was repealed ten years later. In 1894, however, Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court. The Court held it was a direct tax not apportioned according to the population of each state.

The 16th amendment, ratified in 1913, removed this objection by allowing the Federal government to tax the income of individuals without regard to the population of each State. (IRS Website). The sole purpose of income tax is based economics and social goals.( Income Tax Fundamentals 1-2). While the government tries to maximize its revenue, at the same time, Congress tries to make the tax law suitable and fair for each individual. Therefore, the tax law not only divides the taxpayers into categories upon their income, but also it allows them to minimize their taxes due by structuring their tax return in different methods. Unfortunately, not every citizen is law-abiding in this respect, and accordingly, some taxpayers break the tax law. In the foregoing, I will discuss the differences between tax avoidance, tax fraud, and tax evasion.    Avoidance of tax is not a criminal offense. According to the IRS, taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. One who avoids tax does not conceal or misrepresent, but shapes and preplans events to reduce or eliminate tax liability within the parameters of the law. Take for example, Warren Buffett. Buffett wrote in The New York Times in 2011 “ Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent” ( The New York Times). But how Buffett can do that?

Buffett and many other super rich people use different tax rules to avoid paying taxes, like the “cash-rich split-off.” This code mechanism is used when Company (A) puts cash or other “investment assets” plus a business into a subsidiary that it then swaps tax-free to Company (B) in return for B’s holding of A’s stock. In 2010 Graham Holdings and Berkshire (Warren Buffett’s corporation), saved a total of about $675 million in federal and state income taxes by going the “cash-rich split-off” route. Graham Holdings is trading cash, Berkshire stock that it owns, and a TV station for most of Berkshire’s 23 percent stake in Graham Holdings. Tax avoidance matches the well-known saying, “Work smarter not harder.” Also, it is worth mentioning that massive tax avoidance draws attention to the notion of the efficiency of the tax codes, and the need to produce new rules or restrictions prevent such legal tax evasion. (The New York Times).

Tax fraud is another way some taxpayers use to minimize their tax liability. According to the IRS website, tax fraud “is deception by misrepresentation of material facts, or silence when good faith requires expression, which results in material damage to one who relies on it and has the right to rely on it. Simply stated, it is obtaining something of value from someone else through deceit.” (IRS Section 25.1.1.2). According to IRS’s definition of tax fraud, not all the mistakes in preparing a tax return are considered a fraud, and in order to consider a case as a fraud, two elements should be presented:

  1. An additional tax due and owing as the result of a deliberate intent to evade tax; or

  2. The willful and material submission of false statements or false documents in connection with an application and/or return. (IRS Section 25.1.1.1). Generally the expression “Tax Fraud” used for civil and criminal cases.

The third area is tax evasion. Tax evasion, “Involves some affirmative act to evade or defeat a tax, or payment of tax. Examples of affirmative acts are deceit, subterfuge, camouflage, concealment, attempts to color or obscure events, or make things seem other than they are” (IRS Section 25.1.1.2.4). “It is typically used in the criminal context, and it is a subset of the tax fraud.”

Tax fraud and tax evasion are very close in their meaning; both are illegal way to reduce the tax liability. The IRS indicates tax fraud by two major indicators. The first indicator is when the taxpayer knowingly understates their tax liability often leaving evidence in the form of identifying earmarks. The second indicator is that serve as a sign or symptom, or signify that actions may have been done for the purpose of deceit, concealment or to make things seem other than what they are. Usually the IRS cannot prove that to court, because taxpayer can easily claim a good faith misunderstanding of the law or good faith belief that one is not violating the law negating willfulness. Therefore, the IRS chooses to prosecute the taxpayer civilly for underpaying taxes. In such cases, the IRS can impose a tax fraud penalty, which is 75% of the tax owed plus the interest on this penalty. On the other hand, tax evasion is a subset of tax fraud. In tax evasion cases, the very difficult burden for the IRS is to prove the willfulness, which means a voluntary, intentional violation of a known legal duty. (IRS, Section 25.1.1.1) To prove fraud, they must show the court that the taxpayer did the act deliberately for the purpose of deceit. Examples include omissions of specific items where similar items are included; concealment of bank accounts or other assets. (ISR Section 25.1.1.3). So if the IRS can prove that, then it is a tax evasion case. In tax evasion cases, the penalty range is up to five years in jail plus a big fine and plus the costs of prosecution for each separate tax crime.

In conclusion, the tax law was created to enable the government to support the economical and social activities in the American society. The lawmaker enacted some tax codes to help eligible taxpayers reduce their tax liability under exact conditions, but some still try to deceive the government by using illegal means.

Issam is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.

Works Cited

“Sixteenth Amendment.” West’s Encyclopedia of American Law, edition 2. 2008. The Gale Group 17 Nov. 2014. http://legal-dictionary.thefreedictionary.com/Sixteenth+Amendment

tax.” The American Heritage® Dictionary of the English Language, Fourth Edition. 2003. Houghton Mifflin Company 23 Nov. 2014 http://www.thefreedictionary.com/tax

“Brief History of IRS.” Brief History of IRS. Web. 10 Oct. 2014. .

Whittenburg, Gerald E., and Ray Whittington. “The Individual Income Tax Return.” Income Tax Fundamentals. 2014 ed. St. Paul: Cengage Learning, 2014. 1-2. Print.

“Internal Revenue Manual – 25.1.1 Overview/Definitions.” Internal Revenue Manual – 25.1.1 Overview/Definitions. Web. 23 Nov. 2014. .

BUFFETT, WARREN. “Stop Coddling the Super-Rich.” The New York Times 14 Aug. 2011. Web.

Home Warranty Companies Face Lawsuits

Posted by Da’Naysia Aarons.

In an article called, “Lawsuits and Consumer Reporters Fight Home Warranty Companies,” Heidi Turner discusses how home warranty companies are being sued by consumers. An investigative reporter was asked to look into a company called Sensible Home Warranty who was allegedly selling consumers a warranty policy. However, when one consumer asked for a new microwave, Sensible Home warranty refused to pay out her claim. While investigating the company, a reporter name Michelle Mortensen found that Sensible Home Warranty has more than 1,950 complaints. In the article it states, “An investigation into the company was undertaken by the Nevada Division of Insurance but in the meantime, the company reportedly went out of business.”

Due to the fact that the company was mistreating their consumers and taking advantage of their money, the company was fined $5,000 dollars for not complying with the state’s Service Warranty Act. In the article it further states, “The business failed to pay legitimate claims made on home warranty contracts sold in the State of Utah, or to pay them in a timely manner, and the business failed to respond to inquiries of the commissioner.”

Since many other home warranty companies have been taking advantage of other consumers, lawsuits have been filed against them.

Da’Naysia is an international business major at Montclair State University, Class of 2017.

Ex-Goldman Sachs Trader Salem Renews Fight For $5 Million

Posted by Ovais Ahmed.

An article posted on bloomberg.com talks about an appeal made by ex-Goldman Sachs trader Deeb Salem to get an extra $5 million he thinks he deserves in bonus money. He has already received $8.25 million and still wants to get more money out of his former company. I don’t understand why the trader can’t settle with the money he has already made, which is more than the average American would probably ever make. To me, it spells out nothing but greed. Salem states he helped Goldman Sachs earn $7 billion in profit and was sought after by many investment professionals in his industry. The article states:

In September, Justice Eileen Bransten denied Salem’s request to set aside a Financial Industry Regulatory Authority panel decision to dismiss his claim, and granted Goldman Sachs’s request to seal portions of the dispute with the former trader. Salem told a state appeals court in Manhattan today that the judge erred in her decision, according to a filing. Salem claimed he helped the bank earn more than $7 billion, and told the arbitration panel Feb. 25 that he was one of the most sought-after investment professionals in the mortgage industry. The panel, described by Salem’s lawyer as a ‘kangaroo court,’ didn’t let Salem call some of Goldman Sachs (GS)’ top trading executives as witnesses, resulting in a miscarriage of justice, according to his original petition.

Goldman Sachs claimed they gave Salem the opportunity to give his evidence, and followed through fully with the law in denying his award claim. Therefore, Salem has appealed the decision is continues his fight for the extra $5 million he believes he deserves due to his efforts at Goldman Sachs.

Ovais is a business administration major with a concentration in management at Montclair State University, Class of 2015.

Municipal Court Archives – Blog Business Law – a resource for business law students

Posted by Mihran Naltchayan.

On January 16, 2012 around 1:30am, there was a burglary at a jewelry store named “Taline’s Jewelry” in Edgewater, NJ. Burglary is the breaking and entering into a building with the intent to commit a felony therein.

The jewelry store was arranged with a front display space, and the store next door was empty. The empty store is a big building that wrapped around the backend of the jewelry store. The “Ninja Bandit Burglary Crew” cut into a common wall of the empty store and entered the jewelry store from the backend so nobody can see them from the front side. This crew had three people. They didn’t realize that the walls had a vibration sensor that sends a quiet message to the Edgewater police department. So when the police officers arrived, they tried to run away.

“An Edgewater cop fired at least one shot at a thief who used a police cruiser as a getaway car, after a group of officers interrupted an overnight jewelry store break-in involving an alleged member of the infamous ‘Ninja Bandit’ burglary crew.” (Cliffviewpilot.com). The officers arrested 2 of the 3 people. They found the cop car in Teaneck, New Jersey 9:30 am the same day. The third guy wasn’t found.

The two men were brought to a Municipal Court judge in Edgewater and the judge ordered the defendants to be held on $50,000 bail each; they were charged with burglary, resisting arrest, criminal arrest and possession of burglar tools. (Cliffviewpilot.com).

I wrote about this article because this jewelry store is my father’s, and I thought it would be a good article to use for business law, since we cover criminal law in class.

Mihran is a marketing major at Montclair State University, Class of 2016.

Posted by Chris Widuta.

Did you ever stop to notice how busy life can be? Either you’re on your way to your parents, maybe going to class that meets twice a week during rush hour, or off to the gym to see your friends. Life got busy really quickly for me and I am still managing to handle the responsibilities that come with it, which includes bills, an apartment, a relationship, and most importantly my future.

On a Wednesday at nine o’clock in the morning, I was headed down the highway doing a steady 20-mile per hour in light traffic. I was headed to meet with my college professor to discuss statistics before the final examination. The entire drive was very smooth with no one cutting me off. At the same time, I thought the slow moving traffic would make for a great time to multitask. Isn’t it true that more and more people getting more done by doing two things at the same time? Walking and talking is more than simply talking, obviously. For me, that Wednesday morning I was working with my television provider to opt-out of the TV service I thought I didn’t need. Cable is expensive and those types of calls are stages of perpetual holds. I was multitasking.

I was just a few feet away from my exit, blinker on, driving with both hands on the wheel, using my cell phone by holding it with my shoulder. The state trooper was already conducting his business that morning in the emergency lane, when he turned and saw me, communicating. I thought nothing of it as I knew I was within the law. I continued to proceed off my exit, slowly accelerating since traffic was clearing up and all of a sudden, red and blue lights jumped right into my rear-view mirror. This trooper was able to do two things at once, too! The amount of time it took him to leave that scene and open another had to be less than 30 seconds, and quite frankly I was impressed.

He pulled me over and asked for all the necessary documents. I always ask why I was pulled over, because I know that by most tickets are written by the discretion of the officer. He stated that I was on my phone and quite frankly I agreed. I was on my phone, and I stated to him that I was not holding it in my hand. I stated that I had both hands on the wheel, and I asked the officer if he saw me holding the wheel with both hands, at the 10 and 2 position. I believed that if he was able to see my head and phone, he must have been able to see both hands, which would be unmistakable, being about chin level from his vantage point.

At this point, the officer started to look like a State Trooper. He had the hat and was very serious, more serious than a local police officer. I knew that he had to be in a bit of a hurry when he gave me my insurance and registration back immediately and held my license. The trooper then stated that it didn’t matter how I was holding the phone, but the fact that I was on my phone was worthy of a ticket and illegal. I didn’t make a fuss of it and proceeded to my stats lesson.

It took me only a few minutes to research the most recent statue description for 39:4-97.3, or “Operation of a motor vehicle while using cell phone.” The statue number was right on the ticket, and a quick Google search pulled up some results. I proceeded to the 215th Legislature because that lead to the most recent additions to the law. I know how important it is to know current law rather than outdated information from the Internet. After reading through the entire statute, I came up for air and formed a judgment. The statute clearly stated in Article 2 Section 1: “The use of wireless telephone . . . device by an operator of a moving vehicle on a public road or highway shall be unlawful except when the telephone is hands-free wireless telephone or the electronic communication device is used hands-free.” That line right there gave me great hope that I was within the law, and hope that my day in court I could prove that. I was mentally preparing for a trial, pro se.

My first appearance in Municipal Court came 11 days later. Due to the fact that the situation was minor, and really only a monetary fine, I knew that the “ball was in my court.” You see, most municipal courts just love these kinds of evenings. People who are “money right and time poor” just plead guilty, pay the fine, and go on with life. The municipal court makes hundreds of thousands of dollars on these court nights, especially since the average fine that night was around $290 a person. These fines are like a tax on a poor decision.

This situation is the exact opposite. I am a student with a part time job, 15 credits, and financially responsible, who has some extra time to save some money. The fine was $200, a pretty large amount, and something I couldn’t lose. I was charged to go in with the prosecutor and plead my case. The first step I took was to sit down with the prosecutor and told him I plead, not guilty. He told me that by pleading not guilty I would request to have a trial, acting pro se. The prosecutor aggressively asked me if I was ready for “trial” as if it was a big and scary event. Of course, I knew this meant a trial so I was prepared. I also told him that I would be sending an “order” for discovery, which was my Constitutional right. He repeated what I said in a joking manner as if I was doing something wrong, but I confirmed that was what I wanted and thanked him for his time. I proceeded to sit down in the court room, second row from the font. I chose the second row because I wanted the judge to see my face and I wanted to be in the right position to hear the lawyers around me and the cases being presented that night. It was important to hear everything that was said because I was going to eventually head to the bench.

I took notes, studied, and remembered what the judge and prosecutor said for over 4 hours before I had the chance to speak. They called my case. The judge read the statute, told me the fine, and asked how I plead. After a moment or two of silence, I clearly stated “not guilty.” I may have been trembling a little on the inside, but it was important that he heard no wavering in my voice. The judge stated that I should prepare for a trial, but included a certain lead that gave me great hopes; the judge said, “If that phone was in your hand, you’re breaking the law.” I thanked him, and listened to him say that I would be getting a trial date. I walked out of the court room almost 5 hours later.

I quickly wrote up an request for the prosecutor. This official letter included my summons number, the date and who I was. In the order, I reminded him that it was my constitutional right for this discovery. I asked for all recordations of the interaction, including but not limited to, officers notes, audio, and dash cam video.

Preparing for the case was a matter of determining what facts were going to be most important to getting the charges dismissed. It was imperative that I used the officer’s comments against statute and the judge’s interpretation of the law. I truly believed that I was within the law, so it was relatively easy to find good reasons to throw this charge out. It was also clear to me that I would be making decisions based on political decisions; to be exact, I realized that the courthouse was making a bet that the State Trooper would be a witness and testify, but more on that later.

Weeks went by and a discovery packet was never sent. It was the day before the trial date and I called the courthouse to speak with the court clerk. I had told her I have not received discovery and asked for a new date. She said that she could not give one and trial will still go on tomorrow. This was actually good news. Because it is my Constitutional right to have discovery, I knew that the court would not judge against me, and at this point, the worst that could happen would be a new trial date. I could live with that.

I appeared to the court house dressed well. I went to the prosecutor’s office to speak with him, mainly on the fact that I have not received discovery. He was surprised to hear that I sent an request and he never received it. I reminded him of his words and what address to use. He also included a very important hint of what was to come. The prosecutor told me that the witness, the trooper, was not at the trial. This means that the only witness that the State has did not show up! I knew my rights under the Confrontation Clause of the 6th Amendment that, “in all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witness against him.” These new facts greatly swayed my emotions to believe that I had a chance to get this dismissed that night. I was excited to sit in the court room.

Surrounded by lawyers, I was attentive and engaged. Every poor soul that stood up there took the charge and paid the fine. I prepared and thought of a response for what I would say for every one of the questions that the judge asked. Many other people had trials that day, and most if not all led the accused to lose their case. I did not give up hope, as I knew I had a different tactic. Instead of arguing the law, I planned to argue why the rules of the court should sway the judge to dismiss this case. They called my name and I felt much more confident this time around. All the possible scenarios played through my head already and I was ready.

The judge read the charge as I laid my papers on the table. Before I looked up, the judge quickly and effortlessly offered to cut the fine in half. This was completely arguable, I thought to myself. I said was that I was not granted my Constitutional right because I did not receive discovery. Before he said anything, I handed the officer a copy of the letter I sent to the prosecutor. He read it and asked a few questions about what I was requesting. The judge specifically asked how I knew that the interaction with the officer was recorded. Quite frankly, I assumed that it was recorded, I didn’t know for a fact, but I didn’t let him know that. I answered his question by referring to the fact that this was a state trooper and I believed the State installed video long ago, and how important it is to have video for more important interactions. He proceeded to ask about recordations, which I also requested.

The prosecutor followed up with a statement that the officer, who was their sole witness, was not present. He asked if it would be okay to reschedule for another date. I quickly returned his comment by asking for a dismissal. The judge rebutted with some guilt tripping remarks, including that ever since 9/11, State Troopers are very busy, and that certain arrangements for special occasions are required. I wasn’t going to fall for this guilt trip. It is important for the witness to be present at any trial, especially this one. I responded with the fact that this was a trial and asked if a trial is important enough to request their witness to be present. I also stated that he should have been subpoenaed for the trial. The judge did not respond. I asked to kindly accept my motion for a dismissal.

After what seemed to be an eternity, the judge looked up and said, “Case dismissed.” His words were truly the most relieving and gratifying two words I could have possibly heard. All of the hard work and time I put in to this exercise, not only saved me the $200 fine, but I confirmed to myself that I could stand up to my opponents and be victorious. The best part of this was, I didn’t even have to argue the law, I used the law in my favor and the judge nor could the prosecutor do anything to stop me.

Chris is a business administration major with a concentration in management of information technology at Montclair State University, Class of 2016.

Posted by Chris Widuta.

Did you ever stop to notice how busy life can be? Either you’re on your way to your parents, maybe going to class that meets twice a week during rush hour, or off to the gym to see your friends. Life got busy really quickly for me and I am still managing to handle the responsibilities that come with it, which includes bills, an apartment, a relationship, and most importantly my future.

On a Wednesday at nine o’clock in the morning, I was headed down the highway doing a steady 20-mile per hour in light traffic. I was headed to meet with my college professor to discuss statistics before the final examination. The entire drive was very smooth with no one cutting me off. At the same time, I thought the slow moving traffic would make for a great time to multitask. Isn’t it true that more and more people getting more done by doing two things at the same time? Walking and talking is more than simply talking, obviously. For me, that Wednesday morning I was working with my television provider to opt-out of the TV service I thought I didn’t need. Cable is expensive and those types of calls are stages of perpetual holds. I was multitasking.

I was just a few feet away from my exit, blinker on, driving with both hands on the wheel, using my cell phone by holding it with my shoulder. The state trooper was already conducting his business that morning in the emergency lane, when he turned and saw me, communicating. I thought nothing of it as I knew I was within the law. I continued to proceed off my exit, slowly accelerating since traffic was clearing up and all of a sudden, red and blue lights jumped right into my rear-view mirror. This trooper was able to do two things at once, too! The amount of time it took him to leave that scene and open another had to be less than 30 seconds, and quite frankly I was impressed.

He pulled me over and asked for all the necessary documents. I always ask why I was pulled over, because I know that by most tickets are written by the discretion of the officer. He stated that I was on my phone and quite frankly I agreed. I was on my phone, and I stated to him that I was not holding it in my hand. I stated that I had both hands on the wheel, and I asked the officer if he saw me holding the wheel with both hands, at the 10 and 2 position. I believed that if he was able to see my head and phone, he must have been able to see both hands, which would be unmistakable, being about chin level from his vantage point.

At this point, the officer started to look like a State Trooper. He had the hat and was very serious, more serious than a local police officer. I knew that he had to be in a bit of a hurry when he gave me my insurance and registration back immediately and held my license. The trooper then stated that it didn’t matter how I was holding the phone, but the fact that I was on my phone was worthy of a ticket and illegal. I didn’t make a fuss of it and proceeded to my stats lesson.

It took me only a few minutes to research the most recent statue description for 39:4-97.3, or “Operation of a motor vehicle while using cell phone.” The statue number was right on the ticket, and a quick Google search pulled up some results. I proceeded to the 215th Legislature because that lead to the most recent additions to the law. I know how important it is to know current law rather than outdated information from the Internet. After reading through the entire statute, I came up for air and formed a judgment. The statute clearly stated in Article 2 Section 1: “The use of wireless telephone . . . device by an operator of a moving vehicle on a public road or highway shall be unlawful except when the telephone is hands-free wireless telephone or the electronic communication device is used hands-free.” That line right there gave me great hope that I was within the law, and hope that my day in court I could prove that. I was mentally preparing for a trial, pro se.

My first appearance in Municipal Court came 11 days later. Due to the fact that the situation was minor, and really only a monetary fine, I knew that the “ball was in my court.” You see, most municipal courts just love these kinds of evenings. People who are “money right and time poor” just plead guilty, pay the fine, and go on with life. The municipal court makes hundreds of thousands of dollars on these court nights, especially since the average fine that night was around $290 a person. These fines are like a tax on a poor decision.

This situation is the exact opposite. I am a student with a part time job, 15 credits, and financially responsible, who has some extra time to save some money. The fine was $200, a pretty large amount, and something I couldn’t lose. I was charged to go in with the prosecutor and plead my case. The first step I took was to sit down with the prosecutor and told him I plead, not guilty. He told me that by pleading not guilty I would request to have a trial, acting pro se. The prosecutor aggressively asked me if I was ready for “trial” as if it was a big and scary event. Of course, I knew this meant a trial so I was prepared. I also told him that I would be sending an “order” for discovery, which was my Constitutional right. He repeated what I said in a joking manner as if I was doing something wrong, but I confirmed that was what I wanted and thanked him for his time. I proceeded to sit down in the court room, second row from the font. I chose the second row because I wanted the judge to see my face and I wanted to be in the right position to hear the lawyers around me and the cases being presented that night. It was important to hear everything that was said because I was going to eventually head to the bench.

I took notes, studied, and remembered what the judge and prosecutor said for over 4 hours before I had the chance to speak. They called my case. The judge read the statute, told me the fine, and asked how I plead. After a moment or two of silence, I clearly stated “not guilty.” I may have been trembling a little on the inside, but it was important that he heard no wavering in my voice. The judge stated that I should prepare for a trial, but included a certain lead that gave me great hopes; the judge said, “If that phone was in your hand, you’re breaking the law.” I thanked him, and listened to him say that I would be getting a trial date. I walked out of the court room almost 5 hours later.

I quickly wrote up an request for the prosecutor. This official letter included my summons number, the date and who I was. In the order, I reminded him that it was my constitutional right for this discovery. I asked for all recordations of the interaction, including but not limited to, officers notes, audio, and dash cam video.

Preparing for the case was a matter of determining what facts were going to be most important to getting the charges dismissed. It was imperative that I used the officer’s comments against statute and the judge’s interpretation of the law. I truly believed that I was within the law, so it was relatively easy to find good reasons to throw this charge out. It was also clear to me that I would be making decisions based on political decisions; to be exact, I realized that the courthouse was making a bet that the State Trooper would be a witness and testify, but more on that later.

Weeks went by and a discovery packet was never sent. It was the day before the trial date and I called the courthouse to speak with the court clerk. I had told her I have not received discovery and asked for a new date. She said that she could not give one and trial will still go on tomorrow. This was actually good news. Because it is my Constitutional right to have discovery, I knew that the court would not judge against me, and at this point, the worst that could happen would be a new trial date. I could live with that.

I appeared to the court house dressed well. I went to the prosecutor’s office to speak with him, mainly on the fact that I have not received discovery. He was surprised to hear that I sent an request and he never received it. I reminded him of his words and what address to use. He also included a very important hint of what was to come. The prosecutor told me that the witness, the trooper, was not at the trial. This means that the only witness that the State has did not show up! I knew my rights under the Confrontation Clause of the 6th Amendment that, “in all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witness against him.” These new facts greatly swayed my emotions to believe that I had a chance to get this dismissed that night. I was excited to sit in the court room.

Surrounded by lawyers, I was attentive and engaged. Every poor soul that stood up there took the charge and paid the fine. I prepared and thought of a response for what I would say for every one of the questions that the judge asked. Many other people had trials that day, and most if not all led the accused to lose their case. I did not give up hope, as I knew I had a different tactic. Instead of arguing the law, I planned to argue why the rules of the court should sway the judge to dismiss this case. They called my name and I felt much more confident this time around. All the possible scenarios played through my head already and I was ready.

The judge read the charge as I laid my papers on the table. Before I looked up, the judge quickly and effortlessly offered to cut the fine in half. This was completely arguable, I thought to myself. I said was that I was not granted my Constitutional right because I did not receive discovery. Before he said anything, I handed the officer a copy of the letter I sent to the prosecutor. He read it and asked a few questions about what I was requesting. The judge specifically asked how I knew that the interaction with the officer was recorded. Quite frankly, I assumed that it was recorded, I didn’t know for a fact, but I didn’t let him know that. I answered his question by referring to the fact that this was a state trooper and I believed the State installed video long ago, and how important it is to have video for more important interactions. He proceeded to ask about recordations, which I also requested.

The prosecutor followed up with a statement that the officer, who was their sole witness, was not present. He asked if it would be okay to reschedule for another date. I quickly returned his comment by asking for a dismissal. The judge rebutted with some guilt tripping remarks, including that ever since 9/11, State Troopers are very busy, and that certain arrangements for special occasions are required. I wasn’t going to fall for this guilt trip. It is important for the witness to be present at any trial, especially this one. I responded with the fact that this was a trial and asked if a trial is important enough to request their witness to be present. I also stated that he should have been subpoenaed for the trial. The judge did not respond. I asked to kindly accept my motion for a dismissal.

After what seemed to be an eternity, the judge looked up and said, “Case dismissed.” His words were truly the most relieving and gratifying two words I could have possibly heard. All of the hard work and time I put in to this exercise, not only saved me the $200 fine, but I confirmed to myself that I could stand up to my opponents and be victorious. The best part of this was, I didn’t even have to argue the law, I used the law in my favor and the judge nor could the prosecutor do anything to stop me.

Chris is a business administration major with a concentration in management of information technology at Montclair State University, Class of 2016.

Libyan Wealth Fund Seeks Damages in International Court

Posted by Gerald Wrona.

Interesting. That is one word to describe the NY Times report on the pre-trial proceedings of the Libyan Investment Authority’s (LIA) suit against Goldman Sachs (Anderson). Acting as broker-dealer to the sovereign wealth fund, Goldman established a relationship with the fund’s managers in 2007. A year later, Secretary of State Condoleezza Rice was visiting Moammar Gadhafi in Libya’s capital to devise a “trade and investment agreement . . . which will allow the improvement of the climate for investment.” (Labbott). Shortly after that promising convention between the two political heads, Goldman and the Authority finalized the agreement and the bank sold derivative products totaling $1 billion to the LIA. Then the housing market “opened its mouth” and out came the demon of the subprime mortgage crisis.

Understandably, the LIA felt exploited. They bit the bullet. Their lawyers came to the London High Court armed with notions that those managing the sovereign wealth fund were ineffectual in understanding the investments presented to them by Goldman. To add insult to insult, they further asserted that the fund administrators were altered in their judgment by Goldman representatives’ leadership role in incidents allegedly involving the recreational consumption of alcohol and visits paid to what may have been brothels, or some other manufacturer of night entertainment, though a witness statement does not specify. Considering that it would never have been in Goldman’s interest to spend more time carousing then working on the deal with the authority, it is highly unlikely that the time spent in leisure outweighed the hours dedicated to the investigation of the necessary facts of the deal.

Though it is worth noting that Goldman has already been ousted for luring investors into crummy deals and then betting against those deals to increase revenue. This is how Goldman actually made money off the subprime mortgage crisis (Cohan).

Will evidence be disclosed that suggests Goldman dealt with the LIA in a similar way? It’s impossible to know. I believe the judge will find that the heart of the matter is whether Goldman conducted due diligence in their dealing with the LIA. For that reason, Robert Miles, one of the attorney’s representing Goldman, would do well to look to the Securities Act of 1933 for support. It states: “If a Broker Dealer conducts reasonable due diligence on a security and passes the information on to the buyer before a transaction, the Broker cannot be held liable for non-disclosure of information that was not found during the investigation.”  Securities Act of 1933, SEC §§ 38-1-28 (SEC 1933).

The trial is expected to start next year.

Gerald is a Business Administration and MIT major at Montclair State University, class of 2017.

Aeropostale Files Chapter 11

The teen clothing chain, Aeropostale, filed for Chapter 11 protection, claiming online and fast-fashion retailers are the cause. The company expects to emerge within six months as a leaner company. It will close 113 stores in the U.S. and all 41 stores located in Canada.

“Online retailers and fast-fashion retailers such as H&M, Forever 21 and Inditex’s Zara have posed a threat to traditional apparel retailers, but American Eagle Outfitters, Inc. and Abercrombie & Fitch Co. have managed to turn around their businesses by controlling inventories and responding faster to changing fashion trends.”

The company may come out of this with restructured debt, but a long-term solution would require rethinking its brand.

Lifestyle Control

Research proposal posted by Jessica Thomulka.

Part One

Healthcare costs are skyrocketing in the United States. Even prior to the passing of President Obama’s Affordable Care Act, the burden on American corporations to provide healthcare to their employees was placing stress on businesses. Lifestyle control is the term given to an employer’s influence on an employee’s actions outside of the scope of their duties as an employee. Some of the most common examples of lifestyle control revolve around the preventative measures to lessen the pressure of the paying for employee medical coverage. The two most costly medical conditions are complications arising from smoking and obesity. The National Business Group on Health reports that obese employees cost employers $700 more than their average-weight employees, annually, for their healthcare. Along with healthcare, another aspect of business that employers are concerned about is productivity. In a 2002 study, the Center for Disease Control reports that productivity losses associated with workers who smoke cigarettes are estimated to be $3,400 per smoker.[1] Business owners and executives are concerned with maximizing their profits and ensuring the health of their company, and by keeping their employees healthy, they can reduce their risk of paying high medical expenses for preventable diseases. Some states like New York have passed provisions to prevent employer discrimination against an employee’s “after-hours” conduct, however there is no federal statute.

Part Two

There are both pros and cons to the idea of employers having control of the lifestyle of their employees. The stakeholders involved include the employer, the employees, the family of the employees, and even the ‘vice’ industries that the employers are safeguarding against such as the tobacco and gambling industries. The employers reap the most positive benefits out of lifestyle control provisions. They lower their cost and increase their productivity. The employees may also benefits from such provisions due to increased health, but they give up some of their freedom in the process. Some companies also impose lifestyle control upon the employee’s family if they are on the same health insurance policy so likewise, they may gain health benefits but sacrifice some of their freedom. Lastly, ‘vice’ industries suffer the most from lifestyle controls because they ultimately lose business due to embargos on acts like smoking and gambling. If enough companies impose lifestyle controls they could potentially bankrupt ‘vice’ industries.

Part Three

The biggest ethical question regarding lifestyle control is the autonomy of the employee. Should an employee be free from external control or influence by the employer? According to the United States Conference of Catholic Bishops (USCCB) there are several themes of Catholic Social Teaching.[2] Rights established in the Catholic tradition have an impact on lifestyle control. While privacy is not explicitly protected under the United States Constitution it falls under the penumbra of implied rights in the Bill of Rights due to its importance. The Catholic tradition teaches that human rights and responsibilities are at the heart of a healthy community. Within the workplace there is a basic right of workers to be respected by their employers. That is in decent wages, the right to unionize, and a productive work environment. The USCCB notes that work is more than just providing for yourself and your family because it is a way to participate in God’s work. They also suggest that a worthy measure of an institution is its ability to enhance the life of the human person. In the case of lifestyle control, Catholic Social Teaching aligns with provisions to protect the health of employees. This would support a ban on smoking and other such vices that are known to be detrimental to one’s health. If the motives behind the employer’s lifestyle controls align with what is good for society then they should be permissible under the Catholic Social Teaching.

[1] Halbert, Terry, and Elaine Ingulli. Law & Ethics In The Business Environment. 7th ed. Mason, OH: Thomson/South-Western West, 2003. Print.

[2] “Seven Themes of Catholic Social Teaching.” Seven Themes of Catholic Social Teaching. Web. 09 Mar. 2016. .

Arrest Warrants vs. Search Warrants

Criminal law is certainly an important part of the study of business law, and Fourth Amendment questions always seem to come up in class.  Students are very interested in learning about when the police can search a person’s car, office or home, or when and where can they arrest someone. Generally, police need a warrant either to search a person’s property or to arrest, unless it falls within a constitutional exception.

Most students do not know that there is a difference between an arrest warrant and a search warrant.  An arrest warrant is an order by the court directing a sheriff, constable or police officer to find and arrest a person who is wanted for a crime.  In contrast, a search warrant permits a law enforcement officer to search a person’s place of residence or other location for evidence of a crime.  An arrest warrant, however, does not permit the police to search a home or building for a person where the police reasonably believes the person named in the arrest warrant may be found without the consent of the owner.  The question then becomes whether there are any other times police may enter certain areas of a third-party home and search for a person even though they are only acting pursuant to an arrest warrant.

In the New Jersey Appellate Division decision, State v. Craft, 425 N.J. Super. 546 (App. Div. 2012), Judge Graves held that exigent circumstances permitted the police to enter a bedroom of a third-party home to arrest defendant for a shooting even though they were operating solely under the authority of an arrest warrant.  The facts are as follows.

The Newark Police Department’s Fugitive Apprehension Team is responsible to dispatch officers to certain addresses where fugitives may be found based on certain intelligence.  James Craft was wanted for a shooting.  Officers arrived at the location noted in the arrest warrant.  It was a three-family dwelling located on South 13th Street.  The police believed that defendant was residing there with family on the second-floor.

The front door to the residence was open, and the police proceeded to the second floor.  The officers were in plain clothes, but at least one of them was wearing a badge around his neck. Defendant’s mother opened the door and permitted the police to enter.  The officers told defendant’s mother that they had a warrant to arrest her son. Defendant’s mother told the police that her son was not there, but offered to call him on her cell phone.  Upon dialing the number, the police heard a phone ringing behind a bedroom door. The officers believed it was defendant’s cell phone ringing and that he would most likely be in the bedroom.

When they opened the bedroom door, they found defendant attempting to escape.  The police testified they saw defendant drop a handgun as he climbed through the window.  They also discovered five vials of cocaine in plain view on the top of a dresser.  Defendant was arrested and charged.  The trial court suppressed the evidence finding that the “coincidence of a phone ringing” was insufficient evidence to justify entry into the bedroom without a search warrant and that the police did not have an “objectively reasonable belief” that “defendant both resided at and would be found at” his mother’s apartment.

On appeal, the court reversed, holding that “there was no constitutional violation by the police, and it was error to suppress the items that were seized. The arrest warrant provided probable cause for defendant’s arrest; the officers entered the apartment with [defendant’s mother’s consent]; and [the police] had reason to believe defendant was present in an adjoining room when a cell phone began ringing after [defendant’s mother] called her son.  In addition, the officers knew the arrest warrant was for ‘a shooting’ and, therefore, defendant was potentially dangerous.  Under these circumstances, there was a compelling need for immediate action to apprehend defendant, and it was impracticable for the officers to obtain a search warrant.  Thus, their entry into the bedroom was objectively reasonable, and the items seized were in plain view.”

Here, the exigency to protect persons inside the home from being shot by a potentially armed individual excused the police from failing to consider the possible “coincidence” of the phone ring. According to one of the officers, upon hearing the phone ring at the time defendant’s mother dialed, he reasoned since people generally stay close to their cell phones, he would find defendant next to his.  As a result, the search into the bedroom was reasonable.

California Woman Pleads Guilty Over Michaels Retailer Cards Theft

Posted by Daphine Llosa.

The current legal issue relates to conspiracy and breach. A conspiracy is an agreement by two or more parties to commit a crime to do something unlawful or harmful. A breach is an act of breaking or failing to observe a law or agreement. On Tuesday, November 17, 2015, Crystal Banuelos pleaded guilty of a conspiracy to attain personal information and commit cards theft from Michaels Companies Incorporated’s customers. Michaels is an arts and crafts, custom framing, home décor and seasonal products store. Prior to this case, there was another prosecution where Eduard Arakelyan (age of 24) and Arman Vardanyan (age of 26) were charged for being involved in a breach. This breach was discovered in 2011 where devices were installed on point-of-sale terminals so they may obtain Michaels’ customers’ personal information as well as bank account numbers. Both individuals pleaded guilty three years ago for stealing from 952 debit cards; they were sentenced for five years of prison.

Crystal Banuelos, the 28 year old California woman, had participated in a conspiracy to acquire 94,000 credit and debit card numbers. It took Banuelos around four months to admit to her charges and plead guilty in the federal court in Camden, New Jersey. CNBC mentioned that the prosecutors found that the individuals involved in the conspiracy had replaced close to 90 of the point-of-sale terminals in 80 different Michaels stores in “19 states with counterfeit devices that were equipped with wireless technology.” They used these counterfeit devices to acquire customers’ personal identification number information as well as any additional information that they may have found useful for their theft. Crystal Banuelos, along with others, had managed to create an exact imitation of these debit cards using the stolen information they gathered when they applied the counterfeit devices. They were able to obtain and collect more than $420,000 by withdrawing from automated teller machines. Two of the defendants, Angel Angulo and Crystal Banuelos, had 179 of these imitated cards in New Jersey. Some of the banks that were affected include: Bank of America Corp, JPMorgan Chase & Co, Wells Fargo & Co, etc. It has been announced that Crystal Banuelo’s sentence is scheduled to be on February 23, 2016.

Daphne is a graduate accounting with a certification in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2016.