Posted by Patrick Osadebe. 

On September 17, 2014, a federal judge sentenced Timothy Cromer, a former Detroit public library official, to 10 years in prison for bribery and conspiracy to commit bribery. He was charged for accepting more than $1.4 million in bribes from contractors of the library.

Timothy Cromer, 46, was the chief administrative and technology officer for the Detroit library from 2006 to 2103. Cromer helped James Henley set up a company called “Core Consulting and Professional Services.” Cromer then made it possible for the company to win the bid to provide information technology in the library.

Cromer also collected kickbacks from another individual who was charged in the indictment. All of these crimes took place between 2008 and 2011. Hearn and Henley both plead guilty to the charges and are currently awaiting sentencing on October 28, 2014.

Patrick is a finance major at Montclair State University, Class of 2016.

The Federal Reserve Bank of New York has come under fire recently with the release of secret tapes supposedly of regulators planning to “go soft” on Goldman Sachs.  Carmen Segarra, a former employee who was assigned to Goldman, claims in a lawsuit that she was under pressure by her superiors to overlook certain findings she made concerning the company.  The Fed eventually fired her allegedly because she refused to comply and change the findings.

In the recordings, one supervisor tells Segarra that basically consumer laws do not apply to certain institutions.  Michael Lewis, best-selling author of “Flash Boys: A Wall Street Revolt,” said after listening to the tapes that, “The Ray Rice video for the financial sector has arrived.”

Segarra’s lawsuit was dismissed for failing to connect her firing with the alleged Goldman disclosures.  The suit is pending appeal.  Nevertheless, the tapes may prompt a Congressional investigation into the matter.  Sen. Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, stated, “When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy.”  She further stated, “Congress must hold oversight hearings on the disturbing issues raised by today’s whistleblower report when it returns in November.”

Under Article I, Section 8 of the United States Constitution, the Congress has the power to “declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water[.]”  The Founders wisely thought that the Legislature is in a better position than the President to carry out the will of the people.  Congressional debate can test the arguments for and against intervention in global problems.  Every two years members of the House are kept in check by the voters, who ought to dictate what American foreign policy should be.

James Madison, commonly referred to as “Father of the Constitution,” once said:

Of all the enemies to public liberty, war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other.  War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.  In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds are added to those of subduing the force of the people.  The same malignant aspect in republicanism may be traced in the inequality of fortunes and the opportunities of fraud growing out of a state of war, and in the degeneracy of manners and of morals engendered by both.  No nation could reserve its freedom in the midst of continual warfare.

Under the War Powers Resolution, the President can deploy U.S. forces anywhere outside the U.S. for 180 days, provided Congress is informed in writing within 48 hours.  The executive does not need Congress to declare war for the 180 days, however, that time period cannot be extended without congressional authorization.  The President has the authority to introduce American forces into hostilities only when there is:

(1) a declaration of war

(2) specific statutory authorization, or

(3) a national emergency created by attack upon the United States, its territories or possessions, or its armed forces.

The Supreme Court has never reviewed the War Powers Resolution to see if it passes constitutional muster.  Although Congress will say that it has “the power to make all laws necessary and proper for carrying into execution, not only its own powers but also all other powers vested by the Constitution in the Government of the United States, or in any department or officer . . . [,]” the Court, however, has ruled in other cases that one branch of government cannot give power away to another.

Posted by Giancarlo Barrera.

Goldman Sachs was infamously named “The Wolf of Wall Street.”   Goldman created, convinced, and sold mortgage investments that had been designed to fail in the first place.corruption at its finest.  It was corruption at its finest.  Goldman even went as far as betting against the same derivatives it was promoting and selling to their own clientele.  Goldman accepted that it misled investors the wrong way, but did not admit to any scheming or wrongdoing.

In July 2010, Goldman paid an enormous SEC fine of 550 milion dollars.  It was one fine after another.  Then in April 2012, Goldman paid a fine of 22 million dollars for allowing insider trading of non-public information to Goldman’s clients and traders since 2007.  On the link, the story goes into further detail of how much fraud and dishonesty was played under the table and behind the backs of its own clients, who the company was supposed to help invest their money in the first place.

Business is business.

Giancarlo is an economics and finance major at Montclair State University, Class of 2016.

The U.S. Attorney’s Office in Washington D.C. is the first federal office to set up a unit to identify anyone wrongfully convicted of a crime.  The Conviction Integrity Unit will review cases where defendants offer new evidence that was not available at the original trial, such as DNA evidence, to prove their innocence.  Ronald Machen, Jr., the U.S. Attorney of the Washington office said in a statement, “As prosecutors, our goal is not to win convictions, but to do justice.”  Machen further said, “This new unit will work to uncover historical injustices and to make sure that we are doing everything in our power to prevent such tragedies in the future.”

The Conviction Integrity Unit follows similar ones established in state offices.  The modus for the creation of a separate unit to review these cases arises from five convictions that were vacated by the court, including that of Donald Gates, who was convicted in 1982 of rape and murder based on hair evidence.  DNA testing made available in 2009 proved that he was innocent.

The office is working with defense lawyers and the Mid-Atlantic Innocence Project, a non-profit organization which fights wrongful convictions.  Over the last four-years, more than 2,000 files involving hair or fiber evidence have been reviewed by the FBI.

Posted by Arben Bajrami.

Sweatshops, or a workplace with unacceptable working conditions, have remained a problem up until recent years in business and in our economy.  Companies such as Nike and Adidas have workers in foreign countries sewing and producing equipment, apparel, and footwear for very little pay.  It is said that these sweatshop workers receive something called “living wage,” which is only five hundred dollars a month, or just enough money to survive.

Laborers that work in sweatshops are considered highly unethical.  Also, these items cost very little money to make but sell at outrageously high prices in retail stores.  For example, if it costs Nike four dollars and eighty cents to make a shirt, retail stores often mark up the product for eighteen dollars.

At least certain companies, such as Knights Apparel, are making a conscious effort to raise awareness to the horrors of sweatshops. Knights Apparel works closely with a program called Worker Rights Consortium.  They work “‘to combat sweatshops and protect the rights of workers who sew apparel and make other products sold in the United States.’”

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

For all those who died in the terrorists attacks upon our soil:

Eternal rest grant unto them, O Lord.  And let the perpetual light shine upon them.  May the souls of all the faithful departed, through the mercy of God, rest in peace.  Amen.

Latine:

Requiem aeternam dona eis, Domine.  Et lux perpetua luceat eis.  Fidelium animae, per misericordiam Dei, requiescant in pace.  Amen.

Posted by Arben Bajrami.

The United States’ government is divided into three branches – the legislative branch, the executive branch, and the judicial branch. The legislative branch is in charge of enacting the laws of the state and handling the money needed for our government to function. The executive branch is responsible for enforcing and implementing the laws and policies made by the legislative branch. Finally, the judicial branch is in charge of interpreting the constitution and handling the controversies that are brought before them.

Our democratic government cannot function with a complete separation of powers or an absolute lack of separation of powers. This is because the powers of the government are interrelated; they are too abstract to be completely separated from on another.

“The term ‘trias politica’ or ‘separation of powers’ was coined by Charles-Louis de Secondat . . . .” To properly promote liberty, these three powers must remain isolated and act independently. The purpose is to make sure there is no concentration of power and that checks and balances are executed properly.

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

The Delaware Supreme Court has recently handed a major blow to corporate directors and officers who believe the attorneys employed in their legal department necessarily have to keep everything under wraps.  The Indiana Electrical Workers Pension Trust Fund, a Walmart shareholder, filed suit against the directors and officers claiming they knew their employees may have been engaged in a sweeping bribery operation in Mexico.  But the company argued any communications made by its legal department is privileged and could not be disclosed for the purposes of the lawsuit.

The attorney-client privilege is a sacred one because it allows people to freely discuss their problems openly with their attorneys without fear that what they discuss can be used against them.  Courts, however, in extreme circumstances will allow a party to pierce the privilege and force an attorney to divulge these confidential communications.   Company officers have been abusing the privilege by using company attorneys to bounce-off ideas in order to concoct what may be tantamount to an illegal scheme and then shifting the responsibility to the legal department knowing that any communications have to be kept confidential.

Generally, the attorney-client privilege would have to apply in these situations, unless an employee is brave enough to be a whistle-blower.  But not everyone wants to step-up to the plate in these circumstances because, even though there are laws to protect them, whistleblowers fear the stigma that accompanies it.  Moreover, not all crimes are covered under the whistleblower laws, therefore, some nefarious conduct by corporations will go undetected.

Nevertheless, the Delaware Supreme Court articulated that the owners of the companies are really the shareholders; thus, the attorneys working in the legal department work for the shareholders. The court held the allegations made by plaintiffs Indiana Electrical Workers Pension Trust “‘implicate criminal conduct’” under the Foreign Corrupt Practices Act. The court further held that since the pension fund was a stockholder, the information “‘should be produced by Walmart pursuant to [an] exception to the attorney-client privilege.’”  As a result of the decision, the pension fund can now use the information to decide whether there was any wrongdoing.

Posted by Kimberly Culcay.

In the article, “What the PCAOB’s new related-party standard means for auditors,” Maria L. Murphy captures the new standard put in place by the Public Company Accounting Oversight Board (PCAOB). The new standard will require auditors to perform specific procedures that are intended to strengthen auditor performance in high-risk areas, such as significant unusual transactions and financial relationships, and transactions with executive officers. The reason behind the new standard is that in the areas of accounting mentioned above there was a lack of guidance on how to report or treat certain transactions.

The Auditing Standard (AS) No. 18 requires auditors to understand the relationships and transactions with related party transactions as if they were someone working in the company. The auditors must also understand and document the process of understanding the relationships and transactions of the company just as the internal controls of the company itself. The auditors not only have to record how they gained understanding of the relationships and transactions but the auditors must properly account for the transactions, perform procedures to test that the company’s related parties and transactions with those parties have been completely and accurately identified, accounted for, and disclosed. Before this standard, there was a vague and unstructured way of handling related party transactions. Related party transactions are a way that a company can commit fraud by transferring property to a related party thereby creating a conflict of interest. In the article, it also states that the AU Section 316, Consideration of Fraud in a Financial Statement Audit, was amended to require specific procedures to identify and evaluate significant unusual transactions. The main point of amending the standards is for the professional auditors to be able to identify procedures quickly if a situation of fraud exists.

I think amending the standards of accounting to include specific procedures to prevent fraud from happening rather than a professional figuring out what to do if fraud is already done is way more useful. I also think that with the incentive to have these procedures in place, it eliminates some of the gray area of accounting. The need for Forensic Accountants has increased ever since the recession in 2008, with all of the fraud that was done due to the lack of strict standards and procedures to be able to detect fraud early. I am currently a graduate student at Montclair State University; I have been striving to complete my combined program in Accounting BS/MS with a Certificate in Forensic Accounting. Personally, I find that in the emerging economy people have learned from the mistakes made in the past with the scandals, fraud and so on. I think it is important to be a Forensic Accountant in order to apply sophisticated set skills in other aspects of accounting and litigation. I think that if you already know how to be an accountant and with some background knowledge on Forensics, then it could be easier to detect some of the common problems that lead to fraud.

Kimberly is an accounting major with a certification in forensic accounting at Feliciano School of Business, Montclair State University.

Reference:  Murphy, Maria L. “What the PCAOB’s New Related-party Standard Means for Auditors.” Journal of Accountancy. 22 July 2014. Web. 20 Oct. 2015. .

Posted by Mario Damasceno.

In mid-February of 2015, federal prosecutors investigated United Airlines and its close relation with then chairman of the Port Authority of New York and New Jersey, David Samson. The investigation arose shortly after Samson’s resignation, resulting from emails released that showed aids to Governor Chris Christie had intentionally organized lane closures on the George Washington Bridge. This is particularly significant because during his time in office, Samson would spend his weekends in Aiken, SC, which was located 50 miles from the Columbia, South Carolina airport, however, United never initially offered that route from its New Jersey hub.

The New Jersey paper known as the Record reported, “Federal aviation records show that during the 19 months United offered the non-stop service, the 50-seat planes that flew the route were, on average, only about half full,” and “was reportedly money-losing,” (The Economist). This, in turn, lead to the route being named, “The Chairman’s Flight.” The route itself “left United Airlines’ Newark hub each Thursday night bound for Columbia, S.C. On Monday mornings, United Express flew back to Newark,” (Bloomberg Business). Furthermore, federal prosecutors argued that, not by coincidence, “United cancelled the flight on April 1st, 2014—just three days after Mr. Samson resigned from the Port Authority” (The Economist).

The entire situation is worth looking into, and in fact, the Port Authority along with United Airlines have been issued subpoenas examining the communication between David Samson and the airline. Mary Schiavo, a former federal prosecutor and Department of Transportation inspector general stated, “If United realized they were offering this flight to curry favor with a public official, then United’s in the soup—it’s a bribe,” (Bloomberg).

Mario is a management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Bachman, Justin. “Did United Put a Whole Route in the Sky for One Very Important Passenger?” Bloomberg Business. N.p., 25 Feb. 2015. Web. 27 Oct. 2015. .

Gulliver. “The Chairman’s Flight.” The Economist. N.p., 10 Feb. 2015. Web. 27 Oct. 2015. .

“United Airlines: The Chairman’s Flight.” Reinventing the Company 12 Sept. 2015: n. pag. Web. 27 Oct. 2015. .

Posted by Kimberly Culcay.

In the article, “What Types of Legal Cases Require a Forensic Accountant,” Henry Rinder describes what a forensic accountant really is and the need for such a professional. The article discusses that there is a difference between a traditional accountant and a forensic accountant. A forensic accountant combines accounting knowledge and legal expertise to help their clients, from individuals to small and large businesses. The forensic accountant is a person that exhibits a curiosity that allows him or her to figure out if a company is hiding something. Some of the legal cases that require forensic accounting are criminal investigations, fraud, shareholder disputes, and divorce. For example, it is common in divorce cases for one party to hide assets to prevent splitting up everything they have.

In criminal investigations forensic accountants help find key elements to help law enforcement officers investigate crimes. Forensic accountants have some duties when being involved in criminal investigations, such as analyzing personal and business documents, tracing and recovering hidden assets, and tracking and reconstructing transactions and wire transfers. From the information provided above, it is easy to see that the need for forensic accountants in the field is growing rapidly. Fraud is something a traditional accountant may stumble upon in their career, but a forensic accountant is a person whose job is to detect it. As stated in the article, some of the duties forensic accountants have when helping with fraud investigations are detecting employee theft and fraud, investigating embezzlement, looking for inconsistencies in financial filings, assessing financial losses, and assisting with insurance claims and restitution orders or agreements.

Fraud falls under the investigative side of a forensic accounting because in a sense the accountant is acting as a detective. The other side of a forensic accountant is they can testify as an expert in court. Personally, I never expected for a forensic accountant to be involved in divorce cases, however if makes sense that a forensic accountant will usually assist in dividing assets and other valuables owned by one or both spouses during the marriage. Asset tracing is a key way for a forensic accountant to detect if someone has tried to conceal assets. Amongst others, some of the duties forensic accountants have helping with divorce cases are evaluating a spouse’s personal and business statements, tracing assets, debts, income, determining the value of concealed assets, ensuring equitable distribution and helping with divorce negotiations. Overall, the forensic accountant is there to help a spouse so that he or she has an opportunity for a fair and equitable distribution of the assets.

I think that with the evidence presented in this article it is evident that there is a need for forensic accountants in legal cases when it relates to finances. Forensic accounting is interesting to me because I always wanted to be a detective, but I knew that the job market was not going to consistent.  Therefore, it is exciting to find out that forensic accountants can serve the public in this way.

Kimberly is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University.

Reference: Rinder, Henry. “What Types of Legal Cases Require a Forensic Accountant.” Smolin Lupin. 7 Oct. 2014. Web. 21 Oct. 2015. .

Posted by Bridget Uribe.

During the month of March of 2014, the Securities and Exchange Commission (SEC) charged three executives: Chairman Steven Davis, Executive Director Stephen DiCarmine, and Chief Financial Officer Joel Sanders of Dewey & LeBoeuf, the international law firm, with facilitating a $150 million fraudulent bond offerings. The SEC alleged that the three charged turned to accounting fraud when the firm needed money during the economic recession and steep costs from a recent merger.  They were afraid that their declining revenues might cause the bank lenders to cut off access to the firm’s credit lines. Thus, leading Dewey & LeBoeuf’s financial professionals came up with ways to artificially inflate income and distort financial performance.

The fraud didn’t stop there. Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on fake financial numbers. Dewey & LeBoeuf since have officially went out of business, and the Manhattan District Attorney’s Office charged criminal charges against Davis, DiCarmine, and Sanders. According to the SEC’s complaint, the roots of the fraud dated back to late 2008 when senior financial officers began to come up with fake revenues by manipulating various entries in Dewey & LeBoeuf’s internal accounting system. The firm’s profitability was inflated by approximately $36 million (15%) at the end of the 2008 financial results. “The improper accounting also reversed millions of dollars of uncollectible disbursements, mischaracterized millions of dollars of credit card debt owed by the firm as bogus disbursements owed by clients, and inaccurately accounted for significant lease obligations held by the firm”(SEC Press Release).

Fast forward to the present, a New York judge declared a mistrial Monday bringing an end to the trial for the biggest law firm failure in U.S. history! The decision comes on the 22nd day of deliberations by a 12-member jury, which acquitted the ex-law firm leaders on several dozen counts of falsifying business records. The jury couldn’t reach a verdict on grand larceny and remained deadlocked on more than 90 counts charges facing Steven Davis, Joel Sanders, and Stephen DiCarmine. The three could have faced up to 25 years in prison if convicted of grand larceny, the most serious of the roughly 50 counts each brought against them. The defendants also faced related civil charges brought by the Securities and Exchange Commission and a private lawsuit brought by former Dewey investors who say, “They were duped into buying debt in a 2010 bond offering.” Both of those proceedings had been on hold pending the outcome of the criminal trial. Some highlights of the trial are: prosecutors had likened Mr. Davis to a drug kingpin, overseeing a criminal enterprise. Also, the defense side thought prosecutors didn’t present enough evidence to prove their case, thus choosing not to call any witnesses. Instead, the lawyers relied on the cross-examination of government witnesses to try to distance their clients from the actions taking place in the accounting department. At times, such questioning also prompted praise for the defendants from those on the stand. Where does this lead us now? How the Department of Justice completely lost the case or can a retrial give a favorable outcome in the future? It’s too early to tell, but what I do know is that the long deliberations and mistrial will raise questions about whether the case was too complex.

Bridget is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.

Posted by Bridget Uribe.

During the summer of 2015, one of the world’s most known Japanese companies broke headlines as a top accounting scandal. Investigators found the company was overstating operating profits by at least 151.8 billion yen ($1.2 billion in U.S. dollars) between the years of 2008 and 2014. Their accounting problems primarily began from company employees understating costs on long-term projects, according to an investigation by a former top prosecutor in Japan.

The investigation also cited issues with improperly valued inventory also as the cause for the enormous overstatement of operating profits. Details of the scandal emerged when an independent investigative panel released a report describing, “Toshiba CEOs put intense pressure on subordinates to meet sales targets after the 2008 global recession.” The investigative report revealed that the CEOs did not directly instruct anyone to cook the books but rather placed immense pressure on subordinates and waited for the corporate culture to turn out the results they wanted. The investigative panel also pointed out that the weak corporate governance and a poorly functioning system of internal controls at every level of the Toshiba conglomerate didn’t mitigate or stop the inappropriate behaviors. Internal controls in the finance division, the corporate auditing division, the risk management division, and in the securities disclosure committee were not functioning properly. The accounting misconduct began under CEO Atsutoshi Nishida in 2008 due to the global financial crisis that immensely lowered Toshiba’s profitability. It continued unabated under the next CEO, Norio Sasaki, and eventually ended in scandal under Tanaka. Toshiba CEO Hisao Tanaka announced his resignation, in light of the scandal.

It has been four months since the scandal broke headlines and much new information has come to light. Since then, Toshiba has amended and restated those losses as to being more than $1.9 billion. As a consequence of the scandal, the Tokyo Stock Exchange has already designated Toshiba’s shares as “securities on alert” and fined the company $760,000 for “undermining the confidence of shareholders and investors.” In addition, Toshiba also faces the possibility of lawsuits from angry shareholders in Japan who have seen the company’s share price tumble.

Such action is already being taken in the United States, where an investor has filed a class-action lawsuit against Toshiba in June. The Rosen Law Firm representing the plaintiff has called for other Toshiba shareholders to join the suit. Despite the consequences Toshiba is facing, the one burning question has yet to be solved. Who did this? How did all this came about? How could their fraud be maintained for so long, and who should take direct responsibility?

Bridget is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.

Online fraud is alive and well. About 4,550 people have been scammed by foreigners posing as IRS personnel and telling them they are about to be sued for unpaid taxes. The Treasury Inspector General, J. Russell George indicated they are working on bringing to justice the perpetrators of “‘the largest of its kind’” scam, yet taxpayers are urged to remain on “‘high alert.’”

According to George, a scammer will call an unsuspecting individual, claiming to be from the IRS. The “scammer tells the person that they have unpaid taxes and threatens him or her with a criminal violation, immediate arrest, deportation or loss of a business or driver’s license unless they settle the fees via a debit card or a wire transfer.” People have a hard time telling whether the call is legitimate because the scammers either use a robocall machine that leaves a message stating it is the IRS and they are being sued, or callers giving the last four digits of the victim’s social security number, or fake emails appearing to come from the IRS.

One of the ringleaders officials caught, Sahil Patel, is serving a 14 year sentence in federal prison for organizing call centers based in India, as part of the U.S. side of the scam.

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.

In class, we discuss the Fourth Amendment as it pertains to a variety of searches and seizures by government actors. Even though the New Jersey analog is practically identical to the federal Fourth Amendment, the New Jersey Supreme Court has interpreted more protections for privacy than the United States Supreme Court has under the federal amendment.

In a recent case, the New Jersey Supreme Court overturned a prior 2009 decision requiring police officers conducting an automobile search to have probable cause and exigent circumstances, such as time constraints and safety concerns, and obtain a warrant from a judge prior to the search. The court held  officers now merely have to have probable cause to conduct the search–a retreat to the federal standard.

From time to time, courts will break with stare decisis when circumstances permit. The decision in this case, however, drew criticism from two of the Justices and the defense bar. Justice LaVecchia wrote in her dissent, “‘One can only wonder why the State and the majority of this Court find it appropriate to turn from the progressive approach historically taken in this State to privacy and constitutional rights of motorists.’”

But the court held the old standard was “unworkable.” Police were required to get a telephonic warrant in these circumstances; yet, many of them resorted to merely getting the owner of the vehicle to sign a “consent form” for the search instead of calling a judge.

Justice Barry T. Albin, writing for the majority held the standard applied in the 2009 decision “does not provide greater liberty or security to New Jersey’s citizens and has placed on law enforcement unrealistic and impracticable burdens.” The court found that the 2009 standard had the “unintended consequence” of causing an “‘exponential increase in police-induced consent automobile searches,’” suggesting officers may be pressuring drivers to volunteer for searches instead of taking the time to obtain a warrant.

“‘The heavy reliance on consent searches is of great concern given the historical abuses associated with such searches and the potential for future abuses,’” Justice Albin wrote.

IKEA, the popular low-cost furniture manufacturer, recalled 27 million “Malm” dressers.   Three children were recently killed as a result of the defect in design.

The company was on notice of the tendency of the furniture to be top-heavy, but did nothing to address the issue until the death of a 22-month-old child earlier this year.  In addition to the recall, the company offered to send crews to people’s homes to tether the dresser to the wall.

“On average, one child dies every two weeks from falling TVs or furniture. At least six deaths have been connected to Ikea’s Malm dresser.”

Posted by Mike Bocchino.

Tom Brady has been accused of knowing about his team deflating footballs in the 2015 AFC championship game against the Indianapolis Colts. The footballs’ air pressure had been significantly reduced to a point where other players could tell the difference. The NFL commissioner, Roger Goodell, investigated and suspended Brady for knowing about the tampering of the footballs. Brady fought the suspension in federal district court and his lawyers persuaded the judge. He ruled that Brady did not need to serve his suspension because it was an unfair punishment for just being accused of knowing about the deflation.

The commissioner then took the case to the court of appeals where they did not look at the facts of whether or not Brady deflated the ball, but rather whether or not Goodell was able to cast such a punishment on a player. They looked solely at whether Goodell, as arbitrator, acted in the spirit of the collective bargaining agreement. Judges Barrington Daniels Parker Jr. and Denny Chin wrote in their opinion, “We hold that the commissioner properly exercised this broad discretion under the collective bargaining agreement and that his procedural rulings were properly grounded in that agreement and did not deprive Brady of fundamental fairness. Accordingly, we reverse the judgment of the district court and remand with instructions to confirm the award.”

Basically they agree that the commissioner acted on the powers which he, the league, and the players union had all agreed upon in 2011. So those of you out there saying that Goodell has too much power, the players agreed to what he can and cannot do. Plus, the tampering of footballs is cheating and this is not the first time that Brady had been caught cheating, never mind countless times that he did not get caught. It was only a matter of time.

But overall, the court of appeals did a great job looking at whether or not Roger Goodell stepped over the line or acted within his range of duties and whether or not it was the best interest of the league, which it was.

Mike is business administration major with a concentration in finance at the Feliciano School of Business, Montclair State University, Class of 2018.

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.

The Second Circuit upheld Tom Brady’s suspension for the first four games of the new season and overturned the district court’s ruling.  The court ruled the arbitrator’s award was valid and should not be disturbed.

Judge Parker, writing for the majority, stated, “Our role is not to determine for ourselves whether Brady participated in a scheme to deflate footballs or whether the suspension imposed by the Commissioner should have been for three games or five games or none at all. Nor is it our role to second-guess the arbitrator’s procedural rulings.”  He continued, “Our obligation is limited to determining whether the arbitration proceedings and award met the minimum legal standards established by the Labor Management Relations Act.”

Courts are loathe to upend an arbitrator’s decision, unless for example, there was some type of fraud or corruption on the part of the arbitrator. The parties agree by contract to arbitration in lieu of bringing their case to court.

Brady can appeal to the entire Second Circuit (en banc) and to the United States Supreme Court, however, his chances either take the case are slim.

The opinion can be found here: http://www.ca2.uscourts.gov/decisions/isysquery/98c62698-d29a-4b91-98a0-5a5af0c19e88/1/doc/15-2801_complete_opn.pdf

Several states have statutes that make it a crime to refuse to take a breathalyzer if suspected of driving under the influence. Some states, like New Jersey, make refusal a civil offense. The High Court is reviewing statutes in North Dakota and Minnesota that make it a crime for people suspected of drunken driving to refuse to take alcohol tests. Drivers prosecuted under those laws claim they violate the Fourth Amendment’s prohibition on unreasonable searches and seizures.

The justices questioned lawyers representing the states as to why police cannot be required to get a telephonic warrant every time they want a driver to take an alcohol test. “Justice Stephen Breyer pointed to statistics showing that it takes an average of only five minutes to get a warrant over the phone in Wyoming and 15 minutes to get one in Montana.”  However, this may not be correct.

“Kathryn Keena, a county prosecutor representing Minnesota, suggested some rural areas may have only one judge on call, making it too burdensome to seek a warrant every time. She said even if a warrant were procured, a driver could still refuse to take the test and face lesser charges for obstruction of a warrant than for violating drunken driving test laws.”

Telephonic warrants have also been the rule in New Jersey since 2009. Recently, the New Jersey Supreme Court reversed itself, reverting back to the federal standard requiring police to obtain a warrant after establishing they have probable cause. Under the more stringent standard of using telephonic warrants, police were complaining it took to long to reach a judge. Police also used consent forms they carried, causing an outcry from the defense bar that such a practice may lead to further abuses. Justice Anthony Kennedy said the states are asking for “an extraordinary exception” to the warrant rule by making it a crime for drivers to assert their constitutional rights.

The problem for the states is that without the threat of a refusal penalty, the only proof available at trial as to whether someone was intoxicated while driving is the observations made by police. Observations, however, cannot prove blood alcohol level.

In a Fortune interview, Republican front-runner, Donald Trump, indicated he may replace Fed chief, Janet Yellen, although it appears he likes it when interest rates are low. Speaking from a business standpoint, he would be correct. On the other hand, he acknowledges that low rates are not good for savings accounts, “The problem with low interest rates is that it’s unfair that people who’ve saved every penny, paid off mortgages, and everything they were supposed to do and they were going to retire with their beautiful nest egg and now they’re getting one-eighth of 1%,” says Trump. “I think that’s unfair to those people.”

Trump is in favor of taking power away from the Fed and have more Congressional oversight.

The President signed into law a bill passed by Congress banning U.S. imports of “fish caught by slaves in Southeast Asia, gold mined by children in Africa, and garments sewn by abused women in Bangladesh.” The law closes a loophole in an 85-year-old tariff law which allowed these products to be sold.

Due to high demand of certain products, the previous law allowed these goods to be sold in the U.S. regardless if they were produced by slave labor. Sen. Sherrod Brown has pressed U.S. Customs to make sure the law is enforced.  He said, “It’s embarrassing that for 85 years, the United States let products made with forced labor into this country, and closing this loophole gives the U.S. an important tool to fight global slavery.”

A district court judge has ordered Apple to unlock a cell phone used by one of the shooters in the California massacre. Apple is fighting the order, claiming that doing so could make it easier to for anyone to hack into phones.

Apple has secret keys that can open up the software that it will not give to the FBI. The FBI also wants Apple to create a program that will permit it to hack into phones at anytime. The problem lies with a toggle in “Settings” that will make the phone delete all information on it if someone fails to put in the right passcode more than 10 times. This would make it impossible for the FBI to use a program that can guess random codes.

The case has Fourth Amendment implications for various reasons, including conscripting a private entity to become a government agent.

GM will recall 200,000 Saab and Saturn cars replace Takata airbags. The airbags have been know to deploy with too much force, causing metal shrapnel to hit the driver and passengers. 10 people have died and 139 have been hurt, as a result.

A great legal mind and a humble servant of God . . . 

Eternal rest grant unto him, O Lord. And let the perpetual light shine upon him.

And may the souls of all the faithful departed, through the mercy of God, rest in peace. Amen.

Fidelium animae, per misericordiam Dei, requiescant in pace. Amen.

Business law students study the corporate entity and learn from the beginning that since corporations are legal persons they can be charged with crimes.  Corporations cannot be imprisoned, because they have no physical body, but they certainly can face monetary penalties. Such was the recent fate of Credit Suisse.

Credit Suisse pled guilty to one count of “intentionally and knowingly” helping many U.S. clients prepare “false” tax returns.  For decades, Credit Suisse bankers fabricated “sham entities” to help hide the identities of U.S. clients who did not claim the Swiss accounts on their tax returns. They also failed to maintain records related to those accounts, destroyed documents sought by the U.S. government, and helped U.S. clients draw money from those accounts in ways that would not raise a red flag to the IRS. Out of the $2.6 billion, $1.8 went to the Treasury Department, $100 million to the Federal Reserve, and $715 million to the New York State Department of Financial Service.

The monetary penalty is the only punishment levied on the bank, as government officials feared anything further, such as ceasing operations, would have had a detrimental effect on the global economy. Moreover, top bank officials who were involved in the scheme will keep their jobs, even though there were calls for them to resign by their own statesmen.

Reportedly, the Department of Justice is looking to bringing charges against France-based BNP Paribas for similar offenses. But without some officer or director accountability, there will be no deterrence.

The Securities and Exchange Commission charged three software company founders with insider trading and forced them to disgorge $5.8 million in illegal profits, penalties and interest.  Insider trading occurs when people in high levels of management trade company securities based on non-public information.

Lawson Software’s co-chairman, Herbert Richard Lawson, tipped his brother and a family friend (both retired from the company in 2001) about the probable sale of the company to Infor Global Solutions, a privately held software provider.  While negotiations were occurring, the media learned of a possible merger.  Lawson Software’s stock price began to climb based on analyst reports of a possible bidding war with more than one company considering acquiring Lawson Software.  The reports were predicated on an article indicating that Lawson Software conducted a “market check” through its financial advisor to see if there were any other companies interested in a merger.

But Infor Global was the only company interested in buying, as the market check produced “little-to-no interest.”  Lawson Software notified the public that Info Global offered to pay $11.25 per share, however, the media was still reporting incorrectly that other companies were interested in acquiring the company and that the merger would likely be for $15-16 per share.  Those companies listed in the media reports were actually the same companies that declined purchasing Lawson Software in the market check investigation.

The SEC charged defendants both knew the reports were false and Infor Global would not increase its offer any more than $11.25.  But in face of that knowledge, Lawson, his brother and his friend sold shares of the company for approximately $1 over Infor Global’s price, pocketing millions.  Defendants agreed to disgorge the profits and “to the entry of final judgments enjoining them from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.”

An associate director in the SEC’s Division of Enforcement stated, “Richard Lawson conveyed material information that was contrary to what was being publicly reported, and his brother and friend made a windfall when they subsequently sold their company shares at inflated prices.”  He further stated, “When news surfaces about the possibility of a merger and details of the media reports are incorrect, it is illegal for insiders who know the true facts to trade and profit.”

One of the causes of action a plaintiff can bring in a product’s liability lawsuit is a defective design claim. General Motors is facing multiple lawsuits over faulty ignition switches installed in the following vehicles: Chevy Cobalt (2005-2010) and HHR (2006-2011); Pontiac G5 (2007-2010) and Solstice (2006-2010); Saturn Ion (2003-2007) and Sky (2007-2010). More than 2.6 million have been recalled.

A Georgia couple who settled a lawsuit with GM for their daughter’s death is suing again on the grounds that GM’s lead design engineer lied when he testified he had no knowledge of any design “changes” to the switches. Their daughter was killed when her 2005 Cobalt slipped into accessory mode, cutting off the engine and causing her to collide with another vehicle. Her family settled based on this information.

But in recent disclosures to the National Highway Traffic Safety Administration and Congress that testimony appears to be false. The company apparently knew about the problem for years. Now, the family has filed another lawsuit claiming they would not have settled if they had known that evidence was concealed. GM denies the accusation.Settlements are contractual, and therefore, considered final once the parties agree to the terms.  Like all contracts, there are certain situations where a settlement agreement would be deemed void.  In this case, plaintiffs would have to convince a judge that they were somehow misled or defrauded by what GM did or said in order for the settlement to be void and the case to proceed.

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.

Posted by Ola Mohammed Alghasham.

The world encounters cases where frauds are committed by white collar criminals. Executives whom fight against fraud are beneficial for the company. Although the board and management make strong efforts in composing fraud preventing policies, there are several behavioral, environmental, and fraud assessment elements which are ignored during the composition of such policies and their absence provides shelter to the fraudsters. White collar criminals often attain confidence from their role in the organization. This confidence gets transformed into arrogance which prohibits the criminal from applying organizational policies and rules on himself, as an employee of the company.

There is no doubt that the top management always looks for the creative and clever individuals as employees. They forget, however, this creativity and cleverness can be used against the company instead of in its favor. Employees with these traits can cunningly commit frauds by practicing unnoticeable unethical behavior. Companies should execute proper controls with the recruitment of talented people. The tone of top management can either promote or discourage the ethical behavior because it is supposed to set an example for the rest of the organization. The whistle-blowing attitude is shaped by the organizational culture. Moreover, an illogical increase in pay, without any improvement in the performance, allows the fraudsters to continue their unethical activities.

Board members and executives should identify the fraud tactics and fraud hidden strategies of these individuals to compose a fool-proof risk assessment process. Major warnings can appear from the financial data (e.g. unusual, frequent or large transactions), documents with missing or incomplete information or suspicious signatures, poor controls (e.g. lack of monitoring, poor reconciliation of accounts, lack of position to manage conflicts of interest), behavior (e.g. unstable behaviors, mismatched lifestyle with income, high expectations family, and job dissatisfaction). Management must implement strong controls in the day-to-day business operations to avoid fraudulent activities. The board must adopt a proactive behavior in the elimination or early detection of fraud by establishing an audit committee with full authority, monitoring transactions, promoting and maintaining an ethical environment, and composing a procedure for the reporting of fraudulent activities. The board must compose and enforce certain strategies to cope up with the frauds. The executives must develop an ethical environment for keeping the employees loyal with the company and directing the human talent towards the betterment of the company.

Ola is an graduate accounting major with a certification in forensic accounting at the Feliciano School of Business, Montclair State University.

Source:

Marks, J., (2012), A Matter of Ethics: Understanding the Mind of a White-Collar Criminal, Financial Executive, pp. 31-34. Retrieved from www.financial executives.org.

Posted by Dylan Beland.

One of the most talked about issues in business law news is the Wells Fargo scandal. The story behind this scandal is that the Department of Justice and many attorneys are investigating the possibility that Wells Fargo has millions of fake accounts opened at their banks. The result of the investigation was Wells Fargo had to pay a 185 million dollar fine.  Wells Fargo had to let go over 5,300 workers for fraudulent sales tactics.

From this, the concern and worry in the banking industry instigated a lot of questions about the fake accounts being opened. Employees were pushed to reach near-impossible sales targets, which in turn led to the creation of fake accounts. Mike Mayo, a banking analysist at CSLA, said the investigation “reflects pent-up frustration by the public over the lack of accountability at big banks post financial crisis.”

The people that could see some blame for this are the investors of the banks. One of Wells Fargo’s biggest investors has not spoken, since the situation has arisen. Warren Buffett is Wells Fargo’s biggest investor and he owns Warren Buffett’s Berkshire Hathaway.

On September 20, Wells Fargo is meeting with the Senate and is having John Stumpf, CEO, represent and testify at the hearing. He apologized for the fake accounts but also said he does not plan on resigning from being CEO of Wells Fargo.

Dylan is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Steven Otto.

The San Francisco rating company, Yelp, is not found liable for negative reviews posted on its site. This is because it relies on ratings posted by users, not the company itself. A federal appeals court on Monday, September 12, dismissed a libel lawsuit filed against Yelp by Douglas Kimzey, the owner of a Washington state locksmith company. The 9^th U.S. Circuit Court of Appeals ruled that, under federal law, Yelp is not liable for content it gets from its users. The features of Yelp are based on users’ input and it is not content created by the company, whose site helps guide people to anything from restaurants to plumbers and much more.

The court said that Douglas Kimzey’s business received a negative review on Yelp in 2011. Kimzey claimed that the negative review was actually meant for another business, and claimed that Yelp transferred the review to his business on purpose in an attempt to extort him. He claims that Yelp was trying to force him into paying to advertise with Yelp. The appeals court said that his allegations were not substantial and that there were no facts at all supporting Yelp fabricating content under a third party’s identity. Circuit Judge M. Margaret McKeown, writing for a unanimous three-judge panel decision, said “We fail to see how Yelp’s rating system, which is based on rating inputs from third parties and which reduces this information into a single, aggregate metric, is anything other than user-generated data.”

The appeals court previously ruled under the 1996 Communications Decency Act that “websites that provide what are known as ‘neutral tools’ to post material online cannot be held liable for libelous material posted by third parties.” Kimzey’s claim that Yelp should be held liable for distributing reviews to search engines was dismissed by this act. The appeals court stated that distributing the content does not make Yelp the creator or developer of the content.

Aaron Schur, Yelp’s senior director of litigation, said the appeals court “rightly confirmed Yelp’s ability to provide a forum for millions of consumers to share their experiences with local businesses.” Kimzey said he lost 95% of his business after getting one star on Yelp and said, “If you have a one-star rating, people won’t go near it (the business). They don’t care if you’ve been in business for one week or 25 years.” Obviously upset over what had occurred to him and the ruling, Kimzey, serving as his own attorney, plans to appeal to a larger court panel.

Steven is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Abigail Hofmann.

Francisco Garcia of the Sacramento Kings was lifting weights on a Ledraplastic exercise ball on October 9^th, 2009. The 195 pound player was lifting two 80 pound weights while on the ball when it suddenly burst beneath him. This supposed “burst resistant” ball advertised its ability to withstand weight up to 600 pounds. In the fall, Garcia suffered a fracture to his forearm, causing ineligibility for upcoming games. This injury came shortly after signing a five year, $30 million contract. Because of this, the Sacramento Kings wanted “to recoup the more than $4 million in salary, medical expenses and other costs it incurred after Garcia’s injury, as well as prejudgment interest.” (Bricketto)

Ledraplastic initially refused to reimburse the Kings or Garcia for the financial loss or issue a statement recalling the products or forewarning about potential dangers. In the Kings’ product liability case, they were able to prove that the ball burst at weights of mere 400 pounds, rather than the advertised 600 pounds, and that “for a very small expense, the ball could have been made thicker and would have provided the burst resistant capacity as represented.” (Bricketto) Eventually, a settlement was done in private, but the Kings “sought reimbursement for the salary they paid Garcia,” and “Garcia had also sought damages for pain and suffering as well as loss in future earning capacity.” (Lu)

Ultimately, this product liability case was pretty clear on who was at fault: Ledraplastic claimed to have a ball that withstood weights up to 600 pounds, yet failed to hold even 400 pounds. This caused an injury resulting in millions of dollars of damages, and up until the settlement, Ledraplastic refused to forewarn others about this potential danger. Although the settlement was private, we do know that Ledraplastic is now required to warn users of the dangers of using the ball while lifting free weights, hopefully preventing many similar injuries.

Abigail is a management, marketing, and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Works Cited:

Bricketto, Martin. “NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360.” NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360. N.p., n.d. Web. 08 Sept. 2016.

Lu, Andrew November 1, 2012 5:54 AM. “NBA Star Francisco Garcia Settles Exercise Ball Lawsuit.” Injured. N.p., n.d. Web. 07 Sept. 2016.

Posted by Ali Paladino.

Recently, on September 1, 2016, the electric car maker Tesla Motors was called out for attempting to sell their vehicles directly to their customers in Missouri. The judge ruled Tesla’s efforts to rule out the middleman, car dealerships, violated state law.  The Missouri Revenue Department “gave the California-based manufacturer a license for a University City dealership in 2013 and a franchise license for a Kansas City dealership in 2014.” Both of these licenses allowed Tesla motors to sell their vehicles directly to their customers, disregarding any use of dealerships.

The court ruled this was not suitable, and Missouri Automobile Dealers Association agreed. The Association sued the State claiming that “it had given Tesla special privileges,” in their attempts to disregard using franchised dealerships to sell their vehicles. The court ruled that Tesla’s action was not technically unconstitutional, but held the licensing was not allowed. Tesla argued the ruling against them was going to damage the company and suppress their ability to compete with other motor vehicle companies. The company also argued the order was an “attempt” to “limit consumer choice in Missouri.” Yet, Tesla appears to be determined to try and continue to sell to their customers directly in the hopes that this will improve their bottom-line. Doug Smith, head of the Dealers Association, however, does not agree with Tesla’s actions and believes that it is not fair to other manufacturers. He believes all manufacturers should be “treated the same in Missouri.”

I have to agree with Doug Smith. I do not think Tesla should have the right to sell directly to their customers and completely bypassing dealerships, only because it puts the company on a different playing field than other motor vehicle companies. I do not believe that is fair.

Tesla has looked at other ways to get around laws in other states in order to improve their sales; however, I do not agree with this either. In this situation, the law stands blurry and unclear and it is intriguing to see how far Tesla will go in attempts to get around the law.

Ali is a finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Los Angeles will pay 24 million dollars to two men who spent decades in prison for crimes they did not commit. In one case, lawyers and a team of students from Loyola Law School challenged a key witness’s testimony. In 1979, Kash Delano Register was charged with the armed robbery and murder of Jack Sasson, 78, after eyewitness testimony placed him at the scene at the time of the shooting. The witness told police she heard gunshots and she saw Register fleeing the scene. The witness selected Register out of a photo lineup, but her sisters told police that her story was untrue. No murder weapon was recovered and no fingerprints were found. Based solely on this witness’s testimony, a jury found Register guilty and he spent 34 years in prison.

The witness’s sister testified she tried to tell a detective that her sister had lied, but in response, the investigator allegedly put a finger to his lips indicating she should keep quiet about it. Her other sister told the police that she was lying, but even her pleas were ignored. Register’s attorneys claimed that the witness selected him under the threat of being prosecuted for credit card forgery and a recent theft if she failed to choose someone out of the lineup.

In the other case, Bruce Lisker was accused of murdering his mother. “At the time of the murder, Lisker, who had a reputation for fighting with his mother and a history of drug abuse, told police he saw her lying in the foyer and broke into the home to help her. They did not believe him.” During a hearing challenging the conviction, lawyers undermined or disproved key elements of the prosecution’s case, including that a bloody shoe print that could not have been made by Lisker’s shoes. His attorneys claimed “that the lead detective ignored evidence that Lisker’s friend may have been a possible suspect.”

In every arrest and criminal prosecution, someone’s liberty is at stake, and these cases illustrate the importance that prosecutors and police get it right. Money can always be replaced. But no one can ever get back all those years lost in prison, as a result of being falsely accused.

Snow shoveling always has been a means for young people to learn how to run a business. They learn how to advertise, interact with customers, work for a competitive wage, and learn something about service to the community. All businesses are at the service of others; and, snow shoveling, like delivering newspapers, or running a lemonade stand, give young people a way of learning responsibility.

Governor Christie just signed into law (before a major snowstorm) making it legal for residents to offer snow shoveling services without first applying for a permit. Last year, Bound Brook, New Jersey police stopped two entrepreneurial teens for going door-to-door and offering to shovel snow for a small fee. The police told the boys they were not allowed to solicit businesses without a permit. In Bound Brook, the license costs $450. The case made national headlines.

Republican State Sen. Mike Doherty sponsored the “‘right-to-shovel’” bill, stating it “was incredible that some towns wanted teens to pay expensive licensing fees just to clear snow off driveways.”

“The bill removes only licensing requirements for snow shoveling services, and only applies to solicitations made within 24 hours before a predicted snow storm. Towns with laws prohibiting door-to-door solicitation will be able to enforce those laws in all other circumstances.”

The defendant in the Chris Kyle murder case argued he was insane at the time of the killing. There are various forms of the defense, but in essence it is the defendant’s inability to know that his actions are right or wrong, or that a mental disease somehow impaired his free will to act.

Normally, the burden is upon the defendant through his counsel to show that he was insane at the time of the murder. But in some states such as Colorado, the burden falls upon the prosecution to show that the defendant was sane at the time of the murder.

Posted by Fadi Huzien.

This article “Injury on Weight Bench Results in Lawsuit But Ruling for Club,” discusses a lawsuit, which was filed by a fitness facility member at the gym center where he routinely exercised. The plaintiff, La Fata, filed a lawsuit towards the center, LA Fitness International, because he claimed that his injury was due negligence by the defendant, LA Fitness International. As stated in the article, “the member contended that the facility was negligent and responsible for what the member claimed was a willful injury.” This quotation alludes to La Fata’s perspective that LA Fitness International was responsible for his injury and believed that he was morally and ethically entitled to monetary compensation in this civil case in order to make the defendant compensate him for what he contended was significant injustice in which he was victimized.

Contrary to La Fata’s assertions, there was significant evidence omitted from what he claimed was a vindictive, immoral, and an unjust situation in which he was harmed and expecting compensation for the wrongdoing. This evidence significantly neutralized his claims for wrongdoing and negligence by the defendant LA Fitness International. The defense completely destroyed his argument in the statement, “At the time the plaintiff joined the defendant’s facility he signed a double-sided membership agreement which contained a release/waiver of liability. The release contained the usual language including a provision that the facility was relieved from any liability for injuries suffered “in, upon, or about LA Fitness premises or arising at LA Fitness facilities, services or equipment.” A bold face typed provision of the release indicated this member had “read and understood the entire agreement.” This quote indicates that the plaintiff knowingly signed a waiver for liability in the event of getting injured on the premises of LA Fitness, and most importantly, signed the contract that he had read and agreed regarding the rules and regulations. Therefore, the lawsuit was dismissed on summary judgment because La Fata knowingly signed this contract, which shields LA Fitness from liability. The clause defends the corporation from lawsuits such as these that could result in a significant financial award for damages.

Conclusively, the judge granted summary judgment in favor of the defendant, LA Fitness International. Perceiving the deciding factors in this case, the judge placed significant importance upon the evidentiary support and the notion (as was taught in class) that it is not necessarily about who is right or wrong, but what one can prove. Within the domain and the rules of the law, it is more important who can provide more evidence to support a claim. In the end, it is about whichever party can ascertain more concrete and factual information to provide justification to decisively conclude who is righteous in the perception of the law. That will separate which individual, or party, is morally and ethically innocent by contemporary societal norms and beliefs.

Herbert, David L. “Injury On Weight Bench Results In Lawsuit But Ruling For Club.” Exercise Standards & Malpractice Reporter 23.6 (2009). Web. 14. Feb. 2015.

Fadi is a double major in nutrition food science and exercise science at Montclair State University, Class of 2015.

Posted by Fadi Huzien.

The article “Debate On Medical Malpractice Lawsuits,” discusses the intricacy of a singular aspect of business law that involves the controversial aspect of medical malpractice lawsuits. The primary reasoning behind the controversial nature of medical malpractice lawsuits is that they can be perceived from a beneficial and optimistic standpoint in the notion that if a medical professional is negligent then the victim would be able to receive some outlet of financial compensation to justify the negligent actions the physician took towards the patient/victim.

Conversely, however, there are many individuals seeking to intentionally profit off of a malpractice lawsuit in the immoral and unethical attempt to make as commonly referred to as a “quick buck.” In the article, the author eloquently articulated, “Some states have been gradually chipping away at medical malpractice laws seen by some as too plaintiff-friendly. For instance, a New York law limits the size of contingent fees in medical malpractice cases, thus reducing the financial incentive for plaintiffs’ attorneys.” This quote illustrates the belief that there are a multitude of profit-seeking individuals who aspire to take advantage of this law, which was originally created to empower the victimized individual or to allow financial compensation in a civil case to pay the families of the victims in the event of harm that had occurred due to the physicians negligence. As the quote portrays, contemporary legislatures are seeking to minimize this immoral mentality and reduce wrongful malpractice lawsuits that focus on making a significant profit by opportunistic individuals who are suing the doctor in a “get rich quick scheme.”

This article reveals that there is no simple black and white solution for these issues, because there are truckloads of gray areas. Although malpractice lawsuits are occurring in civil cases with righteous reasons and there are a wide spectrum of patients who became victims under the negligence of the physician operating on them, there is a wide-spectrum of profit-seeking fools who are filing malpractice lawsuits in the hopes of getting a financial benefit that the individual should not receive in the first place. In conclusion, this article summarizes both aspects to this controversy and insightfully portrays both sides of the controversy.

“Debate On Medical Malpractice Lawsuits.” Salem Press Encyclopedia (2013). Research Starters. Web. 7. Feb. 2015.

Fadi is a double major in nutrition food science and exercise science at Montclair State University, Class of 2015.

Grand juries function to investigate criminal wrongdoing and screen out charges that do not warrant prosecution. Secrecy in the proceedings is paramount to carry out its duty. Therefore, litigants in a civil action cannot request that grand jury proceedings be disclosed, unless there must be a particularized need for the disclosure. That need must outweigh the public interest in its secrecy.

But why should these proceedings remain secret when court proceedings are generally conducted in public? The United States Supreme Court has said there are five reasons why grand jury proceedings should remain secret:

(1) To prevent the escape of those whose indictment may be contemplated; (2) to insure the utmost freedom to the grand jury in its deliberations, and to prevent persons subject to indictment or their friends from importuning the grand jurors; (3) to prevent subornation of perjury or tampering with the witnesses who may testify before grand jury and later appear at the trial of those indicted by it; (4) to encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes; (5) to protect innocent accused who is exonerated from disclosure of the fact that he has been under investigation, and from the expense of standing trial where there was no probability of guilt.

United States v. Proctor & Gamble, 356 U.S. 677, 681 n. 6, 78 S. Ct. 983, 986 n. 6, 2 L. Ed. 2d 1077, 1081 n. 6 (1958)).

One of the concerns is keeping witness names secret for fear that exposure could have a chilling effect on future witness cooperation in grand jury proceedings. Another concern is damage to the reputation to those investigated if they are not indicted by the grand jury or if the indictment is subsequently dismissed by a judge for legal or factual defects in it.

Particularized need requires the party requesting the grand jury information to show its relevance to the case and without it the party would suffer prejudice or an injustice. Courts may require the party seeking the information to exhaust all other means provided by the discovery process first. And if granted, the court may opt to review the material in camera to make sure the party’s need outweighs the public policy for grand jury secrecy.

The Supremacy Clause of Article VI of the United States Constitution states:

This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

While federal law trumps state law, nothing under the Supremacy Clause compels a state court’s interpretation of a federal law to give way to a lower federal court. In Lockhart v. Fretwell, Justice Thomas stated in his concurrence that “a state trial court’s interpretation of federal law is no less authoritative than that of the federal court of appeals in whose circuit the trial court is located.” 506 U.S. 364, 375-76 (1993).  Justice Thomas gave the following example: “An Arkansas trial court is bound by this Court’s (and by the Arkansas Supreme Court’s and Arkansas Court of Appeals’) interpretation of federal law, but if it follows the Eighth Circuit’s interpretation of federal law, it does so only because it chooses to and not because it must.”

The Supreme Court is the final interpreter of federal law. When it rules, then the states are bound.

In Heien v. North Carolina, the Supreme Court held that where a police officer makes a stop based upon a reasonable mistake about a law, the stop is justified.

In this case, an officer stopped a vehicle because one of its two brake lights was out, based on a misunderstanding that the North Carolina law permitted only one working brake light. The officer stopped Heinen’s vehicle because one light was not working and then proceeded to a consensual search of the car. The search turned up a bag of cocaine located in a duffle bag in the trunk. Heinz was arrested and convicted of attempted drug trafficking. The question presented to the Court was whether a police officer’s reasonable mistake of law can give rise to the reasonable suspicion necessary to uphold a seizure of an automobile and the occupants in it under the Fourth Amendment.

The North Carolina statute reads that a car must be:

equipped with a stop lamp on the rear of the vehicle. The stop lamp shall display a red or amber light visible from a distance of not less than 100 feet to the rear in normal sunlight, and shall be actuated upon application of the service (foot) brake. The stop lamp may be incorporated into a unit with one or more other rear lamps. N. C. Gen. Stat. Ann. §20–129(g) (2007).

The Court concluded that the statute required only one stop lamp to be working. However, the officer was under a different impression of the law at the time. A nearby statute requires that “all originally equipped rear lamps” be functional. N. C. Gen. Stat. Ann. §20–129(d). The officer made the stop under a mistake in law. Nevertheless, the Court held that even if an officer reasonably misunderstood the law, as long as the officer conducts a search or seizure reasonably under the Fourth Amendment he is acting justifiably.

“To be reasonable is not to be perfect, and so the Fourth Amendment allows for some mistakes on the part of government officials, giving them ‘fair leeway for enforcing the law in the community’s protection.’” Reasonable mistakes of fact are permissible. For example, when someone consents to the search of a home, the search will be considered valid even if the officer mistakenly believes that the person consenting is the owner.

Reasonable mistakes of law are also permissible. “Reasonable suspicion arises from the combination of an officer’s understanding of the facts and his understanding of the relevant law. The officer may be reasonably mistaken on either ground.” Even laws that police enforce that are later declared unconstitutional by a court does not rebut an officer’s reasonable assumption that the laws were valid at the time.

Heinen argued that there is no margin of error for an officer’s mistake of law. He argued the legal maxim: “Ignorance of the law is no excuse.” If persons cannot get out of trouble by claiming they were mistaken about the law, then neither can the police.

But the Court concluded the law protects against only “reasonable mistakes,” and therefore, “an officer can gain no Fourth Amendment advantage through a sloppy study of the laws he is duty-bound to enforce.” The Court further concluded Heinen’s reliance on the legal maxim is misplaced. A person cannot escape criminal liability by claiming he did not know the law, but neither can the government impose criminal liability by a mistaken understanding of the law. The Court explained:

If the law required two working brake lights, Heien could not escape a ticket by claiming he reasonably thought he needed only one; if the law required only one, Sergeant Darisse could not issue a valid ticket by claiming he reasonably thought drivers needed two. But just because mistakes of law cannot justify either the imposition or the avoidance of criminal liability, it does not follow that they cannot justify an investigatory stop.

In this case, Heien did not appeal his brake-light ticket. Instead, he appealed a cocaine-trafficking conviction, as to which he did not claim the police made either a mistake of fact or law.

Posted by Cynthia Mihalenko.

JBS’s plan to list shares on the New York Stock Exchange are uncertain now due to their legal issues. The company, located in Brazil, is the world’s largest meatpacker. Plans for a global reorganization were in place to try and boost their company’s value. JBS is already in the U.S. market, as they own Pilgrim’s Pride and Swift & Company. The new company they would reorganize into would be called JBS Foods International and would be based in Ireland.

Current developments have both JBS’s Chief Executive Wesley Batista and his brother, Chairman Joesley Batista, suspended from managing their companies until the investigation is over. JBS has not announced a new replacement and this has also fueled speculation that JBS’s plans for global reorganization are on hold. Company spokespeople have denied they are changing their plans and also denying any wrongdoing by the Batistas. One investigation is the overbilling in government contracts where some funds were paid as bribes to politicians. Another investigation is whether the company received favorable treatment from Brazil’s National Economic Development Bank. Analysts at some of Brazil’s banks have expressed concern that the legal problem could delay the reorganization as Guilherme Figueiredo, a fund manager at Sao Paulo base investment firm M. Safra states that “Our feeling is that the new (corruption probe) will at least delay the NYSE listing.”

Investors are rightfully fearful of JBS, now that it is under this investigation. No one wants to invest in a company if their CEO cannot be trusted. However, the Wall Street Journal interviewed several analysts and they knew of a large pool of talent that the company could tap into if they needed someone to take over should Wesley Batista step down. This should help alleviate some of the investor’s concerns.

Cynthia is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Mariafernanda Ayin.

Best Buy is considered one of the biggest electronic selling corporations, but not even the biggest companies can avoid problems. Best Buy has been selling products like TVs, computers, and appliances such as washing machines that have had recalls.  These recalls have been one of the biggest headlines in the past couple of months in the electronics industry.

Federal Law states that it is illegal to sell and distribute products to consumers that have been publicly recalled. Best Buy, allegedly knowing that they were selling recalled products, told the U.S. Consumer Product Safety Commission that they had created measures to stop the risk of selling recalled products, however they continue to do so. Therefore, U.S. Consumer Product Safety Commission decided to penalize Best Buy because the company was not able to effectively create procedures to be able to identify, separate, and avoid selling recall products. In addition, Best Buy failed to block the product code which caused them to get erroneous information that indicated that the recall product was not in inventory.

Best Buy is being blamed for selling over 16 different products and a total of 600 recall items from September 2010 through October 2015—400 of the items being Canon cameras. Some of the items sold had a risk of skin irritation, and even catching on fire, which could have caused enormous harm to the customers. Best Buy is a company that has shown a clear lack of ethics by knowingly selling and distributing recall products just to make a profit, not caring about the well-being of their customers. This unethical act caused Best Buy to settle and pay $3.8 million of civil penalty in thirty days and in addition the company needed to create a compliance program to show that they are strictly following the laws and regulations of the Consumer Product Safety Act.

After the settlement was made, Best Buy sent a spokesperson to publicly address the situation, making an announcement after the settlement, “we regret that any products within the scope of a recall were not removed entirely from our shelves and online channels. While the number of items accidentally sold was small, even one was too many. We have taken steps, in cooperation with the CPSC, to help prevent these issues from recurring.” (Kieler).

This whole dilemma that Best Buy has been through has put them in the eye of the public, and could of possibly affected their sales. However, they still remain one of the biggest companies in the electronic business, and most likely will surpass this situation.

Mariafernanda is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Ashley Torres.

In July of 2012, Marissa Mayer became both the President and Chief Executive Officer of Yahoo!. During her time within the company, she has found herself involved in many lawsuits, and is yet hit with another. Recently, in the San Jose District, a former media executive known as Scott Ard filed the lawsuit against Mayer. He is accusing her of running a campaign that discriminates against male employees, specifically. His reason behind this alleged accusation includes Mayer’s implemented “use of the employee performance rating system to accommodate management’s subjective biases and personal opinions, to the detriment of Yahoo’s male employees.” Mayar states the employee performance rate system has improved their overall performance, but Ard believes he was fired not because of his performance, but because of his gender.

Besides just accusing Mayer, Kathy Savitt, former chief marketing office, and Megan Liberman, editor in chief, are also involved in the lawsuit for discriminating against men. As evidence of this accusation, the lawsuit alleges that 14 of the 16 senior-level editorial employees were female whom were purposely hired by Savitt, while firing men because of their gender.

In February of 2016, there was another filed lawsuit with similar accusations. A former employee by the name of Gregory Anderson was fired, while he attended a fellowship at the University of Michigan. Anderson too believed that he was fired because of his gender and not his performance because when he asked to view his documentations with his performance that supposedly resulted in his termination, Anderson was denied. Both Anderson and Ard are represented by the same attorney, Jon Parsons, in which he declined in making any comments.

Ashley is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Kirsten T. Rewekant.

A somewhat recent case, Ellis Vs. Cartoon Network, Inc. shows how old statutes can be in conflict with the new and always updating technology. Ellis uses the Cartoon Network app on his android device to watch popular television shows that Cartoon Network airs. This is a free service, which you could choose to upgrade to pay for exclusive content that the free app does not allow others to see. When signing up for this extended service, you would create a profile with personal information that Cartoon Network would be available to see. Ellis had decided the free version was good enough for him, and therefore, did not give Cartoon Network permission to obtain any personal information.

Cartoon Network uses a service called Bango, which allows them to assign an ID number to everyone who views their content, free service or extended. This service does not know exactly who you are with any personal information, but is essentially learning who you are by linking all the shows you watch to your ID number, and therefore, learning what you like to watch. Through the service, the company is getting an understanding of who you are. Ellis tried to argue this to the court.

The court heard arguments as to whom is considered a consumer or producer. Cartoon Network argued Ellis is not considered a consumer under the definition of the Video Privacy Protection Act (VPPA) because he does not provide any “personal identifiable information.” But Ellis argued, this ID number does show a side of his personality and gives the company his personal information. Finally, the court needed to decide whether Ellis can be considered a subscriber to Cartoon Network, which makes him a consumer under the VPPA. To be a consumer under the VPPA, you do not have to pay for a service, log in, or create a profile.

Overall, the court ruled Ellis as not a subscriber under the VPPA for not signing up for an account, providing no personal information, having no profile, not paying for the service, and he is not considered to have a committed relationship with Cartoon Network to obtain the exclusive content they offer.

Some issues with this ruling includes the fact that if you were to visit Cartoon Network on your web browser, you would not be assigned an ID number, as the app does. Another issue with this case is the very little distinction between downloading the app and being a subscriber to Cartoon Network and how these two do not show a difference in commitment. After this case, there are still questions regarding the VPPA regarding privacy, and therefore, there may need to be some revising.

Kirsten is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Sara Firnstein.

Everybody knows that General Motors, or “GM,” has had its fair share of issues throughout the years. Many recalls have been raised based on multiple different issues. In 2014, GM came out and recalled over 3.4 million cars because of an ignition switch issue on top of the already 2.6 million small cars they recalled four months earlier to fix the same issue. GM said that they needed to change the keys to these cars. The major issue that prompted this recall is that the switch could rotate out of “run” if the key has excess weight on it. This could lead to the car shutting off the engine and then the power steering with become disabled, leaving the driver without any control. This recall had an effect on cars ranging from 2000 to 2014.

The most surprising facts about this recall is that after the first recall of 2.6 million small cars, GM has only repaired seven percent of the vehicles. This leaves ninety-three percent of the recalled cars not fixed yet, and another 3.4 million cars just recalled, which obviously haven’t been fixed yet either. Also, the effect of the first recall has caused a minimum of 54 crashes and 13 deaths, but lawyers who are suing GM say that there have been at least 60 deaths. The deaths from this issue are the most surprising, but also “GM has acknowledged knowing about the problem for more than a decade, yet the cars weren’t recalled until this year” (CBS News, 2014).

An issue that arose from these ignition switch recalls are the massive amount of lawsuits filed against GM. This has led to many different court cases and GM has tried to avoid lawsuits that deal with cars that were made by the old, pre-bankruptcy GM.  Recently in July, the “U.S. Second Circuit Court of Appeals overturned a bankruptcy judge’s ruling this week that had protected GM from those lawsuits because of the company’s 2009 bankruptcy restructuring” (Bomey, 2016). Because of this ruling, it may expose the new GM to liabilities for a defect that killed a minimum of 124 people and injured over 275 more in the small cars that were made by the old GM before bankruptcy. This ruling gives life to hundreds of cases where the victims decided to take their chances in court and refused to settle. Attorney Robert Hilliard says that he is happy for his clients because for years “the victims of the GM ignition switch have had their claims languishing in bankruptcy court and now these folks will have their day in court” (Bomey, 2016). These victims aren’t going to back down and GM has to continue to deal with the old GM car lawsuits along with the new GM car ignition switch lawsuits. GM is not out of the clear just yet, as they have to deal with these lawsuits that can now proceed based off of the court’s most recent ruling.

Sara is a criminal justice major with a minor in legal studies at the College of Arts and Sciences and the Stillman School of Business, Seton Hall University, Class of 2019.

Works Cited:

GM recalls 3.4 million more cars for ignition defect. (2014, June 16). Retrieved September 26, 2016, from http://www.cbsnews.com/news/gm-recalls-3-16-million-cars-for-ignition-problems/.

Bomey, N. (2016, July 14). Court: Ignition-switch lawsuits against GM can proceed. Retrieved September 26, 2016, from http://www.usatoday.com/story/money/cars/2016/07/13/general-motors-bankruptcy-ignition-switch-lawsuit/87029916/.

Posted by Gabriella Campen.

Unfortunately, in this day and age being well-known in Wall Street circles also happens to be synonymous with being well known by the SEC. The SEC has recently charged hedge fund manager Leon Cooperman, 73, of insider trading by using his easy access to executives to gather information, which he used to buy securities from a company called Atlas Pipeline Partners.  Cooperman’s information led him to buy more securities in the firm, right before the stock’s value soared over 30% due to the company’s $682 million dollar sale of a natural gas processing facility.

After the suspicious buy, the SEC filed a federal lawsuit in Philadelphia, and accused Cooperman of abusing his access to executive information, “By doing so, he allegedly undermined the public confidence in the securities markets and took advantage of other investors who did not have this information,” said SEC Enforcement director Andrew Ceresney.  Along with barring Cooperman from any positions as a director or officer in the future, the SEC is seeking restitution of profits as well as money penalties from Cooperman and his firm, Omega Advisors.

However, Cooperman’s attorneys, Ted Wells and Dan Kramer have released a statement claiming that these allegations are “entirely baseless” and that “Mr. Cooperman acted appropriately at all times and did nothing wrong. We intend to vigorously defend against the charges and will not allow the SEC to tarnish the legacy Mr. Cooperman has built over the course of a legendary career spanning five decades.”  Cooperman is firing back and defending his career and reputation, to which the SEC is saying that they “will continue to pursue relentlessly those who engage in insider trading, regardless of their status or resources.”  This comes as a lesson that no matter who you are or how much power you have on Wall Street, you are still not exempt from following the law.

Gabriella is a marketing and finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Ivanna Klics.

There has been quite a ruckus at Wells Fargo as they made headlines for causing fraudulent transactions that have not been authorized by the customers themselves. Wells Fargo is being accused for creating banking and credit card accounts without the permission of its customers. Who are the customers more to blame then the CEO, John Stumpf; however, in his defense, he is not capable of overlooking every branch in the bank. Stumpf’s leaders have not only stepped out of their comfort in the company but the reputation of the company, as well as opening up the door to a criminal investigation case.

The investigation has put the company to shame. Stumpf appears to be clueless of what has been going on literally right under his nose. Because it is almost impossible for these events to occur overnight, management should have known about it for a long time. Whether Stumpf admits it or not, Charles Gasparino stated “he and the bank will still face numerous civil and criminal inquiries for years to come.”

Although the company does not mean all harm, Wells Fargo is still one of the most profitable banks worldwide; however the company’s perception has had a dramatic change. Currently the company is facing a congressional investigation, and who knows if they will be able to build back their reputation.

Ivanna is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Dylan Beland.

One of the most talked about issues in business law news is the Wells Fargo scandal. The story behind this scandal is that the Department of Justice and many attorneys are investigating the possibility that Wells Fargo has millions of fake accounts opened at their banks. The result of the investigation was Wells Fargo had to pay a 185 million dollar fine.  Wells Fargo had to let go over 5,300 workers for fraudulent sales tactics.

From this, the concern and worry in the banking industry instigated a lot of questions about the fake accounts being opened. Employees were pushed to reach near-impossible sales targets, which in turn led to the creation of fake accounts. Mike Mayo, a banking analysist at CSLA, said the investigation “reflects pent-up frustration by the public over the lack of accountability at big banks post financial crisis.”

The people that could see some blame for this are the investors of the banks. One of Wells Fargo’s biggest investors has not spoken, since the situation has arisen. Warren Buffett is Wells Fargo’s biggest investor and he owns Warren Buffett’s Berkshire Hathaway.

On September 20, Wells Fargo is meeting with the Senate and is having John Stumpf, CEO, represent and testify at the hearing. He apologized for the fake accounts but also said he does not plan on resigning from being CEO of Wells Fargo.

Dylan is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Steven Otto.

The San Francisco rating company, Yelp, is not found liable for negative reviews posted on its site. This is because it relies on ratings posted by users, not the company itself. A federal appeals court on Monday, September 12, dismissed a libel lawsuit filed against Yelp by Douglas Kimzey, the owner of a Washington state locksmith company. The 9^th U.S. Circuit Court of Appeals ruled that, under federal law, Yelp is not liable for content it gets from its users. The features of Yelp are based on users’ input and it is not content created by the company, whose site helps guide people to anything from restaurants to plumbers and much more.

The court said that Douglas Kimzey’s business received a negative review on Yelp in 2011. Kimzey claimed that the negative review was actually meant for another business, and claimed that Yelp transferred the review to his business on purpose in an attempt to extort him. He claims that Yelp was trying to force him into paying to advertise with Yelp. The appeals court said that his allegations were not substantial and that there were no facts at all supporting Yelp fabricating content under a third party’s identity. Circuit Judge M. Margaret McKeown, writing for a unanimous three-judge panel decision, said “We fail to see how Yelp’s rating system, which is based on rating inputs from third parties and which reduces this information into a single, aggregate metric, is anything other than user-generated data.”

The appeals court previously ruled under the 1996 Communications Decency Act that “websites that provide what are known as ‘neutral tools’ to post material online cannot be held liable for libelous material posted by third parties.” Kimzey’s claim that Yelp should be held liable for distributing reviews to search engines was dismissed by this act. The appeals court stated that distributing the content does not make Yelp the creator or developer of the content.

Aaron Schur, Yelp’s senior director of litigation, said the appeals court “rightly confirmed Yelp’s ability to provide a forum for millions of consumers to share their experiences with local businesses.” Kimzey said he lost 95% of his business after getting one star on Yelp and said, “If you have a one-star rating, people won’t go near it (the business). They don’t care if you’ve been in business for one week or 25 years.” Obviously upset over what had occurred to him and the ruling, Kimzey, serving as his own attorney, plans to appeal to a larger court panel.

Steven is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Abigail Hofmann.

Francisco Garcia of the Sacramento Kings was lifting weights on a Ledraplastic exercise ball on October 9^th, 2009. The 195 pound player was lifting two 80 pound weights while on the ball when it suddenly burst beneath him. This supposed “burst resistant” ball advertised its ability to withstand weight up to 600 pounds. In the fall, Garcia suffered a fracture to his forearm, causing ineligibility for upcoming games. This injury came shortly after signing a five year, $30 million contract. Because of this, the Sacramento Kings wanted “to recoup the more than $4 million in salary, medical expenses and other costs it incurred after Garcia’s injury, as well as prejudgment interest.” (Bricketto)

Ledraplastic initially refused to reimburse the Kings or Garcia for the financial loss or issue a statement recalling the products or forewarning about potential dangers. In the Kings’ product liability case, they were able to prove that the ball burst at weights of mere 400 pounds, rather than the advertised 600 pounds, and that “for a very small expense, the ball could have been made thicker and would have provided the burst resistant capacity as represented.” (Bricketto) Eventually, a settlement was done in private, but the Kings “sought reimbursement for the salary they paid Garcia,” and “Garcia had also sought damages for pain and suffering as well as loss in future earning capacity.” (Lu)

Ultimately, this product liability case was pretty clear on who was at fault: Ledraplastic claimed to have a ball that withstood weights up to 600 pounds, yet failed to hold even 400 pounds. This caused an injury resulting in millions of dollars of damages, and up until the settlement, Ledraplastic refused to forewarn others about this potential danger. Although the settlement was private, we do know that Ledraplastic is now required to warn users of the dangers of using the ball while lifting free weights, hopefully preventing many similar injuries.

Abigail is a management, marketing, and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Works Cited:

Bricketto, Martin. “NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360.” NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360. N.p., n.d. Web. 08 Sept. 2016.

Lu, Andrew November 1, 2012 5:54 AM. “NBA Star Francisco Garcia Settles Exercise Ball Lawsuit.” Injured. N.p., n.d. Web. 07 Sept. 2016.

Prof. Victor N. Metallo teaches business law at Seton Hall University, Stillman School of Business, Department of Economics and Legal Studies, and Montclair State University, School of Business, Department of Accounting, Law and Taxation, and has published in the areas of criminal law, civil procedure, and the First Amendment. He holds a JD from Seton Hall University, School of Law, an MLIS from Rutgers University, an MBA in Marketing Management from St. John’s University, Tobin School of Business, an MAE in General Professional Education from Seton Hall University, a BA in Criminal Justice from Seton Hall University, and has studied at Ave Maria School of Law, Naples, Florida, the London School of Economics, and the Scuola Leonardo da Vinci, Rome, Italy. Professor Metallo clerked for the Honorable Ronald B. Graves, New Jersey Superior Court – Appellate Division.

This blog/website is for educational purposes only to give the reader general information and not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the blog/website publisher(s). The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Posted by Abigail Hofmann.

Francisco Garcia of the Sacramento Kings was lifting weights on a Ledraplastic exercise ball on October 9^th, 2009. The 195 pound player was lifting two 80 pound weights while on the ball when it suddenly burst beneath him. This supposed “burst resistant” ball advertised its ability to withstand weight up to 600 pounds. In the fall, Garcia suffered a fracture to his forearm, causing ineligibility for upcoming games. This injury came shortly after signing a five year, $30 million contract. Because of this, the Sacramento Kings wanted “to recoup the more than $4 million in salary, medical expenses and other costs it incurred after Garcia’s injury, as well as prejudgment interest.” (Bricketto)

Ledraplastic initially refused to reimburse the Kings or Garcia for the financial loss or issue a statement recalling the products or forewarning about potential dangers. In the Kings’ product liability case, they were able to prove that the ball burst at weights of mere 400 pounds, rather than the advertised 600 pounds, and that “for a very small expense, the ball could have been made thicker and would have provided the burst resistant capacity as represented.” (Bricketto) Eventually, a settlement was done in private, but the Kings “sought reimbursement for the salary they paid Garcia,” and “Garcia had also sought damages for pain and suffering as well as loss in future earning capacity.” (Lu)

Ultimately, this product liability case was pretty clear on who was at fault: Ledraplastic claimed to have a ball that withstood weights up to 600 pounds, yet failed to hold even 400 pounds. This caused an injury resulting in millions of dollars of damages, and up until the settlement, Ledraplastic refused to forewarn others about this potential danger. Although the settlement was private, we do know that Ledraplastic is now required to warn users of the dangers of using the ball while lifting free weights, hopefully preventing many similar injuries.

Abigail is a management, marketing, and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Works Cited:

Bricketto, Martin. “NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360.” NBA Team Sues Exercise Ball Cos. Over $4M Injury – Law360. N.p., n.d. Web. 08 Sept. 2016.

Lu, Andrew November 1, 2012 5:54 AM. “NBA Star Francisco Garcia Settles Exercise Ball Lawsuit.” Injured. N.p., n.d. Web. 07 Sept. 2016.