The Law Planet Blog

John Goodman has done the unthinkable. He has adopted his girlfriend to protect his assets from a wrongful death lawsuit. He drove a car drunk and killed an innocent son of a mother and father. He is rich beyond belief. He will probably go to prison for a very long time, but he seems intent on punishing the victim’s survivors even more by depriving them of compensation and rubbing their face in more grief. He wants them to suffer through the facts in the criminal case and then again in the civil case. What kind of a person does this? I have to believe there is a special place in hell for a person like this. And maybe it has started now for him with his latest stunt. How does he deal with his daughter/girlfriend? Maybe she runs off with all the money when he goes to prison. Karma is a bitch.

First: Let’s talk about sexual assault. If you allow anyone to touch a child at your house, you will pay! Not only will the law come down hard on you but juries will too! Last month, a Levy County, Florida jury awarded a boy who was molested at his grandmother’s home by his uncle an award of $26,400,000 against the grandmother! The case was brought as a Negligent Supervision case where that negligent act allowed the intentional tort of sexual assault and sexual battery to occur. Because it was a negligent supervision claim the homeowner (read grandma) must pay the award.

The reason the jury found the grandmother guilty for allowing this heinous crime to go on was because she started babysitting the boy when he was 5 years old in 1999 and her son, the uncle, came over at least 20 times between then and 2003, and sexually assaulted his nephew, the boy in the case. When the boy finally told on the uncle and the legal case began, the uncle committed suicide. Thus he isn’t able to pay anything any longer. The boy’s father sued his mother-in-law saying that she failed to closely watch the boy and should known this was happening. The boy’s older sister even told the grandmother what was happening because she observed the molestation, but the grandmother branded her a liar and refused to investigate.

The boy now has Post-Traumatic Stress Disorder (PTSD) and will need psychological counseling for the remainder of his life. In truth, no one ever really gets over such a violation. According to the boy’s doctors, he is at risk of drug and substance abuse, suicide and other psychiatric maladies throughout his life. He will need to be counseled into having normal relationships with his friends, family and, of course, his wife.

The jury found the grandmother 85% responsible and the father only 15% responsible, so the total award was reduced to only $22,440,000. The way the jury came to such a high number was that they awarded $400,000 for future medical care and $6,000,000 for past pain and suffering, but the bulk of the money, $20 million, was for future pain and suffering damages.

It is important people learn about how such a crime like this can affect their lives.

But, how does this type of case apply to me? It applies when virtually any crime happens in your home. What kind of crime do people let happen in their homes? Underage drinking! Here is a common scenario: A son or daughter returns from college with some friends. They are 20 years old and have been responsibly drinking at college for 2 or 3 years. They sit around at night hanging out and drinking a few beers. Then at the end of the evening they drive home. Not drunk. Just a few beers, mind you. Unfortunately they get into a car accident and hurt someone on the way home. They don’t need to be drunk! If the officer smells alcohol on their breath and asks where they were drinking, YOU are responsible for that accident. You can be arrested for permitting under-age drinking to occur at your house and you can be responsible for all the damages that the accident caused! Sound unfair? Maybe it is, but that is too bad – It’s the law.

Do not allow it to happen. Say no to your kid’s request to be a “cool” parent and allow a “few” beers, or you could buy yourself a huge lawsuit.

The Supreme Court announced today that it will rule this year on the health reform law and hear a challenge to the Obama administrations’ signature legislative achievement. The plan is to focus on a specific case brought by 26 states, the National Federation of Independent Business and two individuals that challenges the constitutionality of the mandate that requires individuals to buy health care insurance by 2014 or pay a penalty fee.

Paul D. Clement, a lawyer for the 26 states challenging the law urged the Supreme Court in briefs to step in and resolve the “grave constitutional questions surrounding the ACA (Affordable Care Act).” He said, “time is of the essence, States need to know whether they must adapt their policies to deal with the brave new world ushered in by the ACA.”

Most likely, the Court will schedule oral arguments to be decided by early next summer – just in time for the next presidential election.

Full article: http://abcnews.go.com/blogs/politics/2011/11/supreme-court-will-rule-this-year-on-health-reform-law/

2010 was a disheartening year for many people. According to the Bankruptcy Court in Miami, the number of personal bankruptcies in Miami-Dade, Broward and Palm Beach counties rose by 40%. Bankruptcies Florida totaled 24,681 in the state's southern region in 2009; they rose to 34,579 in 2010. As unfortunate as the increase is, it dovetails with unemployment figures, home foreclosures and business closings around the state.

Are Things Worse in Florida?
Across the country, personal bankruptcies were up by 9% in 2010. In 2009, approximately 1.41 million personal bankruptcies were filed in the United States. In 2010, that number rose to 1.53 million filings, according to the American Bankruptcy Institute. Based on that information, it may appear that Florida is worse off than many other parts of the country. However, there is a bit of a silver lining at play: Monthly bankruptcy filings have actually been on the decline in the state since September 2010. In December, there were 2,577 bankruptcies filed in south Florida, which represents a 2.6% decline from the previous month.

Understanding Bankruptcies Florida
The vast majority of the personal bankruptcies that are filed in the state of Florida are Chapter 7 bankruptcies. Under Chapter 7, a person must liquidate his or her assets in order to pay off old debt. Under Chapter 11 bankruptcy a person with the help of an attorney, works with the court to come up with a way to consolidate and reorganize his debt. Determining which bankruptcy is right for you can be tricky; an experienced attorney can help you make the right decision.

Unemployment and Bankruptcies
Considering the fact that Florida's unemployment rate is, on average, 12%, it makes sense that there have been excessive numbers of bankruptcies during the last twelve months. In south Florida, unemployment ranges from 10.8% to 13%, a fact that highlights the especially dire situation in that part of the state. Whether or not those numbers will improve in 2011 remains to be seen; similarly, it's too early to tell whether the slow decline in the number of bankruptcies is just a blip on the radar or the beginning of a long-term trend.

Click on the following links to read more on Bankruptcy increase in Florida:
South Florida Bankruptcies increas 40% in 2010 - Sun Sentinel - Marcia Pounds
Bankruptcy Statistics 2010 - U.S. Federal Courts

The time that many wealthy individuals have been dreading is almost here: the estate tax is coming back. Due to the unique laws and specifications of the new estate tax, only a fraction of a percentage of those who pass away in 2011 will be subjected to it. Back in 1977, approximately 10.5% of people had to pay the estate tax. According to estimates, less than half of one percent of those who die in 2011 will do so. When combined with savvy accounting practices, many people will escape from the tax altogether and will be able to pass their sizable fortunes on to their heirs.

When the estate tax expired in 2009, many people assumed that it would be reinstated quickly; it wasn't. Instead, it was out of effect throughout 2010, which made many rich people very happy. It was assumed that when it came back, it would do so with a vengeance. Instead, the 2011 estate tax is a lot gentler than the 2009 one. In 2009, there was a $3.5 million exemption and a tax rate of 45%; in 2011, the exemption rises to $5 million and the rate drops to 35%.

The new estate tax is the result of intense back-and-forth sessions between Republicans, Democrats and President Obama. It was included on the recently passed tax bill that also extends unemployment benefits in the United States. It's important to keep in mind, however, that the new estate tax isn't going to be around forever; it is due to expire in two years. At that time, there is no telling what will happen. There could be another moratorium on the estate tax, or it could be increased to become less favorable to the country's wealthiest people. For now, however, people can begin planning for the tax that goes into effect in 2011.

Importance of Proper Estate Planning
Proper Estate Planning can help you control your assets and help you minimize taxes. It is wise to work with a trusted advisor and Estate Planning Lawyer to assist you in proper Estate allocations.

Click on the following link to read more from the New York Times: Estate Tax Will Return Next Year, but Few Will Pay It

The University of Notre Dame may have violated safety rules when a student worker was killed while videotaping a football practice according to Indiana State regulators. The student worker was on top of a tall hydraulic lift that toppled in high winds, when he fell to his death.

At the heart of the investigation is whether the employee received training before using the scissor lift and whether a federal rule barring workers from using scaffolds during bad weather would have applied to his job.

The federal Occupational Safety and Health Administration issues industry standards and rules regarding employee safety. If winds are gusting up to 50 mph, an operator in a scissor lift at the height as in the Notre Dame fatal accident may be in danger.

In 2007, Notre Dame created a policy regarding lift operators and considering weather before using the machines. However, at this time, it is unclear if this policy is in force at the current time. The 14-page policy also appears to provide conflicting information about what training is required for lift users. Authorities are currently investigating the fatal workplace accident.

Click on the following link to read more on the Workplace safety rules a part of ND death probe

Did you know that 30% of all scam victims are over the age of 65? That frightening statistic is a call to action for 3,000 Florida senior citizens who volunteer in the Senior vs. Crimes Project. The Project is administered by the Florida Attorney General’s office. Their mission is to assist seniors who have been victimized by scams, identity theft, and unethical businesses and individuals.

The program began in 1989 as a task force on crime against the elderly. It has grown to include 30 offices statewide. Seniors vs. Crime has been responsible for recovering over $8 million for Florida seniors who were the victims of con artists. While they do not provide legal services or legal representation, their free service is offered to assist all consumers, regardless of age.

If you feel that you or a loved one has been the victim of a scam, you can contact one of the project’s 3,000 volunteers at an office near you.

Florida Attorney General
Fraud help line: (866) 966-7226

Seniors vs. Crime,
Statewide hot-line: (800) 203-3099

Local Seniors vs. Crime Offices

Continue reading "Scammers target Seniors in fraud schemes - Seniors vs. Crimes Project - Helps seniors fight back" »

The DOJ takes cyber crimes seriously, as Albert Gonzalez has found out. U.S. District Court Judge Douglas P. Woodlock sentenced Gonzalez to 20 years and one day in prison for two conspiracy counts in connection with his efforts to help gain access to the payment card networks of numerous nationwide retailers. The judge also ordered Gonzalez to pay a fine of $25,000 as well as serve a three year supervised release upon completion of his prison term.

This sentencing comes in addition to an earlier sentence issued against Gonzalez by U.S. District Judge Patti B. Saris for aggravated identity theft, computer fraud, conspiracy, and access device fraud among others. In this sentence, the judge also ordered Gonzalez to serve 20 years in prison in addition to a three year long supervised release after completing his prison term, and a $25,000 fine.

Court documents indicate that Gonzalez and his co-conspirators used sophisticated methods such as “wardriving” (attempting to locate unsecure wireless computer networks with a laptop while driving) and “sniffer programs” designed to capture card information during transfers. According to court documents, Gonzalez and his cronies stole more than 40 million credit and debit card numbers from retailers using these or similar techniques, and then sold the numbers to others for fraudulent use.

According to Federal prosecutors, the actions of Gonzalez and his co-conspirators cost a number of companies, banks, and insurers some $200 million in addition to victimizing millions of people. U.S. Attorney for the Eastern District of New York, Benton J. Campbell, made the following statement about the matter:

"Computer hackers and identity thieves pose serious risks to our commercial, personal and financial security. Today’s sentence should serve as a warning to would-be hackers everywhere, including those who commit their crimes from abroad – you will be found, prosecuted and convicted."

Unfortunately, yesterday was not a great day for the SEC and the Bank of America legal team. Their $33 million agreed upon settlement regarding the BofA taking over Merrill Lynch was rejected by Southern District of New York Judge Jed S. Rakoff

Judge Rakoff entered strong words towards the SEC and Bank of America settelement in his 12-page order, in Securities and Exchange Commission v. Bank of America Corp., 09 Civ. 6829. The judge stated the following: "Overall, indeed, the parties' submissions, when carefully read, leave the distinct impression that the proposed Consent Judgment was a contrivance designed to provide the SEC with the façade of enforcement and the management of the Bank with a quick resolution of an embarrassing inquiry -- all at the expense of the sole alleged victims, the shareholders."

He continues to further scold the SEC with additional statements:

"When a federal agency such as the SEC seeks to prospectively invoke the Court's own contempt power by having the court impose injunctive prohibitions against the defendant, the resolution has aspects of a judicial decree and the Court is therefore obligated to review the proposal a little more closely, to ascertain whether it is within the bounds of fairness, reasonableness, and adequacy -- and, in some certain circumstances, whether it serves the public interest."

Judge Rakoff deems the settlement "neither fair, nor reasonable, nor adequate."

Click here to read more on the SEC and BofA settlement from the New York Law Journal.

As prior readers of The Law Planet Blog know, I have a strong dislike for Equity Index Annuities. I think they are lousy products and, to the extent they are sold, should be sold by someone who has proven at least a modicum of securities knowledge. Insurance salesman, without a Series 6 or 7 license, have not proven this knowledge. Yet they were allowed to sell complicated, market-based products.

I cheered last year when the SEC announced Rule 151A which would bring these products under their purview. It would also require licensing of salespeople and registration with a broker-dealer. All of these are good things. The Insurance and Annuity industry did not agree with me. It was nothing personal, I’m sure.

The industry took their case to court, in the case American Equity Investment Life Insurance Company v. Securities and Exchange Commission (July 21, 2009-6) on Petitions to argue that the Rule should not be enforced. The industry won, and lost.

There should be no joy in Mudville here. The District of Columbia Court of Appeals has told the SEC what it did wrong and what it needs to do right. On the other hand, the Court told the insurance industry that these products can be regulated as securities. For me, that’s the important part.

The court wrote “In this case, the SEC has adopted an interpretation that is based in reason. By their nature, FIAs ‘appeal to the purchaser not on the usual insurance basis of stability and security but on the prospect of ‘growth’ through sound investment management.’” This is what I’ve been saying all along. This is a market-based product. It is a security. It should be sold by qualified securities salespeople. Now it’s up to the SEC to make the requisite findings regarding its rulemaking and give it another try.

Stay tuned…

A Florida Judge orderered former Pinnacle Business Management, Inc Chairman, Jeffrey G. Turrino to pay $9.95 Million and permanently banned him from Penny Stock Offerings.

The Securities and Exchange Commission announced that, Judge Elizabeth A. Kovachevich, United States District Judge for the Middle District of Florida, entered an order of civil contempt against defendant Jeffrey G. Turino.

In her ruling, Judge Kovachevich found that Turino acted in flagrant and repeated contempt of the penny stock bar back from December 2003. This was in connection with a previous Commission enforcement action stemming back from May 2002. In that action, the Commission alleged that Turino, one of his associates, and the penny stock company they operated, Pinnacle Business Management, Inc., had committed securities fraud by making materially false and misleading statements about Pinnacle’s business operations. This action was settled by Turino with a civil penalty of $60,000, consent to a permanent fraud injunction, and a penny stock bar for five years.

To learn more on the case, click on the following link from the SEC website regarding: Securities and Exchange Commission v. Pinnacle Business Management.

The truth will always come out. This is a hard lesson that Fund Manager, Matthew D. Weitzman, just recently learned. He has been charged with investment adviser fraud, securities fraud, and wire fraud. If convicted he faces up to a maximum of 15 years imprisonment and over $5 million in fines.

Mr. Weitzman was co-founder of AFW, financial planning and investment management firm. AFW managed more than $190 million in assets at the end of 2008. According to reports in the North Country Gazette,, Mr. Weitzman converted investor money for his own use.

The Golden Goose is no more for Mr. Weitzman. His misdeeds caught up with him and now he must face the music for his crimes. Hopefully, the Investors in AFW will seek legal counsel to discuss how they can get their stolen funds back.

Countrywide executives must face the music for deception and fraud as the Securities and Exchange Commission (SEC) has brought charges against the former Chief Executive Officer (CEO) Angelo Mozilo and two executives for allegedly hiding financial difficulties which led to the company's collapse from the subprime mortgage crisis. In 2007, Countrywide Financial was the United States' largest mortgage lender. When it collapsed in 2008, the Bank of America acquired Countrywide for more than $4 billion. This case is important as the public attempts to assign blame for the subprime mortgage collapse.

Many corporate executives use a common defense against financial malfeasance, that their subordinate employees hid important information. The SEC has collected top Countrywide executive e-mails (sent while the housing market was starting to decline) that portray a rosy public picture, with negative private ruminations concerning an impending collapse. These executives described the mortgage loans as "toxic" in private conversations. Ex-CEO Mozilo used terms like "flying blind" to describe his inability to assess the viability of these subprime loans.

Actions, such as ex-CEO Mozilo's sale of $260 million worth of stock, have led to insider trading charges that these executives failed to disclose important information publicly. Evidence is growing that ex-CEO Mozilo was quite engaged in all of the intricate details of homeowner loans. The Bloomberg News Service has reported extensively on these SEC lawsuits.

Still, ex-CEO Mozilo and his co-defendants are adamant in defending themselves, denying the SEC's claims that they deceived investors. These defendants argue that "no one could have predicted the severity and force of the housing market downturn." The Countrywide executives claim that regulators "cherry-picked" quotes which have been taken out-of-context.

Continue reading "Countrywide Executives must face the music for deception and fraud " »

The Eleventh Circuit Court of Appeals, which covers Florida, is a "manifest disregard" circuit. In Montes v. Shearson Lehman Hutton, the court found that a closing argument in an NASD arbitration that acknowledged the law, but encouraged the arbitrators to ignore it, was evidence of manifest disregard of the law. The arbitrators agreed and Shearson won the case.

On a motion to vacate, ultimately decided by the 11th Circuit, Shearson lost. The court found that the test is that the arbitrators were aware of the law and chose to ignore it. Montes may be the only case decided on this basis for the movant. In other words, in establishing "manifest disregard" as a basis for vacating an arbitration award, Shearson lost.

Over time, and mergers, Shearson became part of Citigroup Global Markets. That entity, Citigroup, recently lost a FINRA securities arbitration award to a woman from Texas. Citigroup thought it had a good argument, that the arbitrators manifestly disregarded the law. The trial court agreed. The Fifth Circuit did not.

In Citigroup v. Bacon the Fifth Circuit said that "manifest disregard of the law" is no longer available as grounds to vacate an award. The court based its decision on a recent US Supreme Court decision in Hall Street Associates v. Mattel. The US Supreme Court in Hall Street found that "manifest disregard" is not part of the statute allowing vacatur of arbitration awards. The Court pronounced for the entire nation that "manifest disregard" does not exist any longer. (Other circuits, by the way, have found their way around this ruling.)

Florida currently is a "manifest disregard" state, but the 11th Circuit said that Montes is the only case it has found worthy of that moniker. In fact, in Harbert v. Hercules Steel,, the 11th Circuit warned that sanctions may be appropriate for weak motions to vacate arbitration awards based on "manifest disregard."

There you have it. Citigroup has managed to establish that "minfest disregard" is and is not a basis for vacating an arbitration award. For those of you non-lawyers who read this, I can't explain it other than to say, that's the way the law is sometimes.

That's the view from The Law Planet - Jupiter, Florida.

I was recently retained to represent a client who was both an insurance agent and a registered representative with a related entity. The client was terminated by the insurance company and the broker-dealer. The U-5 that was filed became a problem.

The broker-dealer disclosed on the U-5 that there were two customer complaints from insurance customers regarding fixed insurance products. While this was true that there were two complaints, I felt (actually, I knew but I was being modest) that the disclosure was improper. I wrote to the company and told them to change things.

The company's lawyer wrote back and advised that he felt that the disclosure was proper under U-5 question question 7E(3)(a), which references U-4 question 14I(3)(A). This is essentially a question about the existence of yet-unreported customer complaints. The insurance company/broker-dealer felt that fixed (as opposed to variable) insurance complaints were reportable. I knew they were not.

The FINRA website held the key. FINRA advises that only complaints concerning a security, variable contract that is subject to regulation under the federal securities laws, or commodity exchange product are reportable . Other complaints are not.

There is one caveat, however. If the complaint relates to fixed insurance and alleges forgery, theft, or misappropriation or conversion of funds or securities, then it is reportable on a U-5. This is a slight, but important, difference.

After being educated in their wayward ways, the broker-dealer agreed to arrange to remove the improper disclosures.

That's the view from The Law Planet, Jupiter, Florida.

I am not a bankruptcy lawyer. But my sister is one. We were talking about the mortgage "crisis" and she pointed out a flaw in the bankruptcy code that remains unaddressed.

Unlike virtually every other form of debt, a debtor in bankruptcy cannot modify a home mortgage loan. I can buy three investment properties and force the lender to accept less money as part of my bankruptcy plan, but I can't do it with my home mortgage. I'm wondering, aloud, how that makes sense.

Andrea turned me on to a blog called Creditslips where bankruptcy people hang out. In a recent posting there, Mortgage Modification in Bankruptcy: Redux, the commentator intelligently discusses this issue.

And for all you free market fans out there, this would eliminate the need for the giant bureaucracy that Congress is about to create. One of the commenters on Credit Slips wondered if there was a connection between the bankruptcy code revisions in 2005 and the problems we're facing now.

Somebody has to sweep up after the elephants when the circus leaves town. Looks like it's the taxpayer once again.

That's the view from The Law Planet, Jupiter, Florida.

The securities industry, no doubt, has been waiting for the decision in this case for a while. The Securities and Exchange Commission ("SEC") filed an action against NEXT Financial, Inc., an independent broker-dealer firm. The SEC was rightfully unhappy about NEXT's broker transition practices. I've commented on this before, but when you don't work for a brokerage firm and you're accessing that firm's records to enable that firm's broker to transition to your firm, you're doing something wrong. Apparently a few people skipped that class.

An old adage is that "bad cases make bad law." This was a bad case. NEXT had people who would access competitors' computer systems. NEXT had people accessing mutual fund systems using the recruits' user information. And NEXT did nothing to safeguard the information of non-customers on its computer system. The SEC was shooting fish in a barrel.

The Administrative Judge found that NEXT did what the SEC alleged. You can view a copy of the opinion here. It's ugly. Even the proposed changes to Regulation S-P, relating to customer information protection, couldn't help. And now the securities industry is going to have to live with this decision brought about by the overreaching of one of its members.

The lesson here, folks, is don't access other firm's computer systems. Don't take more than you need. And take steps to protect the information you do bring to your new firm.

That's the view from The Law Planet, Jupiter, Florida.

Since just about the beginning of time, FINRA (formerly NASD) fines were viewed as a mere nuisance by out-of-business firms and former registered persons. FINRA has been criticized in the past for not collecting regulatory fines or fees from arbitration proceedings. At least in one case, this seems to have changed.

FINRA filed, and won, an enforcement action against John Fiero and Fiero Brothers, the broker-dealer he controlled, obtaining an award for over $1,000,000 in fines and costs. In the past, this would have been a pyrrhic victory for FINRA as it was well-known that they would not pursue collection if the firm was out of business. Well, it looks like this is no longer the case. FINRA filed a lawsuit in New York state court to collect the award.

FINRA was successful in the lower court and the appellate level. There were various defenses raised by Fiero and his company -- all of which were nice attempts but hard to fathom. Their success, perhaps temporary, came at the Court of Appeals, New York's highest court. For the first time in this matter, it appears, a court addressed the issue of jurisdiction over the action. The Court of Appeals found that Section 27 of the Exchange Act of 1934 specifically provides for "exclusive jurisdiction" in Federal Court. Boom, like that, FINRA was foiled.

Probably not for long. And this will be a lesson for those of us who practice in this area. We can no longer advise clients that, out of the business means that FINRA won't come after you. Maybe it's based on dollar level, but we'll see.

That's the view from The Law Planet -- Jupiter, Florida.

A recent article in The New York Times described how Pakistan's lawyers are opposing the disbanding of the court system and what appears to be the imposition of martial law. I'm not sure what I, a securities lawyer in Jupiter, Florida, can do about this situation other than stand up and cheer.

Lawyers are easy targets in the U.S. We are blamed for higher costs for health care, medications, insurance and just about anything else when the critic feels it appropriate. On the other hand, there are lots of satisfied clients out there who were glad they had a lawyer when one was needed. It may be that people like some lawyers, but only their own. The other guy's lawyers are probably the object of intense dislike.

Lawyers were heavily involved in the formation of our great nation. Lawyers were involved in any case that impacted the rule of law in the U.S. Lawyers are there for the underserved, the ill and those that are too young to even ask for a lawyer. If it wasn't for a lawyer, Mr. Miranda would not have a warning named after him.

So when you read about the lawyers in Pakistan standing up for their country's constitution, dressed in their suits and being assaulted by police with tear gas, ask yourself, do we want to kill all the lawyers? Didn't think so.

That's the view from The Law Planet - Jupiter, Florida.