Can Social Networking Do You Harm?

In today's world, everyone talks about the benefit of social networking and blogging. However, few talk about its potential drawbacks. Some recent events illustrate how social networking can have adverse legal cosequences.

State and Federal tax collectors have been using social networking forums to assist in locating tax evaders and collecting back taxes from them. In one case, the California tax collectors were able to collect "four figure" taxes from a person after a discussion board posting showed the debtor had closed his business and "moved across the bay." The Minessota taxing authorities found a long sought tax delinquent when he announced on MySpace the name and location of his new employment. Searching for information on Google and social networking sites is supplemental to the traditional search methods, such as searching for bank accounts, employment records, real estate records, and motor vehicle records.

In December 2008, Master Harper of the ACT Supreme Court, Australia, authorized a plaintiff to "substitute serve" a default judgment on a hard-to-reach defendants via Facebook. The normal procedure is to serve default judgment on a defendant by personal service or by mail. Given the difficulty in locating the defendants, this Australian court ordered plaintiff to serve notice of entry of default judgment on defendants by transmitting computer messages to defendants' Facebook page.

Some information for this blog was gathered from articles on The Wall Street Journal, and The Sydney Morning Herald. For further information, run a search on Google.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

The Legal Side of "Cash For Clunkers" Program

On June 24, 2009, President Obama signed into law the Consumer Assistance to Recyle and Save ("CARS") Act of 2009, commonly referred to as the "cash for clunkers" program. CARS Act encourages consumers to trade in their older (8 to 25 year old) vehicles, for newer more fuel efficient models. CARS Act required the U.S. Department of Transportation, National Highway Trasportation Safety Administration ("NHTSA") to issue final regulations and implement the CARS by July 24, 2009.

Those consumers whose trade in vehicle qualifies can receive credits ranging from $3,500 to $4,500. The qualifying transactions need to take place between July 1 and November 1, 2009, to the extent the government allocated funds remain available. To check whether your vehicle will qualify for trade in under CARS Act you may visit the official web site.

Under Section 61 of the Internal Revenue Code, "gross income" includes income from whatever source. However, CARS Act specifically states CARS credit is not income to the purchasers. So, for example, if a consumer's transaction qualifies for $4,500 credit, that consumer will truly offset the cost of new vehicle's purchase by $4,500, without having to consider the individual's deductions and tax bracket.

Prior to CARS Act's enactment, other bills were presented and considered at the Congress. One was H.R. 385, the Consumer Auto Relief Act of 2009, which sought to amend the the Internal Revenue Code to (1) allow consumers to deduct up to $7,500 of the purchase price of a new passenger car or light truck; (2) allow deduction of interest paid on purchase loan for such vehicles; and (3) allow deduction of state and local sales taxes on the vehicle purchase. Notice that Auto Relief Act would have provided income tax deductions, whereas CARS Act excludes the credits from purchasers income altogether.

Information for this blog were obtained from StateSurge.com, Consumer Reports, and NHTSA's web site and publication.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

IRS Prosecutes Tax Evaders Using Information Obtained from Swiss Bank UBS AG

The U.S. government has ratched up its tax collection efforts. On the one hand, the government has been prosecuting tax evaders, and pressuring Swiss banks to disclose information that would assist with such prosecutions. On the other hand, the government has introduced Voluntary Disclosure Program, a safe harbor allowing delinquent taxpayers to make voluntary disclosure and payment by September 23, 2009, in order to avoid criminal prosecution and imprisonment.

In February 2009, Swiss banking giant UBS AG settled a U.S. prosecution action against it, by agreeing to pay $780 Million and disclosing information about 250 U.S. depositors. UBS is considered the second largest wealth manager globally. The U.S. Governmet has so far brought four criminal prosecution actions based on in the information disclosed on the UBS depositors.

The latest case has been one against John McCarthy, a resident of Malibu, California. In U.S. vs. McCarthy, United States District Court, Central District of California, Case no. CR 09-00784, the prosecutors charged that in 2003 McCarthy opened a Swiss bank account in the name of COGS Enterprises Ltd., a Hong Kong entity. According to the information released, McCarthy has agreed to plead guilty to failure to report foreign bank accounts from 2003 to 2008, a felony charge. McCarthy has admitted transferring more than $1 Million from his U.S.-based businesses to the Swiss bank account. He has agreed to pay panalties equal to one-half of the highest balances held in this account during the years 2003 though 2008. Under the plea agreement, he faces up to five years inprisonment, three years' supervised release, and fines of up to $250,000. McCarthy is scheduled to appear before the Los Angeles federal court on September 14, 2009.

An earlier case was against Jeffrey Cherkin, a New York businessman. The plea agreement states, Cherkin had used Hong Kong based corporations to hide commissions paid him by toymakers in Hong Kong and in China. When Cherkin needed money, he would request Swiss banks to make out checks payable to Cherkin's U.S. companies and he would personally carry the checks back to the U.S. Charkin has pleaded guilty to filing a false 2007 U.S. tax return and faces 3 years of imprisonment.

Some of the materials for this blog were obtained from the Reuters, The Miami Herald, and USA Today.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

Time is Running out on IRS's Voluntary Disclosure Program

U.S. tax laws require all individuals who are U.S. residents or citizens to pay U.S. taxes on their worldwide income. That is, a U.S. resident or citizen has to report his foreign salaries, interest income, rental income, etc. and pay taxes on them, the same way he would report and pay taxes on his U.S. income. Domestic corporations are likewise taxed on their worldwide income.

U.S. taxpayers who have financial interest in or signature authority over offshore bank accounts, and the aggregate value of these accounts exceeds $10,000 at any time during the calendar year, must annually disclose their assets and accounts by filing a Department of Treasury form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR").

FBAR is due by 30th day of June the year after the taxpayer reaches the $10,000 threshold. Failure to file an FBAR when due may result in civil and/or criminal penalties. There is a 6 year statute of limitation for the IRS to bring a civil claim for delinquent on their FBAR filings. Failure to file FBAR, and the filing a false or fraudulent reports, can result in monetary penalties of up to $500,000 and up to 5 years of imprisonment.

The Department of Treasury has implemented a Voluntary Disclosure Program ("VDP"), which provides a limited time safe harbor for taxpayers with offshore assets to avoid large penalties against them. In order to take advantage of VDP, such taxpayers must disclose unreported foreign income and foreign accounts by no later than September 23, 2009.

VDP is available to individual taxpayers, corporations, partnerships, and trusts; however, the taxpayers need to make their disclosure before the IRS initiates any civil or criminal investigation against them. As well, the taxpayers must file FBAR and amended tax returns for up to 6 years prior and pay the applicable taxes and penalties. If the taxpayer properly complies, the taxpayer will be immune from IRS bringing criminal tax evasion charges against the taxpayer or pursuing imprisonment.

Information for this blog were gathered from various sources including John C. Friskey's article and from the IRS web site. The materials presented in this blog and our other blogs are informational, and should not be relied upon as legal advice.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

Phi Alpha Delta Law Fraternity, International

The Phi Alpha Delta Law Fraternity, International (commonly referred to as "PAD") is a professional fraternity. PAD's Constitution states the organization's purpose is "to form a stong bond uniting students and teachers of the law with members of the Bench and Bar in fraternal fellowship designed to advance the ideals of liberty and equal jusitce under law; to stimulate excellence in scholarship; to inspire the virtues of compassion and courage; to foster integrity and professional competence; to promote the welfare of its memebers; and to encourage their moral, intellectual and cultural advancement; so that each member may enjoy a lifetime of honorable professional and public service."

PAD was founded in 1902 in South Haven, Michigan. Since then, the organization has reached international dimensions. Prominent PAD members have included several U.S. Presidents including William H. Taft, Woodrow Wilson, Warren Harding, Harry S. Truman, James E. Carter and William J. Clinton, and U.S. Supreme Court Justices such as Tom C. Clark, Warren Burger, William H. Taft, Ruth Bader Ginsburg, Stephen Breyer, and Samuel Alito, not to mention the many Senators and Congressmen.

PAD has various Chapters located internationally. PAD's Chapter chartered and located in Loyola Law School Los Angeles is referred to as the William Joseph Ford Chapter. For additional information about Phi Alpha Delta, you may visit its web site, or contact the executive office by telephone at (410) 347-3118.

Robin Mashal is a partner at the law firm of Hong & Mashal LLP, and can be reached at (310) 286-2000. While attending Loyola Law School, Mr. Mashal joined William Joseph Ford Chapter of PAD. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

Justice Sotomayor is Sworn In to the U.S. Supreme Court

On Saturday, August 8, 2009, Sonia Maria Sotomayor was sworn in as the 111th justice of the United States Supreme Court. This was a historical event, as Justice Sotomayor is the first Hispanic justice, and the third female justice in the Court's 220-year history.

Justice Sotomayor is of Puerto Rican descent. She was born in the Bronx on June 25, 1954. Her father passed away when she was 9, after which she was raised by her mother. She completed her undergraduate studies suma cum laude at Princeton University in 1976, and obtained her law degree from Yale Law School in 1979, where she was an editor of the Yale Law Journal. Early in her career, she worked at the New York District Attorney's office, and later had her own private practice. In 1991, President George H.W. Bush nominated her to the U.S. District Court for Southern District of New York. In 1997, President Bill Clinton nominated her to the U.S. Court of Appeals for the Second Circuit. At the Second Circuit, Justice Sotomyor heard more than 3,000 appellate cases and wrote some 380 court opinions. On May 26, 2009, President Obama nominated Justice Sotomayor for appointment to the U.S. Supreme Court, to replace Justice David Souter who is retiring.

Justice Sonia Maria Sotomayor

Section 1 of Article III of the U.S. Constitution provides federal judges with life tenure. That is, once a federal judge (including a U.S. Supreme Court Justice) takes the bench, he or she will remain in that position unless the judge resigns or is removed by impeachment. The policy behind this constitutional provision is to eliminate any control by the government's executive branch over the judicial branch. This explains why the nomination and confirmation of federal judges is such a lengthy and hotly debated matter. This is especially true of U.S. Supreme Court justices who sit at the Nation's highest court and their opinion is the ultimate interpretation of the law. In Justice Sotomayor's case, the confirmation process took better than two months and frequently made the news on a daily basis.

The swearing in oath to the U.S. Supreme Court dictates a duty to administer impartial justice. According to Title 28, Chapter I, Part 453 of the United States Code, each Supreme Court Justice takes the following oath of office: "I, [name], do solemnly swear … that I will administer justice without respect to persons, and do equal rights to the poor and to the rich…. So help me God." There is a famous story about Justice Oliver Wendell Holmes, Jr. who served as a justice of the U.S. Supreme Court from 1902-32. One day Justice Holmes was returning to the Court after having lunch with a young lawyer visiting from Washington. As the two parted, the young lawyer said "Do justice, sir." Justice Holmes responded "No, sir. I shall interpret the law. Justice is none of my business."

The materials for this article were obtained from various sources including Yahoo News, Wikipedia, Washington State Bar Association, Cornell University Law School, and About.com. For additional information run a search on Google.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.

Former AIG Executives Reach Settlement with the SEC

The Securities and Exchange Commission ("SEC") brought lawsuit in the Manhattan federal court against former American International Group, Inc. ("AIG") executives. In this suit, the SEC charged former AIG chief executive officer ("CEO") Maurice "Hank" Greenberg with altering AIG's financial records to inflate its earnings between 2000 and 2005. The suit charged former AIG chief financial officer ("CFO") Howard Smith with civil-fraud.

Based on SEC announcement, Greenberg and Smith have entered a settlement without admission of any wrongdoing. Under the settlement terms, Greenberg and Smith are paying $15 Million and $1.5 Million, repectively. As well, Greenberg and Smith have consented to judgments enjoining them from violating the anti-fraud provisions of the Exchange Act, and from controlling any person who violates the reporting, books and records and internal control provisions of the federal securities laws.

In 2006, SEC sued AIG for securities fraud and improper accounting. AIG was able to settle those claims by paying $700 million in disgorgement and $100 million in penalties.

The information for this article was obtained from various sources including Reuters, CNN, ABC News, and MarketWatch. For additional information run a search on Google.

Robin Mashal is a partner at the law firm of Hong & Mashal, LLP, and can be reached at (310) 286-2000. His practice focuses on business law, real estate law and civil litigation. Hong & Mashal LLP is a California business law firm.