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• Gifts for the People – Proposed Drastic Changes to Federal Gift Tax Law

  Let the taxpayer beware: the recently proposed “For the 99.5 Percent Act” introduced by Senators Bernie Sanders and Sheldon Whitehouse would radically limit the ability of parents or grandparents to make annual exclusion gifts for their families. 
 
 Under present law, $15,000 per donee is excluded from taxable gifts. Gifts that are excluded do not count toward an individual’s lifetime exemption from gift or estate taxes. Gifts of $15,000 may be made to any one or more recipients, and married couples can effectively gift $30,000 to any person through the concept of gift splitting...

• Filing Deadlines and To-Do List for April 2021

  INVESTMENT ADVISERS - 
 
 Form 13H: Following an initial filing of Form 13H, all large traders must make an amended filing to correct inaccurate information promptly (within ten days) following the quarter-end in which the information became stale (unless they are on Inactive Status). Recommended due date: April 10, 2021. (Note: Neither the SEC nor its staff has provided guidance on the definition of “promptly” for Form 13H.)

• CFPB Settles with Yorba Capital Over Debt Collection Litigation Notices

  On April 6, the Consumer Financial Protection Bureau (CFPB) issued a consent order against California-based debt collector Yorba Capital Management LLC and its sole owner Daniel Portilla, Jr. for violating the Consumer Financial Protection Act and the Fair Debt Collection Practices Act. The consent order permanently bans Yorba and Portilla from the debt collection business and orders restitution and penalties to resolve the findings of the CFPB.

• A Farewell to Bernie: Internal Reporting

  Bernie Madoff died yesterday. I cannot think of one person who embodied so many of the things that the compliance profession stands against than Madoff. From fraud, to lying, to ruining lives and about everything in between; it was all wrapped up in Madoff. Given the complete failure of the Securities and Exchange Commission (SEC) to shut Madoff down after whistleblower Harry Markopolis alerted authorities to the massive fraud, I thought the fall of Madoff would be a good introduction into some best practices regarding an internal reporting system. The 2020 FCPA Resource Guide stated, “An effective compliance program should include a mechanism for an organization’s employees and others to report suspected or actual misconduct or violations of the company’s policies on a confidential basis and without fear of retaliation.”

• Third Circuit Affirms Dismissal Of Employee Who Advocated Violence In A Social Media Post

  In a recent employee termination case, the Third Circuit Court of Appeals recently upheld the dismissal of race discrimination claims by a bank employee who was terminated due to a social media post. 
 
 Plaintiff, a Caucasian woman, was employed as a project manager in her employer’s wealth management department...

• Passport Rejected — A New Twist in the COVID-19 Passport Chapter

  Seyfarth Synopsis: Similar to mask mandates, COVID-19 passports—a means to prove one’s vaccination status—are becoming a political lightning rod in the United States. Where states like New York have viewed such passports as a viable tool for promoting safe in-person interactions, others, like Florida and Texas, have viewed them as an affront to privacy and individual liberties. For multi-state employers considering a passport solution, these developments command attention.

• SPAC Attack! SPAC IPOs Are Booming

  We have all seen the daily stories about SPACs (special purpose acquisition companies) and their attack on the IPO and M&A markets over the last 15 months. For context, the number of SPAC initial public offerings (IPOs) has exploded...

• Bristol-Myers Squibb Settles MDRP Underpayment Claim For $75 Million

  The U.S. Department of Justice recently announced that Bristol-Myers Squibb (BMS) agreed to pay $75 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program (MDRP). Of that total, $41 million plus interest will be paid to the federal government and the remainder to various state Medicaid programs...

• When Does My Duty To Preserve End?

  Generally, a litigation hold letter* will issue to preserve documents and information potentially relevant to a reasonably anticipated lawsuit. However, when does one’s duty to preserve potentially relevant documents end? Unfortunately, the answer is not necessarily when the litigation ends. Indeed, a recent decision out of California reminds us there may be instances when one’s preservation obligations are ongoing, even after a litigation is dismissed...

• New York’s Adult-Use Cannabis Law: Multifaceted Licensing With A Purpose

  First in a series on the New York State Cannabis/Marijuana Regulation & Taxation Act- 
 
 New York state recently passed long-awaited adult-use cannabis legislation, taking the lead on other key jurisdictions with medical use-only systems, such as Florida and Pennsylvania. While the bill awaits implementation, now is the time for entities interested in entering the market to gear up for the application process...

Featured documents

• Does the promissory note given in consideration for participation in a MLM program violate state public policy?

  The District Court of Appeals ruled that Universal Marketing Research was an illegal lottery, and that the promissory note should be nullified. Universal Marketing sold Childress a home central vacuum system for a promissory note and the names of 16 friends who might also be interested in the...

• Were Koscot's marketing practices inherently deceptive?

  The court held that Koscot's structure was inherently fraudulent under the New Jersey Consumer Fraud Act. The State attorney general alleged that the marketing practices used by Koscot were deceptive. Koscot overstated potential compensation during recruitment meetings and failed to disclose to...

• Davis v. Avco Financial Services, 739 F2d 1057 (1984)

  he Court of Appeals held that a person is liable as a "seller" of a security if they were the proximate cause the securities sale. An Avco loan officer became involved with Dare to be Great, a program that was found to be a security. The loan officer made appearances at Dare meetings and...

• Can the promoter of a pyramid scheme be convicted of larceny by false pretenses if some of the investments made by the promoter were legitimate?

  The New York Appellate Division concluded that all of the promoter's promises need not be false to be convicted of larceny by false pretenses. The promoter made some investments in legitimate enterprises, but he also made others in shell companies that existed in name only. He argued that he was...

• Is the Ohio State Pyramid statute an unconstitutional prior restraint of speech?

  The Ohio Supreme Court held that the state statute prohibiting pyramid schemes was not a prior restraint on free speech. The statute prohibits proposing, planning and preparing to operate a pyramid plan or program. Beckley challenged the statute's constitutionality, arguing that by prohibiting...

• Is the Maryland Statute prohibiting the promotion of pyramid program unconstitutionally vague?

  The Maryland Court of Special Appeals held that the statue was constitutional because the meaning of the words used could be derived by their common usage by a person of normal intelligence. In interpreting statutes, the court held that a statute is not void for vagueness if the meanings of the...

• Does the date that money is paid into a pyramid program correspond with the date of loss, for the purpose of recovering under Connecticut state statute?

  Karjohn was involved in a pyramid scheme operated by Davis, and sued to recover her money under the state's anti-gambling statute. Pyramid programs were prohibited as a form of gambling under Connecticut state statutes. The statute allowed for the recovery of money paid into such a program to be...

• The FTC claimed that L&S Research claimed that its products were effective in achieving results that were not supported by reliable scientific research.

  L&S Research Corporation manufactured weight loss and body building supplements marketed under the Cybergencis trade name. The company agreed to stop advertising that the product would be effective in helping the user gain muscle or lose fat and that the product would work for all users. The...

• Can Amway modify its distributor agreement on a case-by-case basis?

  The Court of Appeals held that Amway could not, under the terms of its agreement, modify the rules affecting transfers of downline distributors on a case-by-case basis. The Bakers had formed a significant downline network with Amway. They began distributing additional products, other than Amway,...

• Does the possibility of outside sales and not an investment by a prospective recruit allow an otherwise chain distribution scheme to escape application of the statute?

  The Wisconsin Court of Appeals held that the possibility of a sale, instead of an investment, does not exempt a sales program from the application of the state chain distribution statutes. Fortune in Motion designed its program to allow the new recruit to directly invest or sell product. The...