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A law firm recently announced that are employing IBM’s Ross to work in their bankruptcy practice, which currently consists of 50 lawyers.  What is interesting is that Ross is “the world’s first artificially intelligent attorney” combining apple’s Siri voice technology with IBM’s Watson cognitive computer.  According to the firm’s website, “You ask your questions in plain English, as you would a colleague, and ROSS then reads through the entire body of law and returns a cited answer and topical readings from legislation, case law and secondary sources to get you up-to-speed quickly.” Ross will be able to eliminate some of the preliminary research done in cases within 30 seconds.

artificial-intelligence-brain-29076006Artificial Intelligence in law has become a larger topic in the last decade.  The first sighting of Artificial Intelligence in law was in 1999 when Jay Leib and Dan Roth created “Discovery Cracker’ which helped lawyers manage electronic documents for litigation.  Instead of sifting through piles of paper, lawyers now deal with terabytes of data.  E- Discovery is now becoming more sophisticated due to this massive amount of data.  Then in 2013, Jay Leib once again saw a need in the market.  He and Dan Roth created NexLP, a company that used artificial intelligence to analyze data and identify trends. NexLP uses predictive coding, where the computer is able tell which documents are useful and which ones aren’t. This process reduces the time needed for e-discovery and document review since the program is looking for actual concepts and not just keywords.

Currently, nearly 80% of all Americans who need a lawyer cannot afford one.  This is despite the United States having a mass amount of attorneys. With Ross, attorneys currently out of work will be able to use the AI’s services to create a lower barrier of entry into the market, and will create cheaper and more affordable optartificial-intelligence-concept-illustration-29416761ions for prospective clients. On top of this, the addition of Ross into a law firm will enable the firm to lower some of its fees as they wouldn’t be paying humans for cases.  When it comes to opposing law firms battling, it doesn’t matter if there are 30 associates researching a case, or one Ross, the result will be the same. Artificial intelligence will allow the human attorneys to think of creative solutions or focus specifically on the client’s needs instead of leafing through textbooks and clicking hundreds of links looking for precedent or an obscure court ruling.  Ross will also keep you up to date on court rulings to do with the case that is currently being worked on. It can also narrow down the results to the most relevant answers and presents the answers in an understandable language as opposed to passages of law spoken word for word.

businessman-holding-a-brain-in-the-palm--skills-concept--conce   The effectiveness of Ross taking up an entire section of a law firm is still to be seen, but the firm is fairly enthusiastic about the addition of AI Ross.  Their Chief Information Officer explained “… we believe that emerging technologies like cognitive computing and other forms of machine learning can help enhance the services we deliver to our clients.”  He also states we “have been using ROSS since the first days of its deployment, and we are proud to partner with a true leader in the industry as we continue to develop additional AI legal assistants.”

Ross, for law firms as a whole, seems to be a helpful tool.  But, it also means the loss of jobs for a number of lawyers.  Also, Artificial Intelligence, as of now, cannot compete with humans in creative thinking or originality. Artificial Intelligence, in its current state, is good for looking up facts and researching but is nowhere near the point of creating solutions and thinking of new ideas.

Ross will be seen one of the biggest steps in artificial intelligence in law.  The future of artificial intelligence in law is unclear, but one thing that we know for a fact is that if an AI like Ross becomes implemented everywhere, who will be left to wear high heels at the office party?

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crowdfunding-350lSmall investors in Illinois will soon be able to invest in start-up businesses in exchange for a piece of the action, but without some of the onerous oversight previously required by regulatory agencies. Signed by Governor Rauner in July, 2015 the Equity Crowdfunding Act (HB 3429) is a game changing piece of legislation that leverages the crowdfunding platform to the benefit of small investors and companies. Waiving many of the regulations that govern  traditional securities markets, Illinois’ intrastate crowdfunding law authorizes non-accredited investors (also known as “the little guys) to acquire equity in small business without all the red tape.

The law allows individuals with a net worth under $1,000,000 and annual incomes under $200,000 to contribute up to $5,000 per company in any given year. Creative business types will have access to capital that might been unavailable previously, broadening the choice of funding sources beyond the often burdensome small business loans offered by banks.

The law will also allow founders of startups to maintain tighter ownership control of their enterprise. Typically, venture capitalists who invest in new companies demand excessively large chunks of the business in return for their capital infusion. The Act opens doors to a broader lender base while creating the potential for a more even distribution of profits. In general the legislation should improve liquidity across the board.

On the other side of the coin, small investors can benefit from the opportunity to “get in on the ground floor” of rewarding new commercial ventures. While the average citizen is welcome to play the national stock markets, they often end up paying higher transaction fees than insiders, and not having access to such lucrative prospects as IPOs.  The new crowdfunding law is regarded as the most small business friendly measure among all US states and should level the playing field to some degree.

Quoted in the Chicago Tribune, sponsor State Rep. Carol Sente, D-Vernon Hills observed that HB 3429 should also help improve the state’s reputation regarding business climate. As Illinois struggles with a budget deficit and other business climate challenges, this measure has the potential to jump start entrepreneurial enterprises with obvious positive benefits across a broad business spectrum.

Between now and year’s end, Bellas & Wachowski will be analyzing the possibilities of the new law to determine how our clients can benefit from this opportunity. The legislation will take effect Jan. 1, 2016 across Illinois.


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trollIt’s almost never a compliment when someone is referred to as a troll, but in the case of patent extortionists, it is an accurate and richly deserved description. Patent trolls are technically called  “non-practicing entities” (NPE) or Patent Assertion Entities (PAEs), but these euphemisms provide only a dim definition of what they are all about. And they pose a unique challenge to small business owners.

Whatever you call them, they all have a common business model: they purchase patent rights with the intention of generating fees through sketchy lawsuits or the threat thereof.  The patents themselves are generally obscure, shaky or acquired from bankruptcy.  Virtually none of them have ever been deployed legitimately in the marketplace, but that is not the intention of the trollsters. Rather, these organizations exist to exploit weaknesses in the U.S. Patent Office and legal system to generate bogus licensing revenue from legitimate businesses.

Generally, patent trolls have no assets other than the patents they intend to “protect.” They manufacture nothing and render no services. Many of the acquired patents were granted due to the Patent and Trademark Office’s systemic failure to keep up with a rapidly changing world over the past 30 years.  Quite simply, the federal agency has lacked the resources to determine what is really an “invention” in the context of the onslaught of digital technology.  In particular, the class of business method patents that arose that have arisen since 1998 has proven to be a thorn in the side of honest commerce.

In a typical scenario, the NPE contacts a legitimate business with a demand letter claiming infringement of questionable Patent A (let’s say Patent A is a business method patent that applies to any business using doors to enter their building). The targeted business is given the choice of settling for a “licensing fee” or facing a lawsuit. The NPE model works because it costs a lot of money for a legitimate business to defend itself in court, whether the lawsuit has merit or not. Since most NPE’s have neither offices nor employees, it costs them very little to bring the legal action.  Most patent troll lawyers work on a contingency fee basis. For companies fighting these threats, legal expenses can climb into the millions – as many have found out to their dismay. Some have chosen to fight on principle and eventually “won”, while going bankrupt in the process.

There is a real cost to society associated with the activities of patent trolls.  Beyond the cost of paying out what amounts to protection money, fear of patent trolling discourages legitimate innovation in the marketplace and slows job creation. Once limited to mostly technology and software companies, trolls now send blanket demand letters to retailers, restaurants, hotels and all kinds of other main street businesses. In some cases, they do damage to people far removed from the original suit, such as members of credit unions who are targeted with blanket demand letters for use of standard financial technology. If the credit union settles, the money comes out of the pockets of its members.

Since the chances of appealing to a patent troll’s better nature are similar to those of convincing a hyena to go vegetarian, it finally become obvious that regulation needed to be initiated.   Individual states, including Illinois, began implementing patent troll reform laws in 2014. The synopsis of Illinois SB 3405 reads: “Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that it is an unlawful practice to claim that another has infringed upon a United States patent if the claim falsely threatens adverse administrative or judicial action, the assertions lack a reasonable basis in fact or law, the person making the assertion is not, or does not represent, a person with a current right to license the patent, or the claim fails to make certain other disclosures. Effective January 1, 2015.” [Read the Amendment Here]

At this point, a total of 28 states have passed or are about to pass similar legislation.

In addition, the Supreme Court has weighed in on some key patent trolling issues, in the process invoking a small portion their supreme wisdom on the side of good. In a 2013 decision, the Court made it easier for defendants to force NPE’s to pay attorney’s fees. This ruling makes actual lawsuits riskier for the trolls, and trolls hate risk because it costs them money. In a potentially huge 2014 ruling (Alice Corporation v CLS Bank), the Court essentially negated the definition of which types of inventions can be protected. The shakeout of this decision is still being assessed.

However, the fact that patent troll activity is a national problem means that only federal legislation will have the heft to bring this practice to a halt. The good news is that Congressional legislation aimed directly at corrupt NPE practices  was introduced in February of this year. Having accumulated 26 co-sponsors, HR 9 “The Innovation Act” will discourage patent trollers by requiring them to provide more specific information in demand letters. If passed, these restrictions will make it more difficult for trolls to mail out blanket threats. It’s a start/

The bad news is that nothing seems to go smoothly in Washington, DC and the Act appears to be stalled. Whether you own a business or in your capacity as a citizen, I believe this would be a good time for your Congressman and Senator to hear from you in support of HR 9.

Who knows: you might be the next patent troll victim.

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recording-policeIt is now legal in Illinois for citizens to record interactions with police without their consent, but it’s early in the game for too much celebration.

In 2014, the Illinois Supreme Court found the state’s strict eavesdropping law to be unconstitutional under the First Amendment (People v Clark).  Prior to that decision, Illinois had been an outlier among most states with regard to private citizens’ right to record law enforcement officials under any conditions. Most other states already allowed the taping of conversations with police or anyone else without obtaining all-parties’ consent or in most cases, without even letting them know they were being recorded.  But in Illinois, taping a conversation with a police officer without consent was a Class 1 felony with ten year prison potential.

Following that decision, it took a year for our state legislature to amend the Illinois Eavesdropping law, and now Illinois law gives citizens the right to record public conversations with police, arrests and other law enforcement activity without their consent.  720 ILCS 5/14-1 is an improvement.  Nothing promotes accountability like on the spot electronic documentation.

However, every citizen should also be aware that the new law has been widely criticized not only for its vagueness, but also for broadening latitude for law enforcement eavesdropping. Many legal experts and law enforcement officials believe the amended law may discourage video and audio taping of police in a wide range of scenarios. If you find yourself in a situation in which you feel compelled to tape police activity, be aware of the following:

The new law prohibits recording an interaction without the consent of all parties under two conditions: surreptitiously and when the recorded party has a reasonable expectation of privacy. Both of these exceptions will be difficult to prove either way in court. Since most people now carry a device capable of capturing video, it would be challenging to show that any recording was planned in advance – a key component of secret eavesdropping.

The “surreptitious exception” invokes a moral complication. If you are hoping to document police crimes by video-taping an arrest, a beating or what you think is verbal harassment, the act of recording itself is likely to change the behavior of law enforcement. An officer of the law who knows they are being recorded is less likely to commit a crime. In that sense it is possible to regard the new law as a deterrent, which is good as far as it goes. However, the chances of catching serially bad behavior on the part of someone who is supposed to be a good guy are actually reduced by this component of the statute.

Somewhat less fungible is the “reasonable expectation of privacy.” It is hard to imagine a scenario in which a public official believes they are entitled to privacy while doing their job. Unfortunately, one never knows what creative interpretations might arise in the actual prosecution of a case.

A subset of the good news/bad news aspect of this bill is that it reduces the penalties for citizens who violate the statute. Previously, violations were a Class 1 felony with potential sentences from 4 to 10  years; now illegal recording is a Class 2 felony for which you might expect to spend 3 to 7 years in prison if convicted. But the amended law also reduces the penalty for illegal law enforcement eavesdropping from a Class 2 to a Class 3 felony. Both the new law and the old are comfortable with a punishment gap between law enforcement officials and citizens who commit the same “crime”.

An additional stealth provision of the new law is that it expands the circumstances under which officials can eavesdrop on private conversations without a warrant. So along with a small step forward for official accountability comes corresponding step backward. This portion of the law will also end up in the higher courts.

The odds are high that most people will make a decision to videotape police behavior on the spur of the moment or under some sort of time pressure are. Whether you are personally involved or documenting police interaction with a third-party, you are probably not going to have time to analyze the legal implications of your actions. That’s why it’s important to be aware upfront that you are engaging in an activity that could be legally uncertain.

From a private citizen’s perspective, it is too early to say whether the ambiguity of the law will ultimately work to the benefit of citizens. Until it is tested in the real world but before you press record, ask yourself if you are willing be a poster child for official accountability under a slightly improved Illinois Eavesdropping Law.

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teen-drinkingThrowing a party while Mom and Dad are out is a venerable teenage pastime, often regarded as naughty but ultimately harmless behavior.  For philosophically permissive parents, allowing the kids to have a party while the parents are home is sometimes regarded as a better alternative than letting their offspring run wild in the streets. According to this school of thought, “at least we know where they are.”

Unfortunately, there is an almost unlimited potential for things to go south when teens and alcohol/ drugs mix, and parents can end up holding the bag financially. When drunk or high party-goers are released into the world, they could get arrested, or  cause damage to property, or injury to themselves or others. They may kill themselves or someone else.  If any of these things happen, the parents of the hosting teens may well be held legally and financially responsible, even if they had no knowledge of the festivities or the illegal consumption of substances.

Whether or not the owners of the home end up being held accountable depends on a number of factors, some of which aren’t immediately obvious.

Complicit or clueless?   Liability for teen party damage at one’s home can be thought of as an ascending scale of questionable judgment, along which parents enable the process to a lesser or greater extent. The logical principles at work here are: did the parents give permission for the party, were they home and did they allow alcoholic beverages or drugs to be consumed? But lapses in oversight that are not so apparent could still end up costing you money.

Let’s begin with the obvious: If the parents were home, gave permission for the party and allowed alcoholic beverages to be served, they are incredibly liable. Illinois Statute 740 ILCS 58 section 5 is clear about the responsibility of anyone who provides mind altering substances to a minor:

“…any person at least 18 years of age who willfully supplies alcoholic liquor or illegal drugs to a person under 18 years of age and causes the impairment of such person shall be liable for death or injuries to persons or property caused by the impairment of such person.”

However, even the term “willfully” can be subject to interpretation in court. It is not necessary for a parent to pour custom shooters at the wet bar to be held liable for damages. Although it may not seem entirely fair, the fact that liquor was available in the house at all my trigger liability, even if the liquor supply was locked up. The outcome of a court case may turn on whether or not the teens would reasonably know where the liquor was kept and be able to get to it. Since “reasonably” is a highly subjective term, it would seem apparent that no parent would want a court case to turn on its interpretation.

There is an additional standard for most of these scenarios that goes beyond whether or not the parents knew about the party and unauthorized refreshments. That question is whether or not the parents should have known. For example, if there have there been previous unauthorized parties at your house, or the teenager has a shaky track record or if the police been called to the house, the court many decide that you should have known. You may be held liable even if you expressly forbade your teenager to have a party at the house.

Expanded liability:  Another aspect of parental financial exposure that is not intuitively obvious is the scope of potential liability caused by the impaired behavior of a guest. While most people understand accountability for a partier that is injured driving into a tree, they may miss the fact that you can be sued for what the partier does to a third-party. Parents may be responsible for damage done to a personal property or for an injured pedestrian as well. In fact, under the reasonable care principle, if you discovered a drunken guest at your house and failed to drive them home, you could be liable for anything that happened to them or damages they caused after leaving your house.

There are any number of teen party scenarios that can end up with parents financially responsible for consumption of illegal substance at their home. While understanding the law is helpful, the overriding principle is this: whether you are home or not, do everything within your power to make sure no one ever leaves your house in an impaired condition.

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pizza-delivery-w-textFor the last several years the issue of fair minimum wage rights has been front and center in an increasingly passionate public debate. Because it is perceived as a classic David and Goliath mismatch, it is tempting to assume that employers are automatically the bad guys. But, as the following discussion demonstrates, the topic of fair worker compensation can be complicated, both morally and legally.

Perhaps you have noted recent reports of two Fair Labor Standards Act (FLSA) class action lawsuits against Domino’s franchisees in Georgia and California. This is not the first labor related action against Domino’s franchisees, nor is it the first against pizza chains and other fast food store owners.  However, this one is a little different because it ties in a minimum wage action with the reimbursement of delivery drivers for their expenses. This fact makes the case less straightforward and shifts it into an interesting gray area. The strategy chosen by the plaintiff’s legal team also highlights the fact that legislative rules often seem designed to make justice harder to come by.

Filed by a pizza delivery driver in California, the lawsuit alleges that Hishmeh Enterprises, Inc. (the fifth largest Domino’s franchise owner in the country) deprived drivers of fair wages by imposing a faulty policy to determine reimbursement rates. The plaintiffs are not claiming that the store owners were failing to pay the federal $7.25/hour minimum wage for the hours they worked. They are instead asserting that the way in which the owners paid them for vehicle expenses subtracts “value” from their overall compensation and constitutes an FLSA violation.

According to the lawsuit, Hishmeh Enterprises’ flat fee of $1.00 per delivery is the problem: based on standard IRS mileage reimbursement charts, the drivers should be entitled to 57.5 cents a mile. When the plaintiff’s worked out the numbers, they concluded that they were being shorted $1.30 per delivery, which translates into a negative $3.25 an hour. The complaint claims this shortfall runs afoul of the FLSA “kickback” rule by virtually subtracting the $3.25 an hour from the drivers’ wages, almost cutting their compensation in half.

The complaint reads in part: “The net effect of defendant’s flawed reimbursement policy is that it willfully fails to pay the federal and state minimum wage to its delivery drivers.”

In other words, the class action suit is attempting to force Hishmeh Enterprises to compensate drivers fairly for their expenses, but is coming at it by claiming a minimum wage violation. Ironically, the FLSA does not clearly mandate that business owners must compensate employees for personal expenses incurred while doing their job. The law does not specifically tell a pizza franchisee “you must reimburse your drivers for mileage on personal cars used during deliveries.”

Instead, the Feds use oblique language that most likely means the same thing.  While the FLSA clearly mandates that employers pay wages “free and clear”, that condition can be compromised if an employee is forced to pay a “kickback” to their employer. One of the definitions of a kickback is failing to reimburse an employee for expenses that benefit the employer.

If the FLSA language simply stated that employees using their own vehicles for company business must be reimbursed at a minimum of the current IRS mileage allowance, then there would be far less to dispute. But for the Hishmeh Enterprises’ legal team, there will be plenty to dispute. There are any number of variables involved in computing expense allowances for delivery drivers. For example, how many miles does do drivers average per delivery and how many deliveries does a driver average per hour? The only thing we know for sure at this point is that the defendant’s attorneys will have different numbers than the plaintiffs’.

Were the defendants really trying to cheat their drivers? Is the flat fee per delivery a free market approach to incentivizing employees to be more efficient or simply an invitation to exceed the speed limit? In several years we will at least know what a California court thinks about it.

Meanwhile, for small business owners the best approach to labor relations is to avoid the courts in the first place. Likewise, for employees, it is important to understand what the law really says about your rights.

Bellas and Wachowski has been handling employment law for over 40 years.  We invite you contact us with any questions you have on the topic.  For additional information and a free initial consultation, contact attorneys George Bellas or William Boznos.

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power-of-attorney-downloadThe problem with traumatic injuries, accidents and medical emergencies is that they always seem to come unexpectedly. But there are steps that everyone can take to improve the odds that you can exert some element of control over future events, even in the worst of circumstances.

To that end, the State of Illinois has adopted a new Health Care Power of Attorney document that promises to be a boon to anyone seeking to manage their own fate in the event of a personal health crisis or accident. Technically known as an “advance directive”, the HCPOA goes into effect when a traumatic event renders you unable to make decisions on your own behalf. Similar to (but not the same as) a Living Will, the HCPOA provides legally binding emergency guidelines for your family or another designated representative.

A key component of the process is the selection of your trusted health care agent, as they may well become the most important person in your life should your life be on the line. The objective of the form is to communicate your emergency medical treatment parameters to your HCPOA-appointed agent, but the law nevertheless allows this individual to consent to or refuse medical interventions. They are also authorized to withdraw treatment if they understand that course to be consistent with your wishes.

Depending on how you specify your preferences, your agent may also be required to speak with physicians or hospital staff about your condition.  They may be permitted to view medical records, approve tests and treatments and choose where you receive care.

By its nature, an HCPOA is deployed in situations that are fraught with tension and anxiety. Whether they are a family member or otherwise, be sure to consider your appointed agent’s character and even toughness should they find themselves confronted with differences of opinion.

No one wants to confront the possibility of being struck down by a traumatic disease or injury, but the benefits of anticipating such a possibility in advance far outweigh the time and trouble required to fill out the form. High among the benefits of filing the HCPOA is to preclude anxiety on the part of your family and friends caused by the necessity to second guess your preferences. There is also value in minimizing conflict among family members, especially if some hold strong religious or moral beliefs regarding life support.

Filing the form should be part of a larger process that also includes having at least one conversation with your agent about a number of key considerations. If you had to choose, is it more important to you to live as long as possible, or to avoid prolonged suffering or disability? Would you rather be at home or in a hospital for the last days or weeks of your life? Do you have religious, spiritual, or cultural beliefs that you want your agent and others to comply with?

The law permits you to use the official HCPOA form or one of your own, as long as it conforms to State of Illinois’ legal requirements.  Go to our Web Site for more information and the forms.

More questions on health care power of attorney or any other legal topic? We’re the go-to attorneys for small businesseslooking for answers.

For additional information and a free initial consultation, contact attorney William Boznos.

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shutterstock_143144308    In decisions involving two recent cases, the US Supreme Court has made subtle but important changes to the standards affecting retaliation and discrimination cases. By applying more stringent criteria in two areas, the Court has limited the ability of workers to file these types of lawsuits against business owners. The first criterion invokes a legally tricky principle called a “but for” causation standard and the second clarifies the definition of “supervisor.”

A complaining employee must establish what is known as a “but for” condition to satisfy the first criterion.  Specifically, the justices ruled that retaliation claims filed under Title VII of the Civil Rights Act of 1964 must be proven under this established legal principle. It is a term that lawyers are familiar with, but most business owners are not. In practice, it means that an act of discrimination – usually termination or demotion  –  must be shown to be contingent on a supervisor’s wish to retaliate against the employee.  By invoking this scenario, the plaintiff’s lawyer is compelled to convince a jury that the discriminatory action would not have taken place “but for” an conscious desire to punish or pay back the employee.  This concept is a little more accessible if we substitute the term “if it were not for” to replace “but for.”  For example, the supervisor would not have fired the employee if it were not for (but for) the supervisor’s desire for retribution against the employee for complaining about sexual harassment.

The second component of the ruling is more straightforward and involves redefining the term “supervisor” for purposes of discrimination cases.   In the case of University of Texas Southwestern Medical Center v. Nassar, the Court ruled that a supervisor is a person who has authority over the employee in the workplace, including the power to hire and fire.  More broadly, a supervisor has the power to hire, fire, promote, transfer or otherwise discipline an employee.  In that sense, the supervisor is a representative of the business ownership, who may be held legally accountable under the law.

Specifically, the ruling does not apply to discrimination by a coworker, which is particularly good news for small business owners.  Under the new rulings, the business can’t be held liable for the conduct of a fellow employee in cases such as perceived discrimination or sexual harassment.   While discrimination by one’s fellow workers is an unfortunate occurrence, the Supreme Court has clarified that it is not a scenario for which a business can be held accountable in court.  The rulings are likely to reduce the number of frivolous lawsuits filed in this area.

If you are a small business owner and have questions regarding employment law concerns or other employment law questions, please contact the law office of Bellas & Wachowski at (800) 825-9260.

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fraud     In a world preoccupied with internet spam and phishing attacks, beware the old school scalawags who operate their rip-offs through the U.S. mail!  Like their online counterparts, they are trying to lighten your wallet by offering bogus products – in this case “corporate compliance” services.

When your business registers with the State of Illinois, your company information becomes part of the public record and is readily available through the Secretary of State’s public databases. There are good reasons for this requirement. For one, it is important for customers and vendors to be able to confirm that you are a legitimate business. It is also necessary for various branches of government to be able to verify the company’s ownership and officer structure for the purposes of regulation and revenue collection.

Unfortunately, your contact information is also easily accessible to anyone who wants to send you solicitations in the mail. And not everyone who sends you mail has your best interests in mind. Focusing primarily on new business registrations, a specialized type of shady dealer out there is lurking, waiting to offer you their “help” in complying with government regulations. These promotional mailings are creatively worded to panic you into spending money for spurious compliance services, usually for hefty fees.

The most common scam looks as if it comes from the Secretary of State’s office and mimics the design of official forms.  The letter ominously references a state statute that requires businesses to file annual minutes and offers professional assistance to assure compliance. Variations on the theme may reference the filing of annual reports, obtuse business licensing requirements or other recordkeeping functions.  These solicitation letters typically imply there are serious penalties for not complying, including fines or loss of business license.

The language in these documents is purposely deceptive, leading you to believe you are required to send the requested payment to the state of Illinois. What they hope you don’t notice is that the sender is in reality a third-party entity with no relationship to the Secretary of State or any other government unit.

In many cases, the compliance issue itself is phony. For example, the Illinois Business Corporation Act does not require corporations to file a “Minutes Records Form” at all. The only annual fee due to the state is the one related to the filing of annual reports.

Even if the solicitation does reference a “real” compliance issue, there is no value added to having the scaminators handle your paperwork – except to them. Most states allow submission of official documents online and charge only minimal fees.

As these smooth operators attempt to stay one step ahead of the posse, they move their businesses and change the names of their companies more often than Kim Kardashian changes outfits. Among the enterprises that have operated in Illinois are “Corporate Records Service”, “Compliance Annual Minutes Board,” “State Corporate Compliance”, Annual Business Services” and “Board of Business Compliance.”  They all sound very corporate and official, but they are not either of these.

The perps of the corporate compliance scams go to a lot of trouble to fool you, but there are easy to spot features that typically appear in the solicitations.

  • They are similar to Secretary of State or other agency forms
  • They often contain an official-looking seal
  • They often cite a fictitious deadline in the near future
  • They imply that failing to return the form and pay the requested fee may place your company in legal jeopardy, or might cause your company’s filings with the Secretary of State to be out of compliance
  • They may include a reference number that matches one assigned by the Secretary of State
  • They may use the term “annual fee” or “annual payment” instead of an official state “filing fee”

In the past year, the “Philing Phee” for many of these outfits has increased from $125 to $150. Fraudsters have expenses too.

All but the most criminal of these solicitations include very fine print which sets out the whole story for anyone who takes the trouble to read it. A typical sample might be: “This product has not been approved or endorsed by any government agency and this offer is not being made by an agency of the government.”  While on the one hand these statements are usually hard to find and very small, the fact that they have been included at all is a strong indication that the rogues behind the scams understand they are on shaky ground.

Don’t send these people money or bother to reply. I am also suggesting that if you have the time, you should report the matter to Secretary of State’s Office at 312-814-2201. If you have any questions regarding a promotion you have received pertaining to business compliance, feel free to pick up the phone and call me at  847-823- 9030 x216.

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facebook     The central tragedy of human existence is that our lives on the earthly plane are finite. Saint or sinner, the time must come when each of us departs this mortal coil.  But whether or not you believe in an afterlife, there is a higher power that dictates how one small slice of your legacy lives on – that power is Facebook.

As is the case with your other important assets and heirlooms, it now appears to be a key responsibility of your social media persona to arrange for a successor for your Facebook page.  Even if you have a legal executor for your “real world” estate, Facebook has recently determined that our state laws don’t apply to them and that you will need to name a manager to administer your page after your passing.   This Facebook as decreed.

Previous to this policy change, Facebook simply “memorialized” the pages of people who died when advised of their death. The deceased’s profile would be identified with a “Remembering” status, which allowed friends and visitors to share memories on the Timeline.  While family members could request that a page be taken down – a challenging process to be sure – they were not permitted to make any changes to the page.

Facebook’s new policy encourages you to predetermine a “legacy contact” to administer your postmortem profile.  Once named, the friend or relative can post information on funeral arrangements and other related details, as well as respond to new Friend requests. However, the legacy contact will not be able to log into your account, change any content, or read Facebook messages from friends.   In order for a page to transfer to the legacy contact, the social media colossus still requires that your profile be memorialized and requests proof that you are indeed dead. The preferred evidence is a link to a published obituary.

Some of the permissions that will be available to your administrator will depend on choices you make when setting up the legacy contact. In terms of long term consequences, the most important is probably the option to give your Facebook executor access to the posts, photos, videos and information in your “about” section. They will be able to see everything except your personal messages. If you are not the sentimental type, you can also choose to have your Facebook page taken down permanently following your death.

One word of advice: make sure to alert your candidate for posthumous executor before you officially sign them up on the Facebook form. This will help to reduce their alarm when they receive the notification e-mail that your online request will generate: “Hi ___, Facebook now lets people choose a legacy contact to manage their account if something happens to them: Since you know me well and I trust you, I chose you. Please let me know if you want to talk about this.”

The flip side of naming a successor for your social media is the challenge of what to do if a close relative dies without naming a legacy contact. Facebook provides a form for friends or family to request changes following a death. However, you will need to know a fair amount of the deceased’s account details, including the exact version of the name on the page and the e-mail account used to create the page. They also require documentation in the form of a death certificate, a birth certificate or other proof of authority.

Obtaining this material could be upsetting in the aftermath of a death, but we have to understand Facebook’s position as well. They need to establish a high bar of legitimacy to prevent sabotage and pranks.  Once you have established your credentials, you have the option of either removing or “memorializing” the page. But Facebook won’t do anything unless you proceed according to their protocol, so the page will remain online as a potentially disturbing online artifact until Facebook changes their policy again. For all these reasons, it is far easier to have legacy contact status set up beforehand. If you don’t want to name anyone, you can simply opt to make the whole thing disappear.

Not everyone will immediately see naming a Facebook legacy contact as a priority in their lives. Even though society has been awash in social media for over a decade, it is fair to say that our culture has not had time to assimilate whether or not a Facebook page constitutes part of one’s inheritance.

But it may well be useful to give the matter some thought. A bit of foresight now could help remove at least one source of anxiety for your family in the case of your untimely demise.