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Elon Musk and Tesla to Pay $20 Million Each for Securities Fraud

On August 7, 2018, then Chairman and CEO, Elon Musk tweeted that Tesla was considering going private and had the necessary funding “secured”.  Since that day, it was determined that Tesla and Musk did not have funding “secured”.  The Securities and Exchange Commission has determined that this was securities fraud.  After the tweet in August, Tesla’s stock price jumped 11% and then fell on back-to-back days.  This story may not be over just yet.

August 7, 2018

On this day, Chairman and CEO of Tesla Elon Musk sent this tweet:

Once the Securities and Exchange Commission (SEC) launched an investigation into the claim, they discovered that funding was not properly secured.  Musk went on to say that a Saudi Arabian wealth fund “strongly supported” the transaction needed to take the company private.  Musk also stated that his tweet was not meant to state that the transaction was imminent.

The SEC Investigation and Ruling

On September 29, 2018, the SEC charged Musk and Tesla with “failing to have required disclosure controls and procedures”.  The complaint from the SEC also stated:

  • There must be further corporate governance and reforms at Tesla.
  • In 2013, Tesla confirmed they would be using Elon Musk’s personal Twitter account to disseminate concrete corporate information without having any policies or oversight pertaining to the account.
  • Musk is to be removed as Chairman of the Board, but can remain CEO.
  • Tesla and Musk are subject to a fine of $20 million each.

This agreement between the SEC, Tesla, and Musk is contingent on approval from the court.

Court Demands Justification

Judge Alison Nathan of the New York District Court demands that the SEC, Tesla, and Musk submit a letter by October 11, 2018 explaining why all parties agree that the settlement is fair.  Any settlement discussed between the parties is not official until this happens.

If you find yourself in debt, foreclosure, or maybe your business is working on complex transaction, contact Elias Dsouza at Dsouza and Strachan Lawgroup Group.  Elias has been assisting individuals and businesses navigate their legal issues for over 15 years.

Who is Brett Kavanaugh?

In short, he is potentially our next Supreme Court Justice.  The embattled candidate has been getting a serious amount of attention for some serious reasons.  Multiple people have come forward with allegations of drunken tirades and sexual misconduct.  Most of us hadn’t heard of Brett Kavanaugh before he was named as a candidate so, who is he and where did come from?

A Little Background

Kavanaugh is a native of Washington D.C.  He received his undergraduate and law degrees from Yale which is where current Supreme Court Justices Thomas, Alito, and Sotomayor went to law school.  Beginning in 1993, Kavanaugh clerked under Justice Anthony Thomas.  In addition:

  • He was a member of the counsel that investigated the Clinton administration and the suicide of Clinton aid, Vince Foster.
  • He served for 5 years as counsel to the Bush administration.
  • He was appointed to staff secretary for the Bush administration.
  • He was appointed to the D.C. Circuit Court of Appeals.

Brett Kavanaugh has a generally conservative opinion record which is why Donald Trump nominated him.  With a republican House and Senate, Kavanaugh was thought to be a sure thing.

So, What is the Problem?

Well, since his nomination, multiple former classmates have come out to dispute the “worthiness” of Kavanaugh.  A current professor at North Carolina University and former college classmate of Kavanaugh is giving information to the FBI which explains that the candidate is a “belligerent and aggressive drunk”.  The professor plans to share a story that includes Kavanaugh throwing a drink in someone’s face and starting a fight while attending Yale.

In addition to the fighting, two other former Yale classmates allege that Kavanaugh held down a woman and groped her at a party where he was drinking.  Another allegation is that he exposed himself to two freshman classmates at Yale.

These allegations are particularly troubling because Kavanaugh was asked by the Senate under oath about his drinking habits during high school and he said he did not have a problem.  While getting this candidate confirmed by this Senate still seems probable, many believe he should not be confirmed because he may have lied during the vetting process.

If you need assistance navigating bankruptcy, credit card debt, or just about any other legal issue, contact Elias Dsouza of Dsouza and Strachan Lawgroup Group.  He has been assisting individuals and businesses for over 15 years to get back on track.

 

Img Source : By U.S. Court of Appeals for the District of Columbia Circuit [Public domain], via Wikimedia Commons

Why Did Toys ‘R’ Us Go Bankrupt?

Toys ‘R’ Us was a goliath in the toy industry for decades.  It was publicly traded on Wall Street for almost 30 years starting in 1978.  At its peak, the toy retailer’s stock traded for over $45 per share.  Unfortunately, this got the attention of other retailers.  Companies such as Wal-Mart, Target, and Amazon began to steal market share which was the beginning of the end for the toy giant.

Going Private

In 2005, several private equity firms came together to buy up all Toys ‘R’ Us stock for about $6.6 billion.  Unfortunately for those firms, over the next 15 years, competition slowly chipped away at the market share.  Saddled with tons of debt from the stock acquisition and unable to adapt to the changing retail sales model, Toys ‘R’ Us looked to a new CEO.

Plans to Go Public Again

In 2015, David Brandon was hired and many suspected it was to take the company public again.  He was the CEO of Domino’s for 11 years and took them public.  Losing market share and value, public money was the “shot in the arm” Toys ‘R’ Us needed to keep from going under.  However, in October of 2017, any chance the toy company had of surviving was ruined.

The October 2017 Report

Due to the leveraged buyout back in 2005, Toys ‘R’ Us was operating with a huge amount of debt.  Many of the company’s financial obligations were pushed to 2017.  The company failed to go public before the bills were due so they did not have the capital to meet their obligations.  The real “nail in the coffin” came in October of 2017 when a financial report came out stating that, between October of 2016 and October 2017 the toy company operated at a loss of over $950 million.  This killed any chance of going public.  Additionally, consumers were reluctant to shop there during the holiday season particularly for gift cards out of fear that the company would not survive to honor them or provide customer support.

You may not have failed as spectacularly as Toys ‘R’ Us, but your small business may have failed nonetheless.  Being behind on loans and getting harassed by creditors is a horrible feeling that may keep you up at night.  If you find yourself in this position, contact Elias Dsouza at Dsouza and Strachan Lawgroup Group.  He has the skills and experience to walk your through the filing and give you your life back by halting those phone calls and letters from creditors.

Lindsey Lohan’s Mom Files for Bankruptcy

So often is the case that a famous person bites off more than they can chew.  Whether it be houses, jewelry, or friends, people who have money seem to spend money.  Unfortunately, the latest celebrity (kind of) to file for bankruptcy is Dina Lohan.  Dina has been an actor, producer, talent manager, singer, and more in her career which has netted her an estimated $1.3 million.

The Divorce

In 2007, Dina’s divorce was finalized.  Her 22-year marriage to Scott Lohan was marred by alcohol, cocaine, and physical abuse.  Dina maintained custody of their 3 younger kids and the kid’s childhood home which had a mortgage of $1.5 million.

Property Debt

As previously stated, Dina got to keep the home and the $1.5 million in debt that came with it.  Dina has made a decent amount of money throughout her career, but in 2017 the mortgage became too much for her to handle.  The house went into foreclosure even though Lindsay gave her $40,000 to help.  Dina eventually lost the home because she did not respond to the suit within 90 days of the suit filing.  If Dina had read “So You Are Behind on Your Mortgage Payments and You Are Facing Foreclosure” she would have known better.

Taxes and Other Debt

Dina owes thousands in taxes to New York and California.  It is estimated that she owes $4,651 to California and at least $9,000 to New York state.  In addition to state taxes, Dina owes over $45,000 to the IRS, over $10,000 for her Honda, and over $10,000 to her kid’s high school.

Debt can feel insurmountable.  Debt can BE insurmountable.  When this is the case, bankruptcy is a perfectly valid option.  It is a legal tool designed to help an individual (or business) get out from under the thumb of creditors.  People can be forced to file for bankruptcy for many reasons and, while it is not ideal, it can help you move on with your life.  If you are constantly being harassed by creditors and you are ready for a change, contact Elias Dsouza at Dsouza and Strachan Lawgroup Group.  Elias has been helping individuals and businesses navigate the complex process of filing for bankruptcy for over 15 years.  He has the skills to enable you to move forward with your life.

Florida Contractors Face Fines from OSHA for Bridge Collapse in March

Employers, especially those in construction, almost always say “the safety of our employees is our number one priority”.  Most of the time, this is true.  Unfortunately, sometimes it is not true and people get hurt as a result. 

What Happened

Florida International University (FIU) paid several contractors to build a pedestrian bridge over Tamiami Trail (U.S. route 41).

  • The main span of the bridge was lifted into place on March 10, 2016.
  • On March 13th, the engineer in charge of the project reported cracking on the north section of the main span. The engineer left a voicemail with the Florida Department of Transportation (FDOT) which explained that the cracks were not a safety issue and could be repaired later.
  • On March 15th, engineers were adjusting tension on a portion of the bridge and it collapsed killing 6 people and injuring 9 others.

The Investigation

The National Transportation Safety Board (NTSB) sent a team to the site the day of the collapse.  Over the course of the next two years, the NTSB and FDOT investigated the pieces of the bridge, all communications to and from the contractors and governing bodies, and all paperwork filed in preparation for building.

After two years of investigation, it was determined that the contractors were negligent in their assessment that the cracks in the bridge were benign and they failed to protect their employees.  The Occupational Safety and Health Administration (OSHA) was given the go ahead to propose just under $90,000 in fines to be evenly dispersed amongst the contractors.  In addition to the fines, civil suits are being filed in 2018 and plaintiff’s compensation for damages could rise to over $1 billion.

If you feel that your employer has put you in an uncomfortable position or in outright danger, you may have options.  Whether it be discrimination, physical danger, or some other workplace transgression, if you need guidance, contact Elias Dsouza at Dsouza and Strachan Lawgroup Group for a free consultation.  Elias has the skills and experience to defend you.

The Latest Refugee Settlement News

The United States Resettlement Program (USRP) is a joint effort involving the Department of Homeland Security, the Department of Health and Human Services, and State Department.  Its purpose is to manage refugees seeking a life in the United States.  Candidates for participation in this program are sponsored by U.S. embassies.  The President is responsible for determining the annual number of refugees to be placed in the United States.

The Declining Number of Refugees Allowed to Relocate

From 2016 to 2018 the number of refugees allowed to participate in this program were:

  • 2016 – 85,000
  • 2017 – 54,000
  • 2018 – 45,000

45,000 is the lowest number of refugees allowed to participate in this program since its inception.

The Process of Resettlement

The process of resettlement typically takes 2.5 years and typically follows this path:

Security

  • Pre-screening by the Resettlement Support Center.
  • On-site interview by the Refugee Corps.
  • Security clearance and fingerprinting.

Placement (30-90 days in the U.S.)

  • Placement allocations utilizing each of the 9 national voluntary agencies.
  • Cultural orientation and departure processing.
  • Initial reception and placement.

Transition

  • Cash and medical assistance.
  • Employment services and medical screening.
  • Beginning specialized programs to cope with transition.

Do You Need A Lawyer to Navigate This Process?

If you or your family are considering resettlement utilizing this program, it is possible to do it without the services of a lawyer.  All of the paper work and process are outlined here on the Office of Refugee Settlement website.  However, resettlement is becoming increasingly competitive and complex.  The number of refugees allowed to resettle has dropped over 50% and the number of global refugees has risen over 50%.

While the resources are available to work through immigration without a lawyer, you should understand that this could lead to costly errors and confusion.  Resettlement is complicated, competitive, and important.  If you or your family is trying to navigate legal immigration to the United States, consider contacting Elias Dsouza at Dsouza and Strachan Lawgroup Group for a free consultation.  For over 15 years, Elias has been guiding families through the complex process of legal immigration.

How a Hurricane Can Blow Away Your Credit Score

With Hurricane Florence pummeling the east coast, for many, priorities are being shifted.  When you think of a hurricane, you think of the dangers of high-speed winds, rising water levels, and wide spread homelessness.  What you may not think of is the effect a hurricane can have on your credit score.  While this certainly takes a back seat to safety, it should when you are preparing for the storm.

The data used in this post are from a report released in 2017 by the Kansas City Fed, “Financial Vulnerability and Personal Finance Outcomes of Natural Disasters“authored by Kelly Edmiston.

Who is at risk?

People with relatively high credit card utilization and unpaid bills are at risk of losing more than 80 points on the credit score if they are directly hit by a Category 1 hurricane.  In 2007, Hurricane Humberto slammed into the coast of Texas.  In areas of coastal Texas where:

  • 1% of people had unpaid bills, the average drop in credit score was 16.2%.
  • 5% of people had unpaid bills, the average drop was 81.2 points.
  • People had 10% credit card utilization, the average drop was 17.9 points.
  • People had 40% credit card utilization, the average drop was 71.2 points.

The average drop in credit score for all areas affected by Hurricane Humberto was 46.4 points.

How Can You Avoid or Reduce Your Risk?

The author of the report, Kelly Edmiston, addresses one of the main reasons people find themselves unprepared in the path of a hurricane.  He says, “The problem’s not so much that they’re making mistakes in preparing for a disaster, but they underestimate the likelihood that they’ll be affected.”  Suggestions for preparing include:

  • Paying your bills before the hurricane arrives. You may not be able to pay online, by phone, or by mail if you wait.
  • Notifying your credit card companies that you have to evacuate. This could get you an extension if you are late and they will know not to decline your charges if you relocate to a relatively unusual place.
  • Getting cash before the storm arrives. Many places may not be able to accept credit or debit cards and this can prevent you from over-utilizing your cards.

It can be extremely difficult to prepare for a natural disaster.  Sometimes, even being prepared is not enough.  If your credit has been affected by a hurricane, unexpected job loss, or for any other reason, you may need help getting back on track.  If you want creditors to stop calling day and night, contact Elias Dsouza.  He has the skills and experience to get you back on track.

A Quick Guide to Puerto Rico’s Bankruptcy

Puerto Rico became a United States territory in 1898.  The islands economy relied mostly on agriculture.  However, after World War II, the United States tried to modernize the territory by moving businesses there.  Of course, these businesses moved to take advantage of the lenient tax laws and cheap labor ultimately not improving the Puerto Rico in the long run.

The Economic Rise and Decline

In the 1970’s the federal government passed a tax law with a large loop hole that allowed huge businesses to operate in Puerto Rico while paying almost no taxes.  This was great for the citizens of the territory, but it created an enormous tax deficit for the U.S. government.  In 2006, the law was completely repealed and most of the businesses operating in Puerto Rico left leaving thousands of people jobless and debt on the rise.

Underground Jobs

It is estimated that one-third of the Puerto Rican job force operates “under the table” which is to say that the income on these wages is not traceable and therefore not taxable.  This lack of infrastructure leads to a tax deficit for the territory.

How Does All of This Lead to Bankruptcy?

Due to the lack of tax revenue, the Puerto Rican government cannot sustain itself.  Unable to collect taxes from its citizens, the government sold $61 billion in bonds to some of the largest firms on Wall Street.  That total is now up to $70 billion.  I addition to the debt associated with bonds, Puerto Rico owes its government employees over $43 billion in pension payments.  That puts Puerto Rico over $120 billion in the red.  Just to offer some context, when Detroit, Michigan filed for bankruptcy in 2013, it (only) owed about $14 billion.

While the magnitude of the debt is far different than a person or small business may experience, the solution for this type of bankruptcy is similar.  Currently, the United States government is working with leadership in Puerto Rico to put together a bankruptcy plan that their creditors and the court can agree to.

You may not be $120 billion in debt, but maybe you are behind on loan payments and getting harassed by debt collectors.  If you want the phone calls and direct mail to stop, talk to Elias Dsouza and Dsouza and Strachan Lawgroup Group today.

Remembering Burt Reynolds’…Bankruptcy

Everyone is familiar with Burt Reynolds as an actor.  He starred in movies such as Smokey and the Bandit, Deliverance, Boogie Nights, and The Longest Yard.  What you may not remember is his bankruptcy.  Like so many Hollywood stars, he worked hard and played hard.

Divorce from Loni Anderson

In the early 90’s, after 5 years of marriage Reynold and Anderson filed for divorce.  The original divorce agreement mandated that Reynolds pay $2 million and an additional $47,000 per month in “divorce related expenses”.  He continued to pay various amounts for 22 years until he finally wrote a check to Anderson for over $154,000 to end the arrangement.

Bad Investments

Reynolds admittedly was not very good with money.  He took the advice of his business manager and did not pay attention to his investments.  The first bad investment was in a regional restaurant chain called Po’ Folks.  He and Buddy Killen invested $20 million each and they had problems from the beginning.  It got bad enough to warrant the liquidation of all assets which led Buddy and Burt to make another bad investment with the salvaged funds.

Investment number 2 was in another restaurant chain called Daisey’s Diner.  The same issues caused Buddy to sink an additional $12 million into the investment.  Both Buddy and Burt eventually pulled out.  All-in-all, Reynolds lost around $20 million in these investments.

The Icing on the Cake

Perhaps the biggest mistake Reynolds made was entering into all investments as an individual.  His business manager did not advise him to form a corporation with Buddy Killen which made Reynolds personally exposed to his creditors.  His personal assets became available to creditors when loans were not paid.  Even more questionable, Reynolds told his business manager to just pay everyone he owed instead of working with creditors to settle on lower amounts and payment plans.  This left Reynolds with almost nothing.

If Burt Reynolds had Elias Dsouza at his side, many of these unfortunate events could have been avoided.  Elias has been working with individuals to protect themselves in business transactions, debt defense, and credit restoration for over 15 years.  Contact Dsouza and Strachan Lawgroup Group for a free consultation.

Tips for Preparing Your Business for Tropical Storm Gordon

  • Posted On September 6, 2018
  • Categorized In News
  • Written By

Tropical storm Gordon made landfall in Florida Tuesday night.  You should have started preparing before today, but it may not be too late to ready your business for a turbulent week.  Mitigating damage during a natural disaster can be incredibly beneficial in the long run.

Preparing Your Property

This may seem obvious, but there are things you should do to your physical business to prepare for a tropical storm such as securing your property and covering windows.  You want to make sure that any products that are reliant on temperature are relocated in the event of power outage.   However, your business is composed of more than a building and physical goods.

Preparing Your Staff

Bad things happen when there is no plan in place for your employees.  People get caught at work during natural disasters quite frequently.  If you have employees, be sure to:

  • Prepare them with means of communication outside of landlines.
  • Create a “call down” list so everyone from the top down stays informed.
  • Let staff know that they are not expected to be at work if they are concerned for their safety.
  • Have a rendezvous point and time in place in case all communications are disrupted.
  • If you can, offer water, food, and shelter to your employees.

Preparing Business Operations

It is essential to prepare your suppliers, customers, and anyone else that could be affected by pausing your normal business operations.  A few things you can do:

  • Maintain a physical list of vendors and delivery schedules so you can maintain contact with them in the event of an outage.
  • Create a message on your website to communicate a plan to your customers.
  • Make sure you have enough cash on hand to operate for at least two weeks.
  • Keep a physical phone book with phone numbers for your insurance agent, local disaster relief organizations, and employee health insurance providers.
  • If you store business data on-site, consider transferring the data to a cloud service or another physical location.

It is very difficult to be completely prepared for a natural disaster.  Often times, small businesses lose money because insurance companies refuse to adequately cover damage.  If your business suffers damage caused by unforeseen circumstances and you need help getting the support you are entitled to, consider contacting Elias Dsouza at Dsouza and Strachan Lawgroup Group for a free consultation.