Big news today.  A federal grand jury has indicted four people on fraud and conspiracy charges in the CIETC scandal and the former CIETC Chief Operating Officer, John Bargman, apparently pleaded guilty to charges in exchange for testimony in the case.

The four indicted include:

  • Former Des Moines City Councilman and CIETC Board President, Archie Brooks
  • Former CIETC CEO Ramona Cunningham
  • CIETC’s former accountant, Karen Tesdell
  • Former Deputy Director of the Iowa Workforce Development, Jane Barto

The indictments come 10 months after the scandal at the job training agency broke.  The income received by CIETC management is staggering and according to one of my criminal defense buddies it is no surprise federal authorities filed charges.  This has been brewing for months.

If you are a volunteer board member of a state or other agency you better make sure you pay attention and provide appropriate oversight.  Volunteer board members can no longer serve only as a rubber stamp.  Will indictments like this have a chilling effect on the willingness of people to volunteer for these boards? 

In Iowa, the sole owner of a business generally has the following choices for type of business entity:

  • Sole Proprietorship
  • S Corporation
  • C Corporation
  • Single-Member Limited Liability Company

Some of the factors you may want to consider include:

  • Do you need limited liability protection?
  • How will profits be taxed?
  • Can you take advantage of certain fringe benefits?
  • Will you be seeking additional investors?

A sole proprietorship is the easiest to set up.  No formal legal documentation is required.  But a sole proprietorship does not provide you with limited liability protection.  The S Corporation, C Corporation and LLC provide limited liability protection.

Business profits with the S corporation, single-member LLC, and sole proprietorship are taxed at the individual level and you avoid double taxation.  The C Corporation can allow you to take advantage of certain fringe benefits but it also requires appropriate tax planning to reduce your corporate tax liability. 

A C corporation may be necessary if you want to attract additional investors, especially venture capital.

Keep in mind there is nothing to prevent you from changing business entities as your business grows.  Many businesses start out as sole proprietorships and then incorporate later. 

For more information see these posts on Small Business Incorporation in Iowa and Forming an LLC in Iowa. 

 

Tim Johnson of Carpe Factum recently challenged Iowa patent lawyer Brett Trout and me to show how we "thin-slice" clients and cases. Brett posted first and did a great job with how he thin-slices clients.  That leaves thin-slicing cases to me.  Thin-slicing is a concept from Malcom Gladwell’s book, Blink, and is about how we as human beings are capable of making sense of situations on the thinnest slice of experience.

So, what five things do I look for to quickly size up a litigation case?

1)  Do I like the client?  I generally see the good in people.  If I don’t like someone there is a significant possibility a jury or judge won’t like them either.  That is not to say the client must be perfect.  No case is perfect and the client won’t be either. (Just as lawyers are not perfect).  But I ask myself about whether I am willing to sit next to this person at trial.  It also doesn’t hurt if the other side wears a black hat.  But experience tells me a client is never as good and the other side is never as bad as you initially think.

2)   What’s the law?  You can have huge damages and a wonderful client but if the law is not on your side – forget about it.  I turned down the largest damage case that ever walked into my office because it could not be won.  You must have a reasonable chance of winning.

3)  Am I familiar with the subject matter?  Preparation of a case in an unfamiliar area of law costs more time and increases the risk.  Plus, I need to be qualified to handle it. 

4)  Will the recovery be worth the effort?  This is true for both the client and lawyer.  If it is an hourly case, I consider the likelihood the client will recover significantly more than they have paid in legal fees and expenses.  If it is a contingency case, the risk is on my shoulders.  So, I consider the likelihood of recovery, the potential amount of recovery, and how much I will need to invest (in time and money) in order to complete the case.  It is also important to know whether the judgment is collectible. 

5)  Is the case interesting or a cause worth pursuing?  It helps to have passion for the case.  We often live with cases for years at a time.  I always ask whether I can make a difference and help someone.   

When I follow these factors it tends to lead to more success and happiness both on my part and the client.   

If you are a lawyer representing an individual you better start asking your clients whether they have a MySpace, Facebook, or other social networking Web site.  A lawyer I know ended up on the short end of the stick in a pre-trial hearing when opposing counsel pulled out pictures and comments from a client’s MySpace site during a hearing.  Needless to say, the pictures and comments were less than flattering for the client.

Whether you have a personal injury, employment, family law or other case be sure to ask the client in your initial interview whether they have a social networking Web site (or whether family members or friends may have posted about them on the Internet).  If so, be sure to visit the site to learn what has been posted.  If you are a client, be sure to tell your lawyer about any of your personal Web sites.  You may think you are safe because only your "friends" have access.  Keep in mind that your friends are one subpoena away from being forced to testify against you. 

Ignore MySpace, Facebook, and other similar sites at your peril.

See this related post on employer background checks.

The Fifth Circuit Court of Appeals has ruled there is no private right of action for violations of HIPAA (Health Insurance Portability and Accountability Act of 1996).  To this point, every federal district court that has decided the issue has also ruled no private right of action exists.  No other federal circuit court has decided the issue.

A woman had sued filed suit against a doctor for disclosing medical information without her consent.  The Court based its decision on the fact that HIPAA provides both civil and criminal penalties for improper disclosure of medical information and limits enforcement to the Department of Health and Human Services.  The Court ruled that since HIPAA specifically delegates enforcement, there is a strong indication that Congress intended to preclude private enforcement.

Read the opinion.

The Plaintiffs have now set up a Web site to post the public records in the Iowa consumer class action against Microsoft.  Just go to www.iowaconsumercase.com.  The site currently has transcripts available.  Exhibits and further information will be available later this week.  A permanent Web site is expected to be set up during the week of January 21st.  Judge Rosenberg has ruled that a document may be posted three days after it is admitted into evidence.

Employment lawsuits are continually on the rise.  Here are seven things that may help you avoid employee lawsuits:

1.  Treat Employees with Respect:  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

2.  Communicate with Your Employees:  First, make sure you have an effective employee handbook with up-to-date employment policies and publicize your policies to employees.  Make sure you follow your policies.  One of the easiest ways to land in an employee lawsuit is the failure to follow your employment policies.  Also make sure you have an open door policy where employees are allowed to voice their concerns or complaints.  Do not let complaints fester.  Deal with them right away.

3.  Implement an Effective Unlawful Discrimination and Harassment Policy:  Your harassment policy should include more than just sexual harassment.  There may be other forms of harassment based upon race, religion, age or disability.  It is also critical to consistently train employees and supervisors regarding unlawful harassment and discrimination.  You should consider training employees on harassment and discrimination issues at least once every year.

4.  Document, Document, Document:  The importance of good record keeping cannot be overstated.  If you don’t have something in writing, chances are a jury or judge may not believe it happened.  Be sure to document even verbal warnings and maintain an appropriate personnel file in order to make sure the documentation is not lost.

5.  Conduct Honest Employee Evaluations on a Regular Basis:  Unless your company is headquartered in Lake Wobegon every employee is probably not above average.  Evaluations can be valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.

6. Do Not Retaliate:  Employers are often blindsided by retaliation claims.  There are a number of proactive measures you can take in order to avoid liability for retaliation claims.  It is important to avoid retaliation because recent cases have lowered the burden for plaintiffs to prove their retaliation claims.

7.  Take Action and Investigate Promptly: If a complaint arises, make sure you take the complaint seriously and investigate promptly.  A quick and thorough investigation may help eliminate problems before you have a real mess.  You will need to consider who should conduct the internal investigation.

These simple steps will go a long ways to reducing employee lawsuits.  To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

The Iowa consumer class action against Microsoft resumed this week with testimony from the first live witness in the trial, Ronald Alepin.  Alepin is a computer consultant and a technology advisor with MOFO in San Francisco.  Groklaw has some interesting information about Alepin and his past dealings with Microsoft.

Alepin has been called to describe the tactics allegedly used by Microsoft to thwart and crush competitors.  A potentially damaging part of Alepin’s testimony is his accusation that Microsoft’s "innovations" are really just Microsoft’s attempts to copy others’ programs and catch up with other developers. 

Judge Scott Rosenberg did limit Alepin’s testimony in some regard.  Alepin could not offer opinions on whether Microsoft’s conduct was anti-competitive, nor could he offer opinions on other legal matters involving antitrust cases against Microsoft.  Alepin also could not testify on "what would have been" had Microsoft acted differently.

Yesterday, the Iowa Blogga Nostra had its initial family gathering at Panera in West Des Moines.  Talk about passion and enthusiasm for your work.  These Central Iowa bloggers certainly have it:

If you are a Central Iowa blogger who did not attend (or just interested in blogging) please feel free to stop by.  The tips, success stories and discussions on future trends were flowing.  It would be great to see Nanette Rodriguez (Hispanic Marketer) Joe Kristan (accountant), Matt Gardner (wealth and estate planning) and Jennifer Jaskolka-Brown (family law) at Panera in WDM on the first Friday of every month at 8:00 a.m.

If you are a blogger it is truly "an offer you can’t refuse".