Woman holding a black rifle

How to Set Up a Gun Trust

Legal AssistantAdministrative Law, Business Law, Regulatory Law, Resources

If you’re a gun owner, you’re likely familiar with all the benefits that come with setting up a gun trust. These are special kinds of trusts designed to hold ownership of firearms. They are subject to strict state and federal oversight and can include other types of weapons. To learn more about what a gun trust actually is, you can read our primer about this topic here. This article takes an in-depth look into how to actually set up a gun trust.

Weapons Held in Gun Trusts

Two federal laws regulate gun trusts used for weapons: The National Firearms Act of 1934 (NFA) and Title II of the Gun Control Act of 1968. The latter is a revision of the NFA. You’ll often come across weapons referred to as NFA items or Title II firearms. They are classified based on which law regulates their use and ownership.

What Is an NFA Item and How Is It Different From a Title II Firearm

Grenades, short-barreled shotguns, short-barreled rifles, silencers, machine guns, etc., are all classified as NFA weapons. Weapons in this category need to be registered with the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).

Only the person it is registered to can possess and use the firearm in question. If an NFA firearm isn’t already registered with the ATF, you cannot register it, effectively rendering its ownership illegal.

If you want to transfer your registered firearm to someone else, you first need to get authorization from the ATF and pay the $200 tax fee (although some items have a $5 tax requirement).

Several other federal gun laws apply to NFA items as well. For instance, the Firearm Owners Protection Act of 1986 outlawed the manufacture of machine guns from the date the law was first enacted. Only those manufactured before that date can be legally purchased.

How to Set Up a Trust for NFA Items

There are three main ways to set up an NFA gun trust.

1. Free Gun Trusts

Most gun manufacturers and NFA dealers usually give free gun trusts with the purchase of every firearm. It is a popular tool they use for marketing to target individuals who may not already have an existing trust.

2. Lower-Priced Generic NFA Gun Trusts

In this method, an attorney creates a standardized NFA gun trust specific to the state you live in and sells it repeatedly to different customers at a reasonable price. This gives firearm owners access to a trust without having to pay the exorbitant amounts associated with having a custom one specifically created for them.

3. Customized NFA Gun Trusts

These are created for you to accommodate multiple NFA items and multiple trustees, allowing those firearms to be “shared” among the members of the trust. These are more expensive to set up than the generic boilerplate variety.

Gun Trust Law Changes

Gun and silencer
Source: Unsplash

The ATF implemented new guidelines governing gun trust regulation. These include:

  1. “Responsible persons” are required to fill out an NFA gun trust form and submit their respective photographs and fingerprints to the ATF every time the trust acquires or makes an NFA item;
  2. Copies of the completed gun trust form and the NFA application for each “responsible person” must be submitted to the Chief Law Enforcement Officer (CLEO);
  3. CLEO certifications/signatures are no longer needed.

The first two procedural changes to the gun trust law are designed to increase the burden on using NFA trusts. It ensures that every person who can legally own a firearm is subjected to a thorough background check when buying NFA item with a trust. It also makes sure that local law enforcement authorities are aware of every new NFA item owned by a gun trust.

The third change makes it easier for individuals to acquire and own NFA items without a gun trust.

Should Schedule-A Be Included in a Gun Trust

While most gun trusts include schedules such as Schedule A to identify all the items the trust possesses, it is not always a mandatory requirement. Here’s why.

If you want to title your firearm in your gun trust’s name, the ATF requires you to submit a complete copy of the gun trust itself and every amendment made to it, along with your application. If the trust doesn’t specifically mention that it included schedules or any other attachment to identify the trust property, then Schedule A doesn’t need to be submitted.

On the other hand, if your NFA gun trust specifies that schedules are included as part of it, you will need to submit all of them to the ATF – gun trust schedule A example included.

Gun Suppressor Laws

The right to own a firearm is a constitutionally protected 2nd Amendment right. That said, different states have their own laws regulating the use and possession of weapons. These laws revolve around the limits on ammunition, open or concealed carry, and duty to inform. Other states have laws on the use of firearm accessories, one of which includes suppressors.

Suppressors are designed to minimize the flash of a firearm and muffle the sound generated when discharging a gun. Their use and regulation have been the subject of heated debate for several years and counting.

To purchase a suppressor, you need to:

  • Be at least 21 years old
  • Be a United States citizen
  • Be legally allowed to purchase and possess a firearm
  • Pass a background check
  • Pay a one-time, $200 Transfer tax
  • Live in a state where it is legal to own a suppressor

These laws are subject to change depending on the state in which they are enacted. For instance, you need to be at least 18 years old to purchase a suppressor in some states. Others require you to be at least 18 years old to possess a suppressor if you’re a beneficiary of a gun trust.

The gun suppressor laws in the following states make their purchase and use illegal:

  • Rhode Island
  • New York
  • New Jersey
  • Massachusetts
  • Illinois
  • Hawaii
  • Delaware
  • California

If you need help setting up a gun trust, get in touch with a qualified firearms attorney.

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Prison cell

What’s the Difference Between Jail and Prison?

Legal AssistantCriminal Law

The words “jail” and “prison” are often used interchangeably. While both terms generally refer to incarceration, they’re not the same.

Incarceration of any kind is a punishment. It is designed to be unpleasant. That said, the policies and rights that define the day-to-day life of inmates are quite different in the two institutions.

What exactly is the difference between jail and prison? Here’s everything you need to know.

Jail vs Prison

At the most basic level, the fundamental difference between jail and prison has to do with the length of incarceration for the locked-up inmates. Jail is usually for short-term sentences, while prison is for those serving long sentences. How are jails different than prison? Let’s explore the answer to this question in depth.

What Is Jail

A jail is a short-term lockup facility operated by counties, cities, and municipalities. A larger metropolitan area might maintain multiple jails within the cities and counties, whereas a smaller jurisdiction might have a single county facility. In some cases, you may have several smaller jurisdictions joining together to run one regional jail facility.

Jail houses contain a mix of people in various stages of the criminal justice process. You might find a freshly arrested individual housed in the same facility as someone undergoing post-incarceration supervision. Every year, an estimated 11 million people cycle in and out of jails.

A person in jail can be:

  • A defendant who’s been charged with a crime but is unable to post bail while awaiting trial; (A judge might set a higher bail amount for a repeat offender or an individual who would be considered a flight risk or danger to society)
  • A defendant who’s been convicted and awaiting sentencing
  • A defendant convicted of a misdemeanor offense and sentenced to serve less than one year behind bars
  • A defendant convicted of a felony and is either awaiting transfer to a prison facility or is serving jail term as part of their felony probation sentence
  • A defendant on hold, awaiting a determination for an alleged violation of their probation or parole terms
  • A defendant awaiting transfer to a federal facility, a different county jail, or extradition to another state’s jail facility
  • A defendant on Immigration and Customs Enforcement (ICE) hold

While defendants who’ve been sentenced to serve one year or less behind bars will do their time in jail, a pretrial offender might be incarcerated for longer depending on the time it takes for their case to go through the criminal justice process.

Complex cases heading to trial with a lot of discovery will usually have lengthy stays for individuals who are unable to post bail.

What Is Prison

A prison is a long-term lockup facility run by state and federal governments and holds about 1.5 million inmates. Each state may operate anywhere from a handful to several dozen prison facilities.

The federal government runs 122 prisons located in different parts of the country, excluding the private facilities run by private firms that hold 8-11% of the total population of inmates. These companies have long-term contractual agreements with states and the federal government.

The military also has its own prisons that house service members from all five branches convicted of various offenses under the Uniform Code of Military Justice.

Types of Prisons

Prison cell
Source: Pexels

Different prisons have different functions. Some have been designated intake facilities – specific institutions where every convicted defendant is sent to initially. The corrections department will then transfer them to an appropriate facility depending on the inmate’s sentence and security needs.

Federal and state government prisons are designed on a security-level system. They include low- to maximum-security prison facilities, work prisons, and boot camps. Other prisons are classified by the specific types of programs or services they offer, such as drug rehabilitation programs.

A person in prison can be:

  • An individual sentenced to more than a year behind bars
  • An individual serving a life sentence without the possibility of parole
  • An individual on death row unless they successfully appeal their case or get it commuted or pardoned
  • An inmate who committed a crime within that particular state or region
  • An out-of-state inmate who is no longer safe at the facility within the region or state they committed the crime
  • A pretrial detainee accused of a federal crime
  • A sentenced inmate convicted of a federal crime

An inmate in the federal system can be incarcerated in a facility located in any part of the country.

Is Prison Worse Than Jail

The short answer is – no, it is not. While most people who end up in jail hardly ever spend more than one year there, the facilities are designed for short-term stays. As a result, they tend to have fewer services and resources than you would find in a standard prison.

When you compare the conditions in a county jail vs state prison, inmates in jail houses often complain of limitations on movement, lack of nutritional food, lack of access to exercise, and inadequate medical care. It is not unusual to come across defendants expecting a conviction, to accept plea deals in order to be transitioned from the jail they’re currently being held to a prison facility.

On the flip side, while a prison may not exactly be pleasant, it does offer more services to its inmate population. You’ll find a variety of educational programs, including GED courses, allocated time outdoors in a large, open yard, medical facilities, prison jobs, and so forth. The conditions in prisons are more favorable to inmates compared to those in jails.

Alternatives to Jail or Prison

As a result of the rising prison and jail populations, lawmakers and courts are increasingly looking for alternatives to jail or prison incarceration. A prosecutor and defense attorney might negotiate a plea deal that involves fines, community service, restitution, house arrest, probation, and work release, in place of time behind bars in a county, state, or federal facility.

Courts also allow defendants with psychiatric problems, including sex offenders and those with drug and alcohol addiction issues, to serve a portion of their sentence in treatment or rehabilitation programs. These vary from intensive treatment programs funded by the state to halfway houses funded by nonprofit organizations.

Ensure you retain an experienced criminal defense attorney to help you address your sentencing options.

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A person playing a video game

Activision Blizzard Lawsuit Over Sexual Harassment Settles at $18M

Legal AssistantCivil Rights, Constitutional Law, Personal Injury Law

In July 2021, Activision Blizzard, the gaming giant behind hit franchises Candy Crush, World of Warcraft, and Call of Duty, was hit with a civil lawsuit in California. The Department of Fair Employment and Housing (DFEH) filed a complaint citing allegations of sexual harassment, gender discrimination, and other potential violations that go against the equal pay laws in the state.

In its suit, DFEH further alleged that Activision promoted a sexist culture where women were paid significantly less than their male counterparts and retaliated against them when they brought up their sexual harassment concerns to company officials.

Before the DFEH suit, the US Equal Employment Opportunity Commission (EEOC) had brought a complaint with similar allegations against the video game publisher. What is the current status of the Activision Blizzard lawsuit? Here’s everything you need to know.

Activision Lawsuit

Female workers likened their experience working at the Gaming company akin to working in a frat house. They alleged that several of their male coworkers would show up to work hungover, and many others would drink while on the clock. The sexual harassment allegations ranged from jokes about rape, derogatory comments about women’s bodies to unwelcome groping by male employees.

The complaint filed by the DFEH was a culmination of a two-year-long investigation to look into the unequal treatment of women at the organization. Women were paid significantly less than their male peers both at the time of hire and over the course of their employment. They were given lower-level positions and were consistently passed over for promotions despite having a heavier workload than their male counterparts.

One of the women stated that her manager passed her up for a promotion because “she might get pregnant,” and her focus would shift from her job to being a mom.

The investigations further revealed that gender-based discrimination was worse for women of color. In the suit, two African-American women reported being micro-managed and singled out when performing their duties at the company. Several women who spoke up about the discrimination were laid off, involuntarily transferred to other locations, or outrightly denied lucrative opportunities.

DFEH later added to its initial complaint, accusing the video game company of evidence suppression during the investigation. It also changed the wording to include contract and contingent workers.

Activision Blizzard Sued

The complaint filed by DFEH isn’t the only lawsuit the video game publisher was facing at the time. Prior to that, the EEOC sued the firm, citing allegations of pregnancy discrimination, sexual harassment, and related retaliation against the female employees who spoke up.

The EEOC lawsuit stated that the federal commission had been investigating the company for three years and that Activision Blizzard failed to take the appropriate preventive and corrective measures despite being fully aware of the complaints raised by the female employees.

Shortly after filing, the gaming giant announced that it had reached a settlement agreement with the EEOC. Activision agreed to establish a fund worth $18 million dedicated to compensating eligible claimants. Any unused funds would be channeled toward charities that promote awareness around gender equality, harassment, company equity, and diversity issues, as well as those geared toward advancing women in the video game industry.

EEOC Lawsuit Settlements

Brown wooden gavel
Source: Pexels

Aside from the recent $18 million deal reached with Activision Blizzard, several other EEOC lawsuit cases have involved unlawful employment-based discrimination. Some have resulted in settlements, while others are still ongoing. Here’s a brief overview of some notable cases.

Stan Koch Trucking

In an October 2020 ruling by the District Court of Minnesota, Koch was found liable for using a strength test that discriminated against female employees and applicants. The court found that candidates and employees who were not hired or were terminated because they failed the strength test were entitled to compensation. The trucking firm was ordered to pay $165,000.

Dollar General

In April 2021, the retail giant paid $50,000 to an assistant manager after she was repeatedly subjected to sexual harassment by her male boss – the store manager for the Rock Hall, MD, branch. When she escalated the issue to Dollar General management, they transferred her to a different store that added an hour to her daily commute. They failed to take disciplinary action against her harasser.

United Parcel Service (UPS)

In December 2018, the UPS reached a settlement agreement with the EEOC to pay $4.9 million in a religious discrimination class-action suit. Employees whose religion went against the company’s appearance and uniform policy were denied supervisory and customer-facing positions for maintaining long hair or beards.

How to File EEOC lawsuit

If you’ve faced discrimination from your employer on the basis of your sex (including sexual orientation, gender identity, and pregnancy), religion, race, color, age, national origin, or disability, you have the right to sue your employer. Before you can file a lawsuit under federal law, you first have to file a charge with the EEOC.

You have a 180-day window from the date the discrimination took place to file a charge. There are several ways to do this:

  1. Go to the EEOC’s public portal and fill the form provided with the requested information; or
  2. Visit an EEOC office in person, and a staff member will prepare a charge on your behalf based on the information you provide them with; or
  3. Get in touch with them via the phone number provided on the website; or
  4. File a complaint with your local or state Fair Employment Practice Agency; or
  5. Send a letter by mail detailing the discriminatory actions, where they took place, and what you believe you were discriminated against. Be sure to include your name, address, email address, and phone number, as well as that of your employer. Don’t forget to include your signature.

Once the EEOC concludes its investigation, it will issue you with a Notice of Right to Sue, at which point you’ll have 90 days to file a lawsuit in court. The EEOC lawsuit process can only begin once the investigation closes. If you don’t receive the Notice of Right to Sue in 180 days, you can request it through the public portal.

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Nurse holding a newborn baby

When Does a Birth Injury or Complication Warrant a Lawsuit?

Legal AssistantMedical Malpractice, Personal Injury Law

If there ever were a time when qualified medical care was critical, it would be during the birth of a newborn child. Expectant parents want their children to be born healthy. That last thing they expect to hear is that complications during birth and delivery have resulted in a birth injury. Unfortunately, these types of injuries usually cause a permanent disability in the baby.

When does a birth injury or complication warrant a lawsuit? Here’s everything you need to know.

Birth Injuries vs. Birth Defects

The main differentiator between a birth injury and a birth defect has to do with how they develop.

A birth injury occurs during the birth and delivery process. It may include physical trauma to the head and brain hemorrhage.

A birth defect is an abnormality that develops while the child is still in the mother’s womb. According to the Centers for Disease Control and Prevention (CDC), a birth defect usually develops within the first trimester of pregnancy. An untreated infection, family medical history, and drug and alcohol use are some of the most common factors that increase the risk of a child in utero developing a birth defect.

Birth Injury Causes

A birth injury can result from brain damage brought about by several conditions and risk factors that may be present during childbirth. Each cause is unique and can give rise to several different types of birth injury.

One of the most common causes of birth injuries is delayed birth. Labor that persists for more than 18 hours would constitute a delayed birth. As time goes on, pressure in the infant’s brain continues to mount. This can lead to high blood pressure and fetal distress, resulting in a stroke or other heart-related complications.

Oxygen deprivation is another common cause of birth injuries. It can result from underdeveloped lungs in an infant born prematurely or a prolapsed umbilical cord which occurs when the cord slips into the birth canal ahead of the infant. In both cases, the baby’s oxygen supply is limited or, in severe cases, cut off completely, causing a birth injury.

What Is the Most Common Birth Injury

The most common birth injuries infants sustain during childbirth include cerebral palsy and brachial plexus palsy. Here’s an overview of each.

What Is Cerebral Palsy

Every 2-3 out of 1,000 infants are born with cerebral palsy. It is a disorder that affects posture, muscle tone, and movement. Cerebral palsy symptoms include muscle spasms, weak muscles, and a lack of motor skills development.

Cerebral Palsy Causes

In most cases, the condition results from brain damage that occurred during childbirth. This stems from extreme hypoxia (oxygen deprivation) due to:

  • Failure to properly monitor the laboring mother
  • Use of improper birthing techniques
  • Failure to monitor or identify signs of fetal distress

While surgery may help the child, cerebral palsy has no cure and will require a lifetime of therapy. The condition can lead to additional health complications, including hearing, vision, and speech impairment, and learning disabilities.

What Causes Cerebral Palsy During Pregnancy

Aside from oxygen deprivation during childbirth, events that occur before birth can interfere with normal brain development while the infant is still in the mother’s womb. Some of the common causes of cerebral palsy during pregnancy include:

Infections During Pregnancy

Parasitic infections like toxoplasmosis and viral infections like cytomegalovirus and rubella (German measles) in an expectant mother have been known to cause brain damage in the fetus, resulting in cerebral palsy in both full-term and premature babies. Reproductive and urinary tract infections also increase the likelihood of preterm delivery, which is another major risk factor for the condition.

Insufficient Fetal Oxygen Supply

If the placenta tears away from the uterus pre-delivery or fails to function properly, it results in insufficient oxygen supply to the fetus. This leads to cerebral palsy.

Prematurity

Preterm infants who weigh less than 3.3 pounds are 30% more likely to develop cerebral palsy compared to full-term babies. In several of these cases, these tiny infants suffer from a brain hemorrhage which can damage the delicate brain tissue, resulting in cerebral palsy.

Blood Diseases

Rh disease – a disorder characterized by the incompatibility of blood types between a mother and her unborn child – can lead to severe jaundice. This causes brain damage and subsequent cerebral palsy.

Birth Defects

Babies with certain genetic disorders, brain malformations, or any other birth defect have a higher chance of developing cerebral palsy.

What Is Brachial Plexus Palsy

Brachial palsy in newborn infants develops from injuries to the network of nerves in the upper spine (the brachial plexus) that serve the arms, shoulders, and neck. These injuries can result in temporary or permanent disability.

Mild cases of brachial palsy result in stretching of the nerve, while severe cases involve tearing or rupturing of the nerves, which then fail to heal properly. In extremely severe cases, the nerve roots may end up getting dislodged from the spine, resulting in total paralysis.

Brachial palsy symptoms in infants include weak or limp arm, wrist, or hand, abnormal arm, wrist, or hand position, bent elbow, shoulder malformation, and problems moving the arm, wrist, or hand.

There are generally two types of brachial plexus palsy: Erb’s palsy and total or “global” palsy.

What Is Erb’s Palsy

ERB’s palsy is a form of brachial plexus palsy named after the doctor who first discovered it – Dr. Wilhelm Erb. It stems from injuries to the upper nerves in the brachial plexus. As a result, the infant cannot move their shoulder although they can still move the fingers.

If both the upper and lower nerves end up getting stretched, it becomes a more severe form of Erb’s palsy, known as total or “global” palsy. In such cases, the infant experiences complete paralysis of the affected arm.

What Causes Erb’s Palsy

The condition comes about during a difficult delivery when the baby’s neck gets stretched to one side, accompanied by downward pressure on their shoulder. In other cases, it might be due to the baby being larger than usual, making delivery difficult. This is often the result of gestational or poorly managed diabetes.

Other factors that may increase the risk of Erb’s palsy include:

  • Breech birth – This occurs when babies are born feet-first, which leaves their arms raised and outstretched. The excess pressure on the nerves in the brachial plexus during delivery increases the risk of injury.
  • Improper delivery – During a difficult delivery, the baby may be pulled forcibly from the birth canal, injuring the nerves on the neck and shoulder.
  • Larger-than-normal infant – If a particularly petite mother is carrying a larger-than-normal baby, it might result in a difficult delivery. This increases the risk of birth injury to the infant.
  • Long delivery – If the second stage of labor (the “pushing” stage) lasts more than an hour, it increases the risk of injury to the infant’s brachial plexus.

Should You File a Birth Injury Lawsuit

Lawyers in an office
Source: Pexels

A birth injury lawsuit is a form of legal action that can help families affected by Erb’s palsy, cerebral palsy, and other types of birth injuries obtain monetary compensation. These suits are filed against the parties responsible for the infant’s injuries, who in this case might be the doctors, nurses, or other medical practitioners present at the time of birth.

You can lodge different types of birth injury claims depending on the specific circumstances surrounding your case. These claims can be classified into birth injury malpractice lawsuits or wrongful death lawsuits. Here’s an overview of each.

Birth Injury Malpractice Suits

Medical malpractice occurs when doctors, nurses, or other medical personnel fail to administer quality medical care to the mother and child during the birth and delivery process. When filing a medical malpractice claim, the burden of proof rests on the plaintiff. They need to show that the child’s injury was caused by medical negligence.

It’s important to mention at this point that not all birth injuries are the result of medical negligence. The following four elements of medical malpractice law need to be applied to determine whether there are indeed grounds for legal action.

1. Duty of Care

First, the court seeks to establish the appropriate medical standard of care applicable to the situation that led to the birth injury. For instance, if the defendant in the suit is an obstetrician, the court would look into their actions and compare them to those of other trained obstetricians with similar skill levels working in a similar setting. They would not be compared to, say, an advanced practice registered nurse or an ER surgeon.

The court also considers what medical information was available to the health care worker when the injury occurred. A doctor cannot be liable for something they had no way of knowing at the time of the incident.

2. Breach of Duty

Once the proper standard of care has been established, the actions of the defendant – who in this case would be the doctor, nurse, or other medical personnel – are weighed against that standard.

The court considers what took place during labor and delivery measured against what a similarly-skilled professional would have done in the same setting, based on the facts they had at the time.

You would have to show that another medical professional would have taken a different course of action that would have prevented the birth injury.

3. Causation

This step involves proving that the legal cause of the birth injury was the result of the healthcare professional’s deviation from normal procedure.

For instance, did the obstetrician fail to recognize the signs of a difficult vaginal birth process and fail to order a medically-necessary cesarean section in a timely manner? Is it the reason the baby sustained a birth injury?

Other examples of medical negligence include:

  • Failing to detect signs of an infant in distress, such  as low heart rate
  • Failing to treat a maternal infection such as meningitis
  • Failing to treat newborn jaundice or any other condition that puts the baby at risk of a birth injury
  • Using a vacuum extractor or forceps incorrectly
  • Using excessive force when pulling the baby out of the birth canal

If the injury would have occurred regardless, then there would be no legal causation, a necessary element in proving medical liability.

4. Damages

The last element involves identifying and calculating the monetary losses (damages) and injuries the plaintiff has incurred from the malpractice. Keep in mind that you’ll need a sufficient amount of damages to justify the time, money, and resources required to file a malpractice suit.

Wrongful Death Suits

In severe cases, birth injuries can lead to the death of the newborn or intrauterine fetal demise if the healthcare professional fails to act quickly in response to the trauma. If your child died as a result of preventable mistakes shortly after, during, or before childbirth, you’re eligible to bring legal action against the responsible parties.

Birth Injury Lawsuit Settlement Amounts

A birth injury attorney will help you calculate your case value to determine what your potential payout in the suit would be. Case value refers to how much money your claim is worth, in other words, the settlement amount.

Some of the factors that may affect your case value include:

  • Loss of income due to caring for your child’s injury
  • Past and present medical costs
  • Projected lifetime costs of medical care
  • The severity of the birth injury
  • Existing state limits on settlement amounts

Compensation could be anything from $900,000 to upwards of $10 million, depending on the specific circumstances surrounding your case.

If your child has cerebral palsy, Erb’s palsy, or any other birth-related complication, get in touch with an experienced birth injury lawyer as soon as possible. They’ll evaluate your case and advise whether your claim warrants a lawsuit. If it does, they’ll help you determine how much compensation you’re entitled to and advice on the way forward.

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Is Cryptocurrency Safe

Is Cryptocurrency Safe – Are There Any Legal Protections?

Legal AssistantAdministrative Law, Criminal Law, Regulatory Law

In a May 2021 press release, the US Treasury Department announced that it had put in place various measures to crack down on fraudulent cryptocurrency transactions. It stated that it would now require individuals or business entities transferring $10,000 or more worth of crypto assets to report those transactions to the Internal Revenue Service (IRS).

According to the US Treasury, the department has been facing significant detection issues since cryptocurrency facilitates what it termed as broad “illegal activity,” including tax evasion. This new directive called into question the legality of crypto assets.

Is cryptocurrency safe? Who regulates it? What legal protections exist for crypto transactions? Here’s everything you need to know.

How Cryptocurrency Works

Cryptocurrency is a broad term that defines digital currency that exists electronically. It does not have physical bills or coins. You can, however, use a service that lets you cash in the digital currency for a physical token.

What exactly makes cryptocurrency different from mainstream legal tender? For one thing, individuals or entities transacting with one another don’t have to rely on third-party intermediaries like banks. You can simply exchange a crypto asset online directly through your smartphone or computer. Bitcoin, Ethereum, Litecoin, and Dogecoin are some of the well-known cryptocurrencies but are not the only ones. New crypto brands are coming up every other day.

Cryptocurrencies run on a technology known as “blockchain.” A blockchain is a public ledger that documents all transactions in a way that makes them difficult to alter. As a result, it provides a secure way for individuals and businesses to transact directly with each other without involving a bank, government, or any other third-party entity.

Each transaction record – also known as a “block” – is linked using cryptography. It is then verified by independent peer-to-peer computer networks before being time-stamped and permanently added as a new block to the ever-growing chain of transactional data. Once a new block is added, the information it contains cannot be modified.

What Is Cryptocurrency Backed By

Digital currencies like Bitcoin have been touted as an alternative to fiat money. How does cryptocurrency have value? What exactly gives currency – digital or otherwise – any type of value? To understand the answer to these questions, let’s first examine the history of currency, more specifically, why they have so-called “value.”

Regardless of the type, currency is only deemed useful and usable if it can be relied upon to maintain its relative value over a long duration without losing that value – depreciation. This is why it is defined as a “store of value.” Throughout history, many societies relied on precious metals or commodities as a means of payment since their value remained relatively stable.

As time progressed, lugging around huge quantities of gold, cocoa beans, and other forms of early currency proved to be cumbersome. This prompted societies to come up with minted currency, many of which were made from valuable metals that had low depreciation risks and long shelf lives.

The minted currency then evolved to take the form of paper money, and many countries around the world went on to adopt the Gold Standard. In this monetary system, the value of a country’s currency was directly linked to gold. Countries that used this system all agreed that the paper money they had circulating in their respective economies could be converted into a fixed amount of gold. In other words, gold was used to back their paper currency.

The Gold Standard was phased out by the US in 1933 and replaced by fiat money – a currency used by a country by order of the government. It is not backed by any commodity or precious metal but rather on the basis that individuals and governments will accept it as currency.

Cryptocurrency as a Store of Value

One of the major challenges cryptocurrency faces is its status as a store of value, which ultimately depends on its usefulness as a medium of exchange. This whole premise is based on the assumption that for a currency – or any commodity – to be used as a “store of value,” it needs to possess some form of intrinsic value.

Take a cryptocurrency like Bitcoin, for instance. If individuals and entities don’t use it as a medium of exchange, it effectively loses its practical usefulness. As a result, it won’t have any intrinsic value and would, therefore, not be appealing as a store of value.

In the same way that fiat currencies like the US dollar are not backed by precious metals or any other physical commodities, the same applies to cryptocurrency. Speculative interest is the primary driver of its current value.

How Do You Make Cryptocurrency

Bitcoin trader looking for opportunities
Image Source: Shutterstock

Cryptocurrency is digital, which means it is created by cryptographic code – hence the name. A new crypto coin is created when a transaction is confirmed. This process is known as “mining.”

While Bitcoin and Ethereum rely on mining to create new coins, not every cryptocurrency uses this technique. The specific method a particular cryptocurrency brand adopts to generate new coins depends on its underlying code.

For instance, a new token may be created as a reward from software developers upon completion of certain tasks of interest to the holders of the tokens in question. That being said, most cryptocurrencies create new coins when people all over the world run hardware that adds new blocks (transactions) to the blockchain.

How Do You Buy Cryptocurrency

Aside from mining cryptocurrency, there’s the option to buy it instead. Here’s how to go about it.

1. Identify a Crypto Broker or Exchange

A crypto broker or crypto exchange both allow you to buy cryptocurrency. Nonetheless, there are some critical differences between the two.

On the one hand, a crypto exchange refers to a platform that connects buyers and sellers looking to trade cryptocurrencies. While these platforms generally have low fees, their interfaces can be quite complex, which new investors might find challenging. Some of the most popular crypto exchanges include Coinbase and Gemini.

On the other hand, a crypto broker interacts with crypto exchanges on your behalf to take the complexity out of the whole process. Although they may charge higher fees, their interfaces are easy and convenient to use. Some popular crypto brokers include Robinhood and SoFi.

2. Create an Account

Once you pick a crypto broker or exchange, you’ll need to sign up to their platform to create a trading account. Depending on the platform in question and the amount you intend to invest, you will need to verify your identity as part of federal regulatory requirements.

This may involve submitting a copy of your driver’s license or any other applicable identification document and uploading a clear photo/selfie of yourself to verify that you are indeed the person who appears in the documents you submitted.

3. Deposit Funds to Your Account

Once your crypto account is up and running, you’ll then need to deposit cash in your account. You can do this by making a wire transfer from your bank account or authorizing payment from your debit or credit card.

4. Place an Order for Your Cryptocurrency

Once you’ve funded your account, you can then choose from the hundreds of cryptocurrencies available and place your order. You’ll need to indicate the number of coins you wish to purchase, although most brokers and exchanges allow you to buy fractional shares of cryptocurrency.

5. Pick a Cryptocurrency Storage Method

Keep in mind that the Federal Deposit Insurance Corporation (FDIC) does not back cryptocurrency exchanges. This leaves them vulnerable to hacking and theft. There’s also the chance of losing your investment if you forget the access codes to your account. That’s where cryptocurrency storage methods come into play.

If you buy cryptocurrency via a broker, there are three storage options available to you.

  1. Leave your assets in the crypto wallet attached to the exchange
  2. Transfer your assets to an entirely different provider
  3. Use a hot wallet that stores crypto assets online and runs on internet-connected devices like smartphones, tablets, or computers
  4. Use a cold wallet that stores crypto assets online on external, non-internet-powered devices like a hard drive or USB drive

If you purchase crypto assets through a broker, you have little choice over the storage method used.

How to Sell Cryptocurrency

How to Sell Cryptocurrency
Source: Unsplash

Cashing out on your investment is just as important as buying cryptocurrency. Aside from using a crypto broker or exchange, there are three other avenues through which you can sell your crypto assets.

1. Direct P2P Trades

There’s the option to sell cryptocurrency directly to another individual or entity online or in person. You can use a specialized and reputable crypto exchange platform to sell crypto assets online by posting a listing and indicating your desired price. Interested parties would then be able to complete the sale as per the instructions provided on the site.

Alternatively, you could meet with an interested party at a physical location and sell your crypto assets for cash.

2. Crypto ATMs

While these may look like conventional cash machines, they are not ATMs in the traditional sense of the word. They allow you to scan a QR code generated by your crypto wallet and then sell your cryptocurrency for cash.

3. Withdrawing Funds

You can also use a wire transfer service to withdraw the cash in your bank account once you sell your crypto assets on a crypto exchange.

What Can You Buy with Cryptocurrency

Although most people use crypto assets as an investment, there are several goods and services you can purchase using Bitcoin, Ethereum, and other popular digital currencies. For instance:

  • Online travel websites like CheapAir.com and Expedia.com accept cryptocurrency as a mode of payment
  • Several internet-based businesses
  • Small businesses that accept payments in cryptocurrency
  • Several gambling sites and casinos
  • Some restaurants and retail outlets
  • Purchasing other cryptocurrencies

Security Vulnerabilities of Cryptocurrency

To reiterate, cryptocurrencies run on blockchain technology. It defines the way transactions are recorded, time-stamped, and added onto the chain, making it difficult for anyone to alter this information. Before this happens, each transaction has to go through a two-factor authentication process.

This begs the question – Can cryptocurrency be hacked? Unfortunately, the short answer is – yes. Case in point: The Coincheck and BitGrail hacks of 2018, which led to more than $534 million and $195 million in losses, respectively.

How do hackers steal cryptocurrency? If a hacker can somehow decipher your personal information – which may or may not be cryptocurrency-related, they can use it to infiltrate your transactions and steal your crypto assets. By this, we mean information linked to a cell phone number or email address used to authenticate your transactions.

Cybercriminals can also steal crypto assets by bugging your computer or smart device with malware, but not in the way you might think.

What Is Cryptocurrency Malware

Mining cryptocurrency is computationally intensive. It requires significant resources from dedicated computer hardware such as processors and graphics cards. Unfortunately, there’s a growing trend of hackers infecting computer systems with cryptocurrency mining malware to use the machines’ resources to mine cryptocurrency, unbeknownst to the users. This significantly affects the device’s performance, increases its wear and tear, and drives up other associated costs such as power consumption.

Cryptocurrency Scams

One tell-tale sign of a cryptocurrency scam is being asked to pay for goods and services using cryptocurrency only, with no other payment option. Scammers bank on the fact that there’s no way of getting your money back once you pay using crypto.

Unfortunately, unlike credit cards and debit cards that come with legal protections, cryptocurrency payments do not. There’s no way to dispute a payment and have that transaction reversed. The best cryptocurrency consumer protection measures you can take to avoid getting scammed is to steer clear of individuals or companies that:

  • Guarantee big payouts
  • Make big claims with no explanation on how they achieve this
  • Offer unsolicited investment proposals and job offers
  • Promise guaranteed returns

Be On the Lookout

Cryptocurrency scams and related fraudulent activities should be reported to the Federal Trade Commission (FTC), the Commodity Futures Trading Commission (CFTC), and the US Securities and Exchange Commission (SEC).

For more information, check out the FTC cryptocurrency workshop sensitization videos exploring how scammers exploit unsuspecting crypto investors and how you can protect yourself.

Do you have any legal questions for us? Chat online with a Laws101 attorney right now.

Court legal concept of abortion law

What You Need to Know About Texas Abortion Laws

Legal AssistantCivil Rights, Constitutional Law

On May 19, 2021, Gov. Greg Abbot signed a law that outlaws abortions in Texas. The new measure went into effect on September 1, 2021. The first-of-its-kind legislation in the country makes it illegal for healthcare providers to perform or induce an abortion if an ultrasound scan can discern what the new law defines as a fetal “heartbeat.” This is usually at around the six-week mark.

The new abortion law in Texas has sparked heated debate and controversy not only because it infringes on women’s abortion rights but also its so-called “bounty system.” Its legal provisions allow any private citizen to file a lawsuit against abortion providers and other parties.

This article explores everything you need to know about the new Texas abortion laws and what they mean.

Why Did Texas Ban Abortions

When Abbot signed the new bill into law, he stated in part that the “creator” has “endowed” every human being with the “right to life.” Yet, for millions of children all over the world, that right is stripped from them. The Texas legislature worked together on a bipartisan bill to pass a law that ensures every unborn child is protected from the “ravages of abortion.”

The new law’s enactment came weeks after the US Supreme Court indicated that it would hear a case concerning a Mississippi law challenging Roe v. Wade. The law seeks to criminalize abortions carried out at 15 weeks or later. It will be the first major abortion case presented before the newly constituted, conservative-majority bench and could have far-reaching implications on Texans as well.

When Was Abortion Legalized – Roe v. Wade

In a 1973 landmark ruling, the Supreme Court held that abortion was a guaranteed right under the US Constitution. It declared that abortions could not be prohibited by state governments for fetuses considered “non-viable.” A non-viable fetus aged 24 weeks or less cannot survive outside the mother’s womb.

Texas Senate Bill 8, also referred to as the “heartbeat bill,” prohibits abortion after an embryonic heartbeat can be detected in an ultrasound. This is typically six weeks after conception and is often before a woman even realizes she is pregnant.

The Supreme Court has previously struck down heartbeat bills such as this one. Why? They are in direct contravention of constitutionally protected abortion rights, which allow a woman to terminate a pregnancy within the 24-week viability window provided by the 1973 ruling.

Texas abortion providers took to the Supreme Court to block the restrictive law, raising concerns over its constitutionality. While the 9-bench court acknowledged the seriousness of their application, they also stated it presented new and complex procedural questions that they were unable to address.

The main issues raised by the court were whether the defendants in the case (the state officials) were the appropriate targets in the suit since they are not the entities charged with enforcing the new Texas law. They also questioned the court’s jurisdiction to order state courts to reject cases under Texas Senate Bill 8.

In its conclusion, the Supreme Court stated that it was not purporting to definitively resolve any substantive or jurisdictional claim in the providers’ lawsuit; that its order was not based on whether the new abortion law in Texas was legal or not; that it was not limiting any other future “procedurally-correct” challenge to the novel Texas law both in the Supreme Court and in the state courts in Texas.

As a result of the Supreme Court’s failure to block the new law from going into effect, Texas became the first state in the country to ban abortions after the six-week mark. Although 12 other states have enacted similar early-term legislation, none have been implemented due to the pending legal challenges questioning their constitutionality.

For many women across the country, the all-important question is – When is it too late to get an abortion? The short answer is – after 24 weeks. In Texas, however, the answer to that is six weeks.

According to abortion statistics from the Centers for Disease Control and Prevention, women between 20 and 29 years of age account for 57.7% of all reported abortions every year. 92.2% of abortions occur at around 13 weeks of pregnancy, while 6.9% are performed at the 14 to 20-week mark. 38.6% of all abortions are done at less than nine weeks of gestation.

What exactly is contained in the new bill? Here are the highlights.

Civilians Wield the Power

Unlike conventional legislation, the enforcement of the new Texas abortion law rests on private citizens instead of the government. Here’s how.

A patient cannot be sued under the new law’s provisions. Instead, the abortion provider and any other entity that assists with the abortion can be held liable – and by anyone. The legislation also expands the scope of civil lawsuits to prevent providers from using the constitutional right to abortion as provided for under Roe v. Wade as a legal defense against being sued.

An excerpt from Sec. 171.207 states, in part, that the law shall be enforced exclusively through the civil actions of private citizens. It goes on to state that no enforcement of the law can be conducted or threatened by the state, an employee, an executive, or an administrative officer of the state, a political subdivision, or a county/district attorney.

It effectively means that not only is a private citizen allowed to sue a provider or any other entity aiding in abortion, but the state is also prohibited from attempting to enforce the law. In addition, the language used to craft this legislation is designed to sidestep any legal action challenging its constitutionality, a maneuver that has held up in the Supreme Court.

In its September 1 ruling, the court cited this section of the Texas law in its rejection of the emergency injunction filed by providers to block the new legislation. Part of Justice Sonia Sotomayor’s dissent stated that the Texas legislature skirted constitutional precedent by using private citizens to pursue what the state legally cannot.

Any Private Citizen Can Sue Whether or Not They Were Directly Involved

Sec. 171.208 allows “any person” other than a state or local government employee or officer to bring a civil suit against any party found to be aiding and abetting an abortion. This expands the legal concept of “standing,” where one party sues another to get monetary compensation for harm or injury they suffered.

The new Texas abortion law does not require any such relationship to exist for a lawsuit to have legal standing in court. Instead, anyone can sue for legal remedies, whether or not they suffered direct harm. This essentially means that anyone can have legal standing and, therefore, anyone can sue for “generalized grievances.”

Patients Cannot Be Sued

Sec. 171.208 further outlines the parties that can be held liable for damages under the new law. It states that anyone who carries out or intends to carry out an abortion on a patient, as well as any other person or entity that does not adhere to the new state rules by aiding or intending to aid with such abortion, can also face civil action.

While the patient cannot be held liable for their decision to procure an abortion, any other party that aids them in getting the abortion can be sued. This includes everyone from the doctor performing the procedure to the Uber or Lyft driver taking the patient to get an abortion, whether or not they are aware of their passenger’s intentions. Even a family member who helps pay for the abortion can be sued for aiding and abetting.

A “Bounty” Reward for Successful Suits

Reward for Successful Suits
Source: Unsplash

The court will award a plaintiff $10,000 in statutory damages if they successfully win the case, the costs of the suit and attorney’s fees, and what it terms as “injunctive relief” to prevent the defendant from violating the law in the future.

The $10,000 “bounty” will be awarded for every abortion the defendant performed, and the injunctive relief can be any amount the court deems appropriate to act as a deterrent. This section of the law essentially provides an incentive for plaintiffs to sue.

One Payment per Abortion

While a defendant can be in court over a single abortion several times, the court can only collect relief from the same defendant over said abortion only once. For instance, if five different plaintiffs sue a provider for a single abortion, only one of them can collect damages.

The law doesn’t prevent the defendant in a suit from defending themselves in multiple suits brought against them, whether or not damages have already been awarded in a previous suit. As a result, they still have to incur the costs associated with each instance of the suit, not to mention the time lost.

Four-Year Statute of Limitations

Any plaintiff wishing to sue a provider or any other party involved in abortion has a four-year window to bring the suit. This gives potential plaintiffs ample time to bring a civil lawsuit against a defendant long after the abortion was performed.

The law puts a cap on the number of legal arguments that can be used to defend against a suit. Some of the arguments whose use it bars include:

  • Civil action violating the patient’s constitutional rights
  • The provider receiving explicit consent from the patient to perform the abortion
  • The belief that the law is unconstitutional
  • Ignorance

Legal experts contend that barring the use of the law’s unconstitutionality as a legal defense in court might prove difficult to enforce.

A Serial Plaintiff Can Litigate Each Case Separately

If a single plaintiff brings dozens of civil suits against several clinics across the state with similar allegations, each case will be litigated regardless of the outcome of previous ones. Every case is treated independently of the others.

For instance, if a plaintiff sues multiple defendants over the same charge and they end up losing the initial case, subsequent defendants cannot use that as a basis to stop the litigation they’re currently facing. The plaintiff is protected by a legal doctrine known as “non-mutual claim preclusion.”

The Burden of Proof Rests With the Defendant

The law provides in great detail the arguments that a defendant may use. One of them includes that they had a reasonable belief the individual inducing or performing the abortion using an abortion pill Texas or otherwise, complied or intended to comply with the law. The defendant has to prove beyond a reasonable doubt that they believed the abortion was legal.

Defendants Can Never Recover the Costs of the Suit

This effectively prevents the court from awarding the defendant their costs or attorney’s fees even if they successfully defend against the suit. This section of the law is skewed in favor of the plaintiff since they are guaranteed to recover the costs of the suit if they win the case, over and above the damages, they’ll be awarded.

A Rapist Can’t Sue Over an Abortion

A provider performing an abortion on a victim of rape, sexual assault, or incest cannot be sued by the perpetrator. The law, however, doesn’t bar anyone else from suing the provider for carrying out or inducing that specific abortion, regardless of the circumstances that led to the conception.

Texas abortion laws require minors to get legal consent from their parent or legal guardian before getting an abortion. There are some exceptions:

  • Minors who are legally emancipated don’t need consent
  • In case of a medical emergency
  • If the minor receives permission from a judge

Nonetheless, based on the provisions of the new Texas laws, it would still be illegal for a minor to procure an abortion after the six-week mark. A parent or legal guardian who helps a minor get an abortion can be sued for aiding and abetting.

Do you have any legal questions for us? Chat online with a Laws101 attorney right now.

Memo sign PPP Loan Paycheck Protection Program on the black piece of paper

Get Paid for Reporting PPP Loan Fraud

Legal AssistantAdministrative Law, Business Law, Criminal Law, Tax Law

In July 2021, 22 people were arraigned in court on charges of engaging in fraudulent schemes to acquire more than $11 million in loans from the Paycheck Protection Program (PPP). The individuals used the loan proceeds to purchase jewelry, luxury vehicles, and other personal items.

According to court documents, the defendants submitted or aided in submitting loan applications on behalf of a dozen or more businesses that sought funding worth $800,000 each.

The accused individuals certified that the businesses were in operation as of February 15, 2020; that they had employees on their payroll; that they had paid the required payroll taxes; that the funding would go towards maintaining the payroll, retaining employees, making lease or mortgage interest payments, and paying for utilities; that the information provided in their applications was true. As it turns out, it was not.

What constitutes PPP loan fraud? What is the penalty? How can you report it? Here’s everything you need to know.

What Is the Paycheck Protection Program

The PPP is a loan program born out of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Initially worth $350 billion, CARES was intended to provide cash flow assistance to American businesses for eight weeks. In April 2020, the Paycheck Protection Program and Health Care Enactment Act expanded the program, injecting an additional $310 billion worth of funding.

The PPP Flexibility Act was later enacted to make some critical amendments to the original legislation. It gave individuals and businesses more time to spend the funds and made it easier to get the loans forgiven.

In December 2020, Congress enacted a second stimulus package that added $285 billion worth of funding to the PPP. Businesses that had exhausted funds from the initial Paycheck Protection Program loan they had obtained or experienced a decrease in revenue amounting to 25% or more could also apply for another round of funding.

On May 4, 2021, the Small Business Administration (SBA) stopped accepting PPP loan applications. Nonetheless, any lender designated as a Community Financial Institution (CFI) may still access funding.

Loan Eligibility Criteria

Unlike SBA economic injury disaster loans, PPP loans are far-reaching. Small businesses, independent contractors, sole proprietorships, and self-employed individuals can all apply for funding.

  • Independent contractors are required to fill and submit Form 1099-MISC alongside Schedule C from their tax return showing their net earnings
  • Sole proprietors also need to fill and submit Schedule C
  • Self-employed individuals need to submit their payroll tax filings as reported to the IRS

Businesses need to show a revenue reduction of 25% or more to qualify for the second round of PPP funding. To demonstrate this, you would need to compare the revenue earned in any quarter in 2020 against the revenue earned during a similar period in the previous year.

What PPP Loans Can Be Used For

According to the federal guidelines, 60% of the loan must fund payroll costs and employee benefits.

Under the PPP, payroll costs include:

  • Salaries, wages, bonuses, tips, and commissions, capped at $100,000 per annum per employee
  • Employee allowances including sick leave, medical, family, parental, and vacation pay
  • Insurance premiums and retirement benefits
  • Local and state taxes assessed on compensation
  • For sole proprietors or independent contractors, net earnings, income, commissions, or wages capped at $100,000 per annum per employee

Here’s what’s not covered:

  • Payments to independent contractors
  • Payments to C-corporation and S-corporation owners who are not on the payroll, such as payments to shareholders

The remaining 40% of the PPP loan can be spent on:

  • Lease and rent payments
  • Mortgage interest payments
  • Operational expenditure such as accounting and software requirements
  • Property damage not covered by insurance resulting from public disturbances
  • Supplier costs
  • Utility payments
  • Worker protection expenditure related to COVID compliance

Adhering to these guidelines allows businesses to have the full value of the PPP loan forgiven, essentially transforming it into a tax-free grant. As part of the application process, applicants are asked to certify that they will spend the funds appropriately for their intended purposes. The misappropriation of these funds is tantamount to PPP loan fraud.

The Loan Application Process

Keep in mind that the SBA itself doesn’t lend businesses the money they need. They simply back the loan provided by the lender.

Part of the PPP loan application process requires businesses and individuals to verify the following:

  • That the existing economic uncertainty makes it necessary to acquire a loan to support the business’ ongoing operations
  • That the funds will go towards maintaining the payroll, retaining workers, or making lease, mortgage interest, and utility payments
  • Documentation that indicates the number of full-time salaried staff or equivalent working in the business, payroll costs in dollar amounts, covered rent or lease payments, covered mortgage interest payments, and covered utilities for the 24 weeks after obtaining the loan
  • An acknowledgment that the lender will calculate the loan amount the business qualifies for using the tax documentation submitted along with the application
  • An affirmation that the tax documents submitted along with the application are identical to those submitted to the IRS
  • That the business or individual has used up all the funds they received in the first PPP loan if they’re applying for a second round of funding

Businesses or individuals are required to provide bookkeeping/payroll records in support of the payroll expenses listed. That could include payroll tax filings, processor records, tax forms (Forms 940, 941, and W-3) from 2019 or 2020, Schedule C for sole proprietorships, and Form 1099-MISC records.

What Is PPP Loan Fraud

customer signing loan agreement
Source: Pexels

So far, we’ve looked at the PPP loan requirements, the documentation required, and guidelines on what the loan can be used for. If a business or individual submits false or inaccurate information or documentation in their application or certification, it constitutes PPP loan fraud. Even if a business meets the eligibility criteria but fails to abide by the predefined limits and requirements on how it can use those funds, it is also considered loan fraud.

A PPP loan fraud investigation will ultimately determine whether an individual will be charged with violating one or more of the guidelines provided in the program.

A violation includes, but is not limited to:

  • Applying for loan forgiveness by submitting a false certification
  • Being deceitful to agents during a PPP loan investigation or audit
  • Loan stacking – applying for multiple PPP loans from different lenders
  • Making false statements on the loan application
  • Using the loan funds for unauthorized or improper use

PPP Loan Fraud Penalty

An individual charged with PPP loan fraud faces serious civil and criminal penalties. While a single loan fraud case may involve several criminal laws, a brief overview of the most common charges and their respective penalties is below.

Wire Fraud

This invokes 18 USC Sec. 1343 and involves using the phone or internet to defraud another party by making false promises or statements. The penalty depends on the total stolen money and could be up to 20 years behind bars.

Bank Fraud

This invokes 18 USC Sec. 1344 and is similar to wire fraud, only that in this case, it involves making false statements to a financial institution such as a bank. An individual found guilty of bank fraud could face a jail term of up to 30 years.

False Statements to a Financial Institution

This invokes 18 USC Sec. 1014 and makes it a federal crime to lie to a financial institution such as a bank. This involves providing false statements on a loan application form or falsifying documents submitted to a bank to qualify for a loan. Any individual found guilty of violating this law faces up to 30 years behind bars.

Conspiracy to Commit Fraud

This invokes 18 USC Sec. 1349. The law makes it a criminal offense to collude with others in violating or attempting to violate federal fraud laws, whether or not the individual in question actually obtains money, falsifies documents, or makes any false statement.

The penalty depends on the fraud crime the individual conspired to commit. For instance, a conviction for conspiracy to commit wire fraud carries a jail sentence of up to 20 years, while conspiracy to commit bank fraud carries a maximum jail term of 30 years.

How to Report PPP Loan Fraud

A business or an individual that engages in PPP loan fraud is in violation of the 1863 False Claims Act. The law was created to deter individuals from committing acts of fraud against the government and encourage people to report said fraudulent activities. The Act incentivizes private citizens to report instances of fraud committed against the government in what is popularly known as “qui tam” action.

The doctrine allows a False Claims Act whistleblower with evidence of fraud to bring a civil suit against an organization or individual and receive a percentage of the recovery amount. The precise amount that they can recover depends on whether the government intervenes in the suit.

The provisions of the Financial Institutions Reform, Recovery, and Enforcement Act allow the Attorney General to sue for fraud in cases that involve federally insured financial institutions. A FIRREA whistleblower can receive up to $1.6 million for information on PPP violations that result in the successful recovery of stolen funds.

Whistleblower protection laws also protect employees who report PPP loan frauds against retaliatory action by their employers. This means they cannot be terminated, demoted, or harassed for PPP whistleblowing to expose their employer’s fraudulent undertakings against the government.

PPP fraud denies eligible small enterprises of the funding they need to keep their businesses afloat. With that in mind, the US Department of Justice (DOJ) has instituted a policy dubbed “See something, say something” to help them identify instances of PPP fraud.

To report PPP loan fraud and economic injury disaster loan fraud, you can:

  • Call the National Center for Disaster Fraud Hotline: 1-866-720-5721
  • Fill the web complaint form on the DOJ website
  • File a complaint with the SBA Inspector General Office

PPP Loan Fraud Red Flags

If you’re a company board member, executive, or owner, you will be personally liable if your company is found guilty of flouting any of the PPP rules and restrictions. To avoid the stiff penalties that come with a PPP loan violation, below are five red flags to keep an eye out for during an internal compliance audit.

1. Insufficient Documentation Substantiating the Loan Application

Federal investigators don’t just assess the loan recipient’s eligibility; they also check that the representations made in the application can be substantiated. For instance, under the PPP terms, a company should:

  • Apply for the loan because it is “necessary” given the precarious economic climate
  • Be eligible to participate in SBA programs, meaning no single shareholder has more than 20% interest, nor have they been convicted of a federal felony in the last five years
  • Have less than 500 employees to qualify as a small business

2. Multiple Loan Applications to Different Lenders

The CARES Act only allows companies to obtain a single PPP loan from a single lender at a time. Obtaining or attempting to obtain multiple loans is illegal. Even if the company received only one loan, the fact that they submitted multiple applications could lead to criminal prosecution.

3. No Documented PPP Compliance Policies and Procedures

Not having documented policies and procedures to ensure ongoing compliance to PPP requirements is a red flag in fraud investigations and audits. Companies need to adhere to the CARES Act guidelines on how to use the funds and be able to account for expenditures.

4. Insufficient Documentation of Loan Expenditure

Like the compliance program, companies need to have solid documentation that demonstrates they used the PPP loan for authorized purposes only. More often than not, this goes beyond simply keeping a record of transactions. Doing so makes it difficult to defend against PPP loan fraud allegations.

5. Use of Loan Proceeds for Personal Expenses

The CARES Act explicitly prohibits the use of PPP loan funds for personal expenses. The line between business and personal expenditures can often get blurred. This opens you up to the risk of prosecution.

For instance, in cases where home-office expenses, vehicles, and travel-related expenditure, are involved, there needs to be a clear-cut line between the two.

Do you know anyone who may be committing PPP loan fraud? Chat online with a Laws101 attorney now.

Manager engineer check and control automation robot arms machine

Can You Sue a Manufacturer?

Legal AssistantConsumer Law, Mass Torts, Personal Injury Law

Product manufacturers have a responsibility to ensure that the products they make are safe for consumers. If a flaw in the manufacturing process or the failure to properly label a product results in an injury, they can be held liable in a civil lawsuit.

That being said, it doesn’t always mean the suit will hold up in court, and if it does, you might not receive adequate monetary compensation in the form of damages. Here’s everything you need to know about suing a manufacturer when defective products cause injury.

Reasons to Sue a Company

Manufacturers are expected to make products that meet a specific threshold for quality and performance. A claim against them will generally fall into any of the following three categories:

  • Design defect – This type of suit alleges that the product design makes it hazardous for its intended use
  • Manufacturing defect – This comes about when a product is compromised during its manufacture
  • Marketing defect – Also known as “failure to warn,” this type of claim arises from the failure to provide adequate instructions or warnings about the proper use of a product

Keep in mind that not all states classify injuries caused by defective products as product liability cases. Depending on the state laws in question, a claim might fall into any of the following categories:

  • Negligence – These cases focus on the actions of the manufacturer, distributor, or retailer
  • Product liability – These focus specifically on the product itself
  • Breach of warranty – This means that a product failed to meet the guaranteed standard of performance

How to Sue a Manufacturer – The Basics

If a product you used has resulted in injury, you first need to identify who is liable in the first place. These are the parties you’ll name as the defendants in your lawsuit.

There are three main elements you need to establish right off the gate:

  1. The “chain of distribution”
  2. The special considerations that exist for foreign and corporate defendants
  3. The concept of “joint and several” liability when multiple defendants are involved

Below is an overview of how each of them works.

1. Figure Out the Chain of Distribution

The “chain of distribution” refers to the path a product takes from inception right up to the point it gets to the consumer. Most state laws define three main types of defendants that can be held liable in product liability suits.

Manufacturer

Engineer hand using tablet with machine real time monitoring system software
Source: Shutterstock

Manufacturers sit at the helm of the chain of the distribution of an injury-causing product. A manufacturer can range in size from an individual working out of a garage (in which case you cross your fingers and hope they have a solid insurance policy) to a large multinational corporation.

If the defective component forms part of a larger product, you’ll need to hold the manufacturer of the defective part and the manufacturer of the product itself liable in your suit. For instance, can you sue a car manufacturer if your car battery exploded, causing burns on your body? The short answer is – yes, you can. You would bring a product liability lawsuit against the car manufacturer and the battery manufacturer as well.

Ensure that you include any other parties that may have been involved in the design, manufacturer, or marketing of the defective product. The idea is to identify all entities that could be linked to the defect, particularly if they are separate from the manufacturer.

For instance, if a contractor or external consultant had a role in the design or manufacturing defect of the product in question, you also need to name them as the defendants in your manufacturer defect lawsuit.

It could be the quality-control engineers who gave the green light for the product to be manufactured or the design consultant contracted by the manufacturer who dropped the ball. You can even include the technical experts who were brought on board to come up with the usage instructions for the flawed product.

Retailer

While the retail store that sold a defective product may not be directly involved in producing a defective product, they can still be held liable for selling it to consumers. When naming the defendants in your lawsuit, it isn’t a question of choosing one over another. Any party in the chain of distribution involved in your acquisition of the defective product can be held liable.

When deciding whether to sue the retailer, there are a few things you need to keep in mind:

  • You don’t have to be the actual buyer of the product – You can bring a lawsuit against the retailer if a borrowed product caused an injury.
  • You don’t have to be the actual user of the product – You can sue the retailer if you were injured by a defective product that was being used by someone else.
  • You might be able to recover damages for used products – You can sue the supplier of used goods if a defective product they sold you caused an injury.

Wholesaler or Distributor

All middlemen that may be involved in the chain of distribution between the manufacturer and retailer can also be held liable in a product liability suit. Middlemen in the case could be wholesalers, distributors, suppliers, and any other party in the chain.

2. Establish Whether the Defendants Are Foreign or Corporate Entities

If any of the entities in the chain of distribution is a foreign corporation, this doesn’t stop you from naming them in your lawsuit. Any foreign company doing business in the United States falls within the jurisdiction of the courts where it conducts business.

If the entities happen to be corporations, they can also be held liable since the law considers them the equivalent of persons. Even when they merge with or are acquired by other companies or spin-off from their existing one, you can also name the successor companies as defendants in your suit.

3. Figure Out if the Doctrine of “Joint and Several Liability” Applies

This legal doctrine holds that each defendant in your suit is liable both together (jointly) and individually (severally). If one of the defendants in your suit cannot pay their share of the damages, the other defendants have no choice but to pick up the tab.

Can You Sue Vaccine Companies

If you’ve experienced severe side effects after receiving the COVID-19 vaccine or any other vaccine for that matter, you’re likely wondering how to sue a drug manufacturer. While you can technically sue pharmaceutical companies for drugs that end up causing injury or death, vaccines don’t fall into that category.

The 1986 National Childhood Vaccine Injury Act was enacted to provide protection to drug manufacturers against open-ended liability. The law protects pharmaceutical companies against design-defect suits, provided that the vaccine was manufactured properly and had adequate warning labels.

Additionally, in 2005, Congress passed the Public Readiness and Emergency Preparedness Act. The law gave the US Department of Health and Human Services (HHS) the authority to provide legal immunity to pharmaceutical companies manufacturing or distributing vaccines, treatments, and other critical medical supplies, unless “willful misconduct” can be demonstrated. This legal immunity expires in 2024.

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lawyer signing legal document and agreement with court

Can I Sue the United States Government?

Legal AssistantPersonal Injury Law

Maybe you had a slip and fall incident at the local post office, and you ended up with a fractured ankle. Perhaps an FBI agent swerved past you on the freeway, causing you to lose control of your vehicle and ram into other cars. The point is – a federal agency or employee was responsible for your injury.

Naturally, the question on your mind would be – Can I sue the United States government? If so, how do I go about it? Here’s everything you need to know.

Is it Possible to Sue the US Government

The short answer is – yes, you can, but it’s not going to be easy. Filing a civil suit against the federal government is a lot harder than suing a private citizen. These lawsuits are marred with a complex list of legal limitations that may require you to jump through several hoops just to get the justice you deserve.

Historically, the doctrine of sovereign immunity made it impossible to sue the monarchy. That practice has carried over to modern rule, making it impossible to file a civil suit against the government unless, of course, the government allows it. That’s essentially what the Federal Tort Claims Act (FTCA) is – a means through which the government allows private citizens to sue it.

What Is the Federal Tort Claims Act

If a federal employee or agency acts negligently, causing you to suffer harm or injury in the process, the FTCA allows you to take civil action against them. Keep in mind that unless your negligence claim is explicitly allowed by the FTCA, chances are, it will be excluded by sovereign immunity.

Below is an overview of the claims covered under the Act:

  • You can only file a claim against an actual employee of the government and not a partner or independent contractor (unless the contractor is treated as an employee)
  • The act of negligence needs to have taken place within the employee’s line of work and not when they were off the clock, in which case they’ll be deemed to have acted individually
  • Only negligence claims are authorized under the provisions of the Act, as opposed to intentional misconduct (except for wrongful acts perpetrated by law enforcement officers)
  • The claim should be based on the existing personal injury and negligence laws in your state

Once you’ve established that your claim is covered under the FTCA and that you can indeed sue the United States government, you can now initiate the administrative process. You’ll need to submit it to the agency responsible for causing your injuries.

Who Is Covered Under the Federal Tort Claims Act

The Federal Tort Claims Act authorizes private citizens to sue the federal government, meaning it protects individual employees from personal liability when acting within the scope of their official duties. Federal employees and public health service officers are all covered under the FTCA.

What is covered? Acts of negligence or omission that are committed by covered employees within the scope of their employment. The FTCA does not cover deliberate torts such as fraud or battery.

Rules Governing the Administrative Remedies of an FTCA Claim

Justice mallet and FTCA acronym
Source: Shutterstock

The administrative remedies phase has specific rules you need to be aware of before filing a lawsuit in court. Here’s a brief overview of each.

Statute of Limitations

The FTCA claim statute of limitations is two years from the date of the incident in question. If you’re filing a medical malpractice suit, the clock starts ticking when you first discover your injury.

Provide Detailed Facts

When filing your claim, ensure it has detailed facts and information about how you sustained the injuries and the damages you suffered as a result. In addition, you’ll need to provide a precise figure to allow the federal agency that employs the person responsible for causing your injuries to investigate your claim and determine whether or not they’ll pay it.

Wait for the Determination Period

The agency has six months within which to respond to your claim. If it admits the validity of your claim, it may pay a portion of or all the damages you seek. You don’t have to go to court to enforce Federal Tort Claims Act settlements.

Sue In Court

If the agency’s offer to settle your claim is not satisfactory, you can file a formal lawsuit in a court of law. You’ll have six months within which to do this.

Only Sue After You’ve Received a Response

In some cases, you may not get a response from the government regarding your claim long after the six-month determination period has elapsed. You cannot sue in court before you receive a response. As long as your claim is under consideration, there’s no time limit to file a suit.

How to File a FTCA Claim

Once you have exhausted your administrative remedies meaning, you’re not satisfied with the offer you received from the federal agency; you can now file a lawsuit against the federal government.

To file an administrative claim, you need to fill out Standard Form 95 or SF 95 for short, which you can download from any federal agency website. Instructions on how to fill out SF 95 form and where to send it are provided on the document.

Some of the information you need to provide on the SF 95 form include:

  • The name of the appropriate federal agency
  • Your name, address, and date of birth
  • The date and time of the accident or incident
  • The basis of the claim
  • Information on the nature and extent of the personal injury, wrongful death, or property damage
  • Names and addresses of the witnesses
  • The amount of the claim
  • Information regarding the insurance coverage of the damaged property or vehicle

Once you’ve gone through the administrative process, only then can you sue the government in federal court to seek monetary compensation.

It is worth noting that the government pays out millions of dollars every year in Federal Tort Claims Act settlements. Therefore, despite the numerous limitations placed on these claims, it is worth pursuing if you believe you have a valid case.

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Transgender Pride Flag on military uniform

Can Transgender People Join the Military?

Legal AssistantCivil Rights, Constitutional Law

In April 2019, President Trump signed an order banning transgender people from joining the military. The controversial policy not only barred transgender troops from serving in the nation’s defense forces; it also blocked the use of Department of Defense (DOD) and Department of Homeland Security (DHS) resources to fund surgical procedures related to sex reassignment.

Fast-forward to January 2021, when President Biden signed a new executive order to lift the previously instituted transgender military ban. What does the new presidential directive mean going forward? Can transgender people join the military? Here’s everything you need to know.

Transgender Military Ban

Trump’s 2019 directive came a year after revoking the blanket ban he had previously instituted. He stated in a memorandum that after consulting widely, he would defer to the recommendations of James Mattis, the then Secretary of Defense.

Mattis stated that individuals diagnosed with gender dysphoria – a condition in which they feel that their psychological and emotional identity is different from their biological gender – would not be eligible for military service unless in specific special circumstances.

The White House memo read that military personnel who have been diagnosed with the condition or have a history of gender dysphoria (especially those who would require considerable medical treatment) presented a substantial risk to the “lethality and effectiveness” of the military.

The sweeping ban affected approximately 1,320 to 6,630 active-duty troops and 830 to 4,160 reserve duty personnel who identify as transgender. That’s how many transgender serve in the military. Some advocacy groups project that number to be as high as 15,000.

In an earlier statement, Trump backed his decision citing the tremendous transgender cost to military resources. He stated that the military could not be burdened with the disruption and expenses of accommodating transgender troops. A study by Rand Corp. estimated that troops seeking transition-related healthcare cost the DOD approximately $2.4 million to $8.4 million every year.

The 2019 DOD Transgender Military Policy

Following President’s Trump directive, the DOD released a policy addressing military service among people with gender dysphoria. Below are its key highlights.

1. All Persons Must Meet the Military Standards Associated With Their Gender at Birth

The 2019 policy defined a transgender person as an individual who identifies as a gender that’s different from their biological sex. It stated that while the DOD did not exclude transgender individuals from military service, every person – transgender or not – was required to meet all military enlistment standards, including those associated with their gender at birth. Any waiver or exception to those standards would only be given on a case-by-case basis.

2. Transgender Personnel Already Serving in the Military May Continue to Do So

Any individual who joined the military as a transgender person, or was diagnosed with gender dysphoria before the transgender military ban took effect, was exempt from the new policy.

Transgender military members who were already serving honorably – whether in their biological sex or preferred gender – would not be dismissed or separated from active duty. The DOD policy prohibited involuntary separation from service on the basis of an individual’s gender identity.

3. All Individuals Wishing to Join the Military Must Meet All Military Standards Without Special Accommodations

Any person with gender dysphoria, who had been treated for the condition through various procedures such as sex reassignment surgery or cross-sex hormone therapy, and as such was unable or unwilling to meet the military standards associated with their biological gender, would be dismissed from service.

For instance, a transgender woman born a man would have to meet the military standards associated with male recruitment and training during service. If they were unable to meet and maintain those standards, they would be presumptively dismissed.

4. Gender Dysphoria Is a Medical Condition

The policy defined gender dysphoria as a “serious medical condition” that causes significant clinical distress and impairment in occupational, social, and other critical areas of functioning. In some individuals, the condition can be alleviated through counseling, while in others, the only course of treatment is gender transition.

According to the 2019 policy, these individuals would require special accommodations outside the normal military standards and, as such, were not eligible to join.

5. Special Accommodations Accorded to Individuals With Gender Dysphoria and Not to Others Were Removed

The previous 2016 DOD policy instituted during the Obama administration allowed persons with gender dysphoria who underwent sex reassignment surgery or hormone therapy to join the military in their gender of choice without a waiver. This was on the condition that they were stable for at least 18 months prior to their enlistment.

On the other hand, other non-transgender individuals diagnosed with conditions such as low testosterone could not enlist for service, even with hormone therapy. The 2019 policy eliminated this disparity by barring individuals who had undergone sex reassignment surgery or received hormone therapy for any reason from joining the military.

Transgender Military Ban Lifted

Transgender Military Ban Lifted
Source: Pexels

While the policy’s constitutionality was challenged several times, the Supreme Court issued a 5-4 ruling in Trump v. Stockman and Trump v. Karnoski, allowing the directive to stand until the lower courts had finalized all pending litigation on the matter.

The new military policy received widespread criticism from several factions and members of the LGBTQ community, including retired transgender navy seal Kristin Beck. Beck, who fought in Afghanistan and Iraq, received the highly coveted Meritorious Service Medal, the Purple Heart, and the Bronze Star.

In the 2021 executive order, President Biden repealed the controversial transgender military policy, stating that military personnel would not be subjected to the possibility of being discharged from service or undergoing separation of duty based on their gender identity.

The new presidential directive:

  • Lifts the 2019 Trump-instituted ban that barred transgender people from serving in the military
  • Prohibits the discharge or denial of reenlistment of troops on the basis of their gender identity
  • Rectifies the records of individuals who were dismissed from service because of their gender identity from dishonorable to honorable
  • Issues a directive to the DHS Secretary and DOD Secretary to provide a detailed brief on the progress of implementation within 60 days of signing the new order

Far From the Finish Line

Although many welcomed the new Biden order, some factions argue that more needs to be done to protect the rights of members of the LGBTQ community. Unless Congress enacts new legislation, there’s no telling whether the next administration will overturn the newly instituted policy.

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