All posts by Block & Landsman

law gavel and book, business litigation

Three Newest Laws Designed to Help Small Businesses

law gavel and book, business litigationChicago strives to give small businesses the assistance they need to be competitive with larger businesses, including passing legislation that offers a range of benefits. For those who operate a small business, there are three laws that should be understood to reap the greatest gains.

The official website of Chicago houses details about how to own and operate a business in the city, regardless of the business size; however, their New Business page includes numerous useful links for those just starting up their business. Finding and retaining a business litigation lawyer can provide further insights and help in establishing and improving a small business or company.

Tax Credits

Like many major cities, Chicago has a number of tax credits aimed at helping businesses thrive. These credits range in types and target business sizes. A number of these credits are focused on new businesses (or business new to the area), including credits for taking over abandoned properties or vacant lots. The credits are further extended to land that was once considered contaminated but has been deemed clean. There are also several training and hiring credits that help businesses get and retain the right talent for their jobs.

The Regulatory Flexibility Program

This is a state program that specifically targets small businesses and is aimed at assisting in their growth. The state Department of Commerce and Economic Opportunity provides assistance to small businesses so that the businesses can more easily comply with a wide range of regulations. As there are a number of complex regulations around the state, this helps level the playing field. A business litigation lawyer can assist in finding the applicable regulations and determining the best way to proceed with complying with those regulations.

The Chicago Transit Authority Small Business Program

Also called the CTA Small Business Program, this program allows a specific number of CTA projects for small businesses to complete. Larger companies are not allowed to compete to complete these city transportation projects, although they are able to bid on other projects for the transportation department. A small business that wants to be considered for one of the CTA Small Business Program projects must first be SBE certified.

Business litigation lawyers have a better understanding of how to use these laws and others to the advantage of a small business. Contacting a lawyer who focuses on business litigation can help build a small business in the large Chicago business sphere.

medical lab, consumer fraud

When Companies Misrepresent the Effects of Medications

medical lab, consumer fraudWhen drug manufacturers misrepresent the risks, adverse effects and benefits of medications, they can be held liable for the damages that result. Inadequate information and downright misleading claims about the effects of medications are nothing new.

In some cases, companies inflate the positive effects and benefits of their drugs for the purpose of increasing profits. In others, they fail to adequately disclose the risks and possible adverse effects that their medications can cause. With either scenario, when companies are in violation of the Illinois Consumer Fraud and Deceptive Practices Act victims can be financially compensated for the damages that result.

In many situations, the damages that result from medication misrepresentation are severe- especially when accurate information about possible adverse effects is not disclosed. Victims often suffer serious consequences including worsening of medical conditions, developing new medical conditions, permanent disability and even death. In fact, it is believed that this type of outrageous misrepresentation has been a major factor in the opioid addiction epidemic that currently plagues the United States and results in substance abuse and deadly overdoses every year.

According to the National Institute of Drug Abuse, medication overdose deaths continue to rise every year. And the American Society of Addiction Medicine claims that there are more than 50,000 deadly medication overdoses annually- which would make drug overdoses the leading cause of accidental death in the nation. An increasing number of people continue to fall victim to the adverse effects and addictive properties of opioids, and communities continue to be flooded with these drugs. It is reported, however, that there are actually no scientific studies that show that opioids are effective tools for long-term pain management, yet they are marketed as such.

Avoiding Becoming a Victim of Medication Misrepresentation

Despite the FDA’s efforts to crack down on misleading medication marketing campaigns, drug misrepresentation continues to target innocent victims. These distracting, inaccurate and even deceptive ads make it nearly impossible for the average consumer to make an informed decision. To avoid falling victim to false or incomplete medication ads, consumers should:

  • Be wary of the most heavily marketed drug ads and take glowing patient testimonials with a grain of salt.
  • Investigate new medications thoroughly and check out hard facts about clinical trials, possible risks, and FDA labels and warnings.
  • Check labels and warnings for name brand drugs when selecting generic medications. Federal law requires generic and name brand labeling to be identical.

 

Top Investment Scams that Target the Elderly

sad old man, investment fraudThe elderly are favorite targets for investment scammers because they are often technologically illiterate, suffer diminished mental faculties, and are believed to be wealthy, making them vulnerable to investment scams. Financial scams targeting the elderly are so prevalent that the National Council on Aging (“NCOA”) dubbed it “the crime of the 21st Century.”

Unfortunately, financial crimes are difficult to prosecute and heavily underreported. Moreover, according to the NCOA, these crimes are being committed by family members, specifically, a grandparent’s adult children, grandchildren, and nieces and nephews.

Medicare/Health Insurance Scams

This scheme targets adults who qualify for Medicare coverage (i.e. those aged 65 and over). Fraudsters will pose as Medicare or Medicaid representatives to collect information about the victim and use that information to file fraudulent charges to Medicare and Medicaid. Some police event report that these criminals set up fake mobile clinics and provide bogus medical services to complete their illusion. These crimes are often committed by sophisticated individuals who understand how to manipulate victims and Medicare/Medicaid.

Counterfeit Prescription Drugs

As medical costs increase, including prescription drugs, many elderlies are turning to the Internet to locate cheaper, specialized drugs. Sadly, unscrupulous individuals set-up fake websites peddling cheaper, counterfeit drugs that the elderly purchase.

Aside from having their money stolen, these victims are also at risk of suffering adverse medical consequences related to the counterfeit drugs they are ingesting and because they are not taking the medicine that they need.

Funeral and Cemetery Scams

The FBI has released a bulletin describing two funeral scams. One method involves the scammers reading the obituaries, attending the funeral or wake for the deceased person, and then posing as a debt collector or creditor. The scammer will take advantage of the grieving spouse or family member to attempt to extort money from the individual.

In the other method, disreputable funeral homes use the obscurity surrounding their industry to attach unnecessary charges and costs to a bill. Funerals cost several thousands of dollars, and these funeral companies use that to their advantage by hiding fraudulent charges in the bill. Additionally, some of these funeral homes will insist that a person is buried in an expensive casket when a cremation is an acceptable option. Essentially, funeral homes try to “up-sell” their services and products by obscuring costs and facts.

Anti-Aging Products

Similar to fake prescription drugs, fraudulent companies will peddle snake oil as an anti-aging cream, pill, or treatment. Some criminals, like an outfit in Arizona, even sold fake Botox and made $1.5 million in one year. Moreover, homeopathic remedies are so loosely regulated, that many companies promise a broad range of anti-aging results despite no supporting scientific proof.

Furthermore, Botox-based scams are particularly dangerous because it involves fake labs creating counterfeit versions of Botox that use, botulism neurotoxin, the active ingredient in a Botox treatment. Botulism neurotoxin is one of the deadliest substances in the world. A single counterfeit batch of Botox can have significant medical consequences, far beyond drooping neck muscles or wrinkles.

Telemarketing and Phone Scams

The most common scheme, one that touches millions of people a year, is the phone scam. These scams specifically target the elderly who make twice as many purchases over the phone compared to the national average. Phone scams are notoriously difficult to track and prosecute because there is no paper trail, no face-to-face interaction, and the Internet allows criminals to use numbers that could be based anywhere.

There are several versions of this scam including:

  • The Scare Tactic: involves one scammer calling the victim and threatens them with (1) debt collection (2) tax debt or something similar, the scammer informs the victim that this is the final warning before a criminal complaint is filed and that the victim can avoid criminal charges if they pay immediately. The scammer directs the victim to withdraw funds from a bank account and either (1) send a wire or (2) purchase gift cards and send to the scammer. If the victim questions, a second scammer will call posing as a police officer or federal agent as a final tactic to scare the victim.
  • Charity Scam: this involves a scammer soliciting money for a fake charity following a natural disaster.
  • Fake Accident: involves a scammer calling a parent or grandparent to inform them that their child/grandchild was injured and is being treated at a hospital, however, that they do not have any money and cannot pay their bills.
  • The Pigeon Drop: involves a scammer calling the victim to inform them that they found money/won a prize and they will share it with the victim, however, they need a “good faith” payment by withdrawing funds and wiring it to the scammer. Usually, a second scammer will call posing as a lawyer, accountant, or banker to offer support.
writing rules in red, securities fraud

Financial Advisors Will Soon Be Subject to the Fiduciary Rule

writing rules in red, securities fraudThe Department of Labor (“DOL”) announced that it is extending the “investment advice fiduciary” definition in the “Employee Retirement Income Security Act” (“ERISA”) which will bind all financial professionals who provide retirement planning and advice to a fiduciary. A fiduciary is a level of obligation that requires “fiduciaries” to place the interests of their clients above their own. It also exposes people who are “fiduciaries” to additional causes of action if they fail to place their client’s interests above their own.

The expansion of the rule is a significant victory for consumers however there are more than a few financial and investment professionals who argue the rule is unnecessary and will increase costs on consumers.

Fiduciary Rule Explained

A fiduciary is a person who holds a legal or ethical relationship of trust to another person or people. For example, lawyers owe fiduciary duties to their clients; trustees owe a fiduciary duty to the trust and the beneficiaries of the trust, conservators, legal guardians, business partners who fiduciary duties to one another, boards of directors to their corporations, and teachers and students.

The purpose of the fiduciary rule was to emphasize that some jobs or relationships necessarily entail that other people will depend on them for their advice, knowledge, and experience. Those relationships are inherently unequal therefore the fiduciary duty arose to ensure that, despite the unequal relationship, the fiduciary wouldn’t place their interests above their clients.

The fiduciary duty is the highest standard of care to which a person or entity can be bound. The fiduciary is expected to exhibit extreme loyalty to the principal (the person to whom the duty is owed), to the point that the fiduciary must lose their own money in order to assure the solvency of their client. Furthermore, the fiduciary duty prohibits people bound by the duty from entering into conflicts of interest or failing to disclose a conflict to the principal.

A conflict of interest means that the fiduciary has competing goals or obligations that distract from her fiduciary obligation. For example, if a lawyer is representing two clients and evidence is uncovered that one of the clients may have a claim against the other, the lawyer is required by fiduciary and professional obligation to disclose the conflict to the clients.

Controversy Regarding the Rule

The rule was originally promulgated by the Obama Administration and was set to be phased on April 10, 2017. However, on February 3, 2017, after the Trump Administration assumed control of the government, the White House issued a memorandum that instructed the DOL to conduct an “economic and legal analysis” of the fiduciary rule’s impact and to delay the implementation of the rule by 180 days. However, by March 20, 2017, the DOL issued its Bulletin clarifying that the delay would only be for 60 days.

The DOL reopened the rule for public comment and received overwhelming support in favor of the rule and intense opposition to the delay of its implementation. Some industry heavyweights, including major asset managers, oppose the rule and favored delay. However, despite the opposition, the Secretary Alexander Acosta (the head of the DOL) announced that delay of implementation would be inappropriate, contradicting the White House memorandum.

Several lawsuits have been filed to oppose the rule, including a joint suit filed by the U.S. Chambers of Commerce, the Securities Industry, and Financial Markets Association, and the Financial Services Roundtable. Many brokers argue that the new rules will prohibit commissions which will force them to raise their hourly rates which could price many people out of their services.

Outline of New Rule

The rule requires investment and financial advisors to:

  • Place their clients’ interests above their own.
  • Disclose potential conflicts of interest, for example, if the advisor receives a commission for selling the client a particular product.
  • Disclose all fees and commissions to clients.

The rule was expanded to include financial advisors who provide ongoing advice and those who are making one-off recommendations or solicitations (so people who are trying to pitch their services to a client). The fiduciary obligation is a far higher duty than the old suitability rule which only required financial advisors to provide advice that meets the client’s needs and objectives.

The rule also specifically lists plans that are protected by the rule including:

  • Defined contribution plans such as 403(b) (government retirement plans), employee stock ownership, 401(k)s, and Simplified Employee Pensions (“SEPs”);
  • Defined-benefit plans (i.e. pensions); and
  • Individual Retirement Accounts.

However, the rule doesn’t cover every situation in which a financial advisor gives information to a client. For instance, if a customer calls a financial advisor asking about a particular product or if a financial advisor gives general investment advice based on a person’s income or age (but not advice that is individualized to that person’s goals).