Purpose Driven General Counsel

Deutsche Bank’s Subsidiary Pleads Guilty

More news on big banks….

The DOJ entered into a settlement agreement with Deutsche Bank subsidiary – check out the press release here

The headline is: “DEUTSCHE BANK’S LONDON SUBSIDIARY AGREES TO PLEAD GUILTY IN CONNECTION WITH LONG-RUNNING MANIPULATION OF LIBOR”

Yeah, that is pretty bad news…

According to the Press Release: “Deutsche Bank entered into a deferred prosecution agreement today and admitted its role in manipulating LIBOR and participating in a price-fixing conspiracy in violation of the Sherman Act by rigging Yen LIBOR contributions with other banks”

“deferred prosecution” = at the of this, so long as the settlement is abided by, Deutsche Bank isn’t going to have a criminal record. How you throw a bank in jail for violating a settlement agreement is beyond me…

It appears that the Bank will be paying approx $775 Million in penalties.

In other news:

The Consumer Financial Protection Bureau, “the agency established by the 2010 overhaul of financial regulations to enforce laws aimed at protecting consumers from unfair or illegal practices by banks, mortgage lenders and other financial services providers” looks to having its budget restricted some. Check out the article here

By the numbers:

“The measure would cap the agency’s budget at $655 million in 2020 and $720 million in 2025. This year’s budget is $582 million.”

That’s a lot of money spent on holding banks accountable.

Question:

Is it working?

If the DOJ keeps assessing large fines and slapping banks with criminal records, maybe…

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Social Entrepreneurship at its finest: Cascade Engineering.

The Governor’s Office last week posted an article on its “reinvention blog” highlighting a company doing amazing work in West Michigan and around the globe: Cascade Engineering.

According to the State’s Blog Post: “When Fred Keller founded Cascade Engineering in 1973, he was focused not only on building a successful company but also on creating a great place for people to work.”

– Signs of a great visionary and social entrepreneur.

“Keller’s one of a kind program called “Welfare to Career,” in partnership with the state of Michigan, aims to knock down barriers that keep his employees from succeeding.” Check out the article here.

Eradicating Employment Barriers…

Cascade Engineering has always been at the forefront of eradicating barriers to employment. The story of Ms. Valderas, a single mother with small children, and how Cascade Engineering provided her the support and opportunities she needed to succeed is a great testimony of how Cascade Engineering values its workers at a fundamental level.

Cascade Engineering was also in the news today – two of its employees won national awards in manufacturing.

Cascade Engineering and the legacy that Fred Keller has created is certainly living up to its B-Corp designation.

B-Corp Designation

Cascade Engineering maintains a B-Corp Designation. Check out the link for more information on B-Corps.

27 states (excluding Michigan) allow for the formation of “B-Corporations” Essentially, B-Corps have two purposes:

1..to create profit and

2. “create a material positive impact on society and the environment”

B-Corps also Impose heightened fiduciary duties on their board of directors – to consider social/environmental consequences for board decisions.

Not in Michigan…

Bills that would authorize the formation of B-Corps have been proposed, but never enacted.

The closest business entities that exist under Michigan are Low-profit Limited Liability Companies (L3Cs) – the legislature authorized the formation of these “hybrid” business entities in 2009. L3Cs are formed fundamentally for a charitable/socially beneficial purpose, but unlike non-profit corporations, members can own equity in these L3Cs.
L3Cs – Viable Tools for Social Entrepreneurs…

I’ve said this before- L3Cs are a viable tool for social entrepreneurs – they tell the whole world that your company exists, fundamentally to do good. Same can be said for “B-Corps”.

To those at Cascade Engineering – keep up the good work!

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Update on Michigan Intrastate Equity Crowdfunding (MILE Act)

A quick update on Michigan’s MILE Act – Intrastate Equity Crowdfunding….

I have written about previously that the State of Michigan has been slow to propose and implement rules to provide guidance on the practical application of Intrastate Crowdfunding.

Today, Michigan’s Department of Licensing and Regulatory Affairs (LARA) issued a posting on its website: “LARA Offers Tips on Intrastate Equity Crowdfunding; 2013 PA 264 streamlines process for Michigan investors to invest in Michigan’s small businesses” check out the press release here

The posting acknowledges the advantages of this new legislation, indicating that it allows local Michigan businesses “to sell an interest in its business to non-accredited investors without having to register these interests as securities. The new law provides a streamlined procedure to allow Michigan investors to invest in Michigan small businesses; in turn, allowing these businesses to raise capital.”

However, the posting doesn’t so much seem to provide any additional guidance, but merely caution to prospective investors and issuers.

“Small businesses must be aware of the requirements for qualifying for the exemption from registration so they don’t run afoul of federal and state securities laws.”

LARA’s posting seems to point to the fact that Michigan and the Federal government are waiting for clarity.

As the post goes on to state:

“The Jumpstart Our Business Startups Act of 2012 (JOBS Act) requires the SEC to promulgate rules on crowdfunding. The SEC published its proposed rules on October 23, 2013 for public comment, but have not yet been finalized.”

Looks like to some degree we are all waiting on the SEC for guidance….

News in Local Crowdfunding…

Local West Michigan Investment Company Loquidity‘s CEO Jesse Clem will be speaking on Crowdfunding: “Community Impact Investing” here

It’s great to see local Social Entrepreneurs at work!

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Michigan Business Update for Social Entrepreneurs and Business Owners

Happy Monday, all!

A quick update – I recently posted on social entrepreneurship and crowdfunding in Michigan. Check that post here. By way of update, Today, the Michigan Economic Development Corporation (MEDC) posted a press release about a crowdfunding campaign launched by a Ypsilanti non-profit – “Cultivate Coffee and Tap House.” As I’ve mentioned in a prior post, the MEDC has a matching grant program “Public Spaces Community Places Initiative” to match local crowdfunding projects.

According to the press release:

“Cultivate Coffee & Tap House is a non-profit in Depot Town, Ypsilanti that provides sustainable solutions for hunger relief through local and global gardening programs. Cultivate is in the process of renovating a half acre of land into an outdoor gathering space and community garden with a 2,100 square-foot coffee and tap house.”

This is a great example of social entrepreneurship utilizing crowdfunding to “do good” in a local community. Although it hasn’t been widely implemented yet, I believe Michigan’s MILE Act will be useful for social entrepreneurs to begin equity crowdfunding. Only time will tell.

In other news…

I’ve previously posted on new Michigan laws aimed at removing employment barriers. See prior post here

The Michigan Small Business Association has put together a nice article summarizing the three new Michigan Bills intending to reducing employment barriers for felons. Business owners may want to get familiar with these laws.

questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Robin Williams’ Estate: Dispute between Widow and Children.

The ABAJournal reported a story today: Who gets items from Robin Williams estate? Court has to decide between his widow and his children you can check that story out here

From all appearance, it looks like Robin Williams went through his attorney and put together a well thought out estate plan for the benefit of his wife and his children.

What the fight is about…

The dispute is over certain of Robin Williams’ personal belongings.

According to the article, Robin Williams’ children’s Trust gives them “Williams’ memorabilia, awards and other relics”

Robin Williams’ widow claims these items are located in her marital home and therefore belong to her.

It appears from the article there is a bit of “mudslinging” on both sides. Not a good sign for an early resolution to this dispute.

A Lawyer’s Role…

Lawyers look at scenarios from a liability standpoint. We are anticipating the worst case scenario (and other conceivable pitfalls) and how to avoid that worst case scenario.

Usually, things turn out the way you expect. A business contract is followed by both parties… a Trust Plan is administered according to the creator’s intentions.

Worst Case.

Worst case scenario (or something like it) is what appears to have happened here. Even though Robin Williams created a thought out trust plan for his family members, his plan wasn’t enough to keep the bickering family members out of court.

Lessons to be gleaned.

After reviewing the article, and looking back at the experiences I have witnessed first hand – a few observations:

1. Blended Family? Estate Planning red flags.

Communication is key. Even more so when your current spouse and you have different children. While still alive and healthy, members of a blended family should communicate wishes in and open and honest setting. To the best that you can, leave no room for misinterpretation.

2. Estate Litigation is costly because oftentimes money is not the motivating factor.

A Lawsuit is very rarely a cost-effective solution to any dispute. In business disputes, it is much easier to convince your client to make a “business decision” and not throw good money after bad.

Not quite so in estate litigation.

The hard part about dealing with these disputes is that there often times is not a “business decision” to be made. Settlement decisions by and large are made on emotion and negative perception of the intent of the opposing family member.

Case in point – Robin Williams’ Estate. Read the comments being made, and the actual items being fought over.

Questions? Comments?

email: Jeshua@dwlawpc.com

www.dwlawpc.com

Michigan Crowdfunding News for Social Entrepreneurs

Happy Friday!

Last Thursday I presented on “Social Entrepreneurship” from a Legal Perspective at the Grand Rapids Area Professionals for Excellence (GRAPE)

If you couldn’t make the presentation and you’re interested, I believe my power point presentation has been made available through the GRAPE website.

Social Entrepreneurship: #PurposeDriven

I love Shawn Miller’s twitter posts on Social Entrepreneurship – they all have the hashtag #purposedriven. That sums up social entrepreneurs in my opinion.

In my presentation I defined Social Entrepreneurs as individuals who, in their business ventures, are driven by a purpose much greater than their own self-interest. That purpose is to do some good in this world.

In my presentation I didn’t have much time to delve into the specifics of “crowdfunding” as it relates to Michigan law; however, I left the audience with one final point: my belief that crowdfunding is a viable tool for social entrepreneurs.

Latest Michigan Crowdfunding Headlines

A noticed a few news headlines concerning social entrepreneurs utilizing crowdfunding:

#Crowdfunding underway for burger eatery “Chomp Burger” in downtown Adrian, MI.

http://www.lenconnect.com/article/20150325/NEWS/150329429/1995/NEWS

Three area businessmen have launched a rewards-based crowdfunding campaign to help secure a loan for a proposed $1 million Chomp Burger restaurant in downtown Adrian.

Crowdfunding campaign launched to support Portland’s Red Mill Pavilion

According to the article, “the Red Mill Pavilion project will provide residents and visitors with new recreational opportunities and help bring new vitality to downtown Portland,”

Michigan’s Economic Development Corp Innovates with Crowdfunding

Portland’s project is interesting because it is part of a matching grant program with the MEDC’s “Public Spaces and Community Places” Program.

The MEDC program “mobilizes community members, residents and general supporters to make individual contributions while promoting their efforts to others… Projects meeting fundraising goals can receive a matching grant from MEDC of up to $100,000.”

These are innovative examples of how crowdfunding can be utilized by social entrepreneurs.

It’s also an example on how local government sees the value in crowdfunding, and it supports my belief that crowdfunding, including intrastate “equity” crowdfunding is not going away.

Equity Based v.s. Donor Based Crowdfunding

Both of the news stories are great examples of “rewards based” or “donors based” crowdfunding.

Individuals are asked to contribute funds to a worthy project without retaining any ownership stake in the project.

Michigan’s MILE Act deals with “Equity- based Crowdfunding”

As I’ve written in detail before, the MILE Act allows any Michigan resident (local) to “invest” up to $10,000 in a local project that is otherwise compliant with the MILE Act. Those investors retain ownership in the Project.

I believe the MILE Act is a way to connect local individuals to own and take part in local ventures that add value to a local community.

If you’re interested in learning more about funding portals, connect with one of the handful of Crowdfunding Website Operators where Michigan issuers can go to begin a MILE Act project.

You can check out Michigan’s Crowdfunding Website Operators

Included in that list is West Michigan Based Loquidity

Questions? Comments?

email: Jeshua@dwlawpc.com

www.dwlawpc.com

What’s Going on With Banks? Part II: Comptroller on Currency and Community-Based Banks

In my March 11th Post on “What’s Going on With Banks” I made an observation: such worldwide bad press on big banks might lead to increased lending at community based banks.

No sooner than I hit “publish” on my post did I receive several more news headlines regarding big bank lawsuits.

I get regular “Enforcement Actions” e-mailed to me, but you can search them yourself here

I also get regular DOJ press releases, that highlighted several more settlements with Banks.

I recently read that the DOJ may be revoking some settlement agreements with banks related to “manipulating the interest rates” – yikes.

At any rate….

Today Thomas J. Curry, Comptroller of the Currenc,y gave remarks before the ABA Mutual Community Bank Conference in Washington D.C. You can read the remarks here

Mr. Curry had this to say in favor of community-based banks:

“These community-based institutions extend credit to farms and families and local businesses in towns and cities across America, and they serve their customers in a way that large banks just can’t match. They are small enough to be able to know their customers, and they work with them in good times and bad. But they are also large enough to provide the services communities need. Mutual savings associations fit firmly in that tradition”

In further support:

“You are free to do what is best for your customers, and that means you provide services and price those services in a way that puts people first – ahead of quarterly profit targets and ahead of investor interests.”

Those are pretty glowing remarks for community-based lenders.

They are certainly attributes I like to see when I am referring any of my business clients to a commercial lender – particularly a start-up entrepreneurial type client.

Mr. Curry also commented that “big banks”:

“offer a variety of important services to companies and consumers, from commercial loans to credit cards, and they present a number of challenges from a supervisory perspective.”

I’d say the supervisory challenge was an understatement.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Michigan Real estate law update: House Passes “Notice to Evict by E-mail” Bill

Happy March Madness Friday!

Yesterday House Bill 4038 allowing eviction notices to be sent to residential tenants by e-mail passed the Michigan House.

Now on to the Senate.

You can check out the latest Legislative Analysis here

The Passed Bill looks a bit more complicated (as anticipated) than the original bill that was proposed back earlier this month. See here

What’s Different:

The substituted bill included detailed definition of “document” “electronic service” “electronic service address”

It also provides clarity to tenants – they cannot be penalized for “opting out” of notification by e-mail.

Tenants may want to consider this, assuming the bill becomes law.

Lots of Public Attention:

I also find it interesting that this topic received a lot of attention – just look at the different sectors of the real estate industry that weighed in:

A representative of the Property Management Association of Michigan testified in support of the bill. (3-3-15)

The Michigan Judges Association submitted written testimony in support of the bill. (3-2-15)

The Rental Property Owners Association of Michigan indicated support for the bill. (3-3-15)
The Apartment Association of Michigan indicated support for the bill. (3-3-15)
Princeton Enterprises indicated support for the bill. (3-3-15)
A representative of the Michigan Poverty Law Program testified that the entity is neutral on the H-2 Substitute. (3-3-15)
A representative of the Michigan Process Servers Alliance submitted written testimony opposing the bill. (3-3-15) Leg

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Michigan AG is cracking down on Fraudulent Businesses, Unlicensed Real Estate Professionals

Ag Cracks Down on Bad Michigan Businesses. I just received this press release today from the Michigan Attorney Generals Office announcing the Investigation of 10 Michigan Businesses related to faulty Anti-Freeze Distribution. You can check out the Ex-Parte Petition filed in Court here The Court granted the AG’s request for subpoenas in an order signed today. One thing is for sure: the AG’s office is taking serious efforts to shut down businesses engaged in unfair practices. This includes a concerted effort to investigate complaints related to “unlicensed professionals” – contractors, real estate brokers, agents, and property managers. A few days ago I had a client who found out (much to his shock) his business was being investigated for not being properly licensed. Good thing it turned out my client was properly licensed. Case closed. It was a good ending, but I’m sure it made my client nervous for a few minutes. However, the take away is that someone initiated a complaint – and the AG’s office followed up on it. Take Away… I’ve said this before, but if you are a Michigan business engaged in a licensed profession, now is a good time to make sure you are compliant with Michigan law. All it takes is an anonymous complaint to the AG’s office to initiate a process like my client went through. If that happens to your business, hopefully you have everything squared away. You don’t want to be on the receiving end of a (very public) subpoena of the sort granted today by the Wayne County Circuit Court. Questions? Comments? email: Jeshua@dwlawpc.com http://www.dwlawpc.com

Banks, Lawsuits, and Settlements: What’s going on with Banks?

This week I noticed several headlines that amount to bad news for big banks.

I will give you my honest gut-reaction when first reading these headlines:

1. CommerceWest Bank Admits Bank Secrecy Act Violation and Reaches $4.9 Million Settlement with Justice Department (see Link)

Violating the Bank Secrecy Act? Really? That just sounds bad…

CommerceWest Bank was also accused of violating other Federal Laws – check out the Complaint here

2. Chase Bank to Pay $50 Million for Mishandling Bankruptcy Docs (see Link)

Mishandling bankruptcy docs? These people are already broke, why not bilk them for extra fees?

The Department of Justice gave some insight on the nature of the allegations:

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” says Stuart F. Delery, acting associate attorney general, in the release. “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

3. HSBC Bank to Pay $30 Million to Settle Overdraft Fee Lawsuit (see Link)
Gouging customers. Nice…

Two thoughts after my review of these articles:

1. The Department of Justice is out there holding Big Banks Accountable.

Someone has to. It’s not going to be the average consumer, with a mortgage loan. It’s also not going to be the small business owner taking out a construction loan. Big Banks have the leverage.

2. Local Community Banks are More Appealing Than Big Banks.

Consumers and businesses alike are looking for banks they can trust. From a personal point of view, as a lawyer and an advisor to business owners – I’m looking to make referrals to clients that I trust.

Looking at the news headlines, an average individual or small business owner might conclude that they need a local banking relationship they can trust.

In West Michigan there are a lot of good local community banks. I know good commercial lenders who care about their business clients.

Does this mean that big banks are going away? Nope.

As its been said – some of the largest banks are simply able to offer better deals at lower risks.

Regardless, the headlines certainly give you pause to think.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com