In Episode 2 of 'Weekly Docket', Phil Silberman and Austin Black explore the Texas border's razor wire case and the recent Apple watch ban. They also address legal questions related to non-competes, Airbnb, and adoption fraud, concluding with a focus on the evils of small business regulation. Tune in for legal insights and practical advice.
In Episode 2 of 'Weekly Docket', Phil Silberman and Austin Black explore the Texas border's razor wire case and the recent Apple watch ban. They also address legal questions related to non-competes, Airbnb, and adoption fraud, concluding with a focus on the evils of small business regulation. Tune in for legal insights and practical advice.
Welcome to Silverman Law Firm's Weekly Docket, episode two, where we talk legal news and practical law.
austin_1_01-26-2024_121431:Today
Track 1:is January 26th, 2024. And I'm Phil Silverman, your host, and I'm here with my co-host, Austin Black, out of our
austin_1_01-26-2024_121431:Dallas
Track 1:office. How are you doing today, Austin?
austin_1_01-26-2024_121431:Doing fine. A little bit under the weather. Just took a test and confirmed I had have covid. But we're gonna, we're gonna make it through.
Track 1:We're doing a covid show. Austin's a trooper. So the main goal for episode two is not to offend
austin_1_01-26-2024_121431:as
Track 1:as many people as we offended in episode one. I think we offended Italians,
austin_1_01-26-2024_121431:Canadians,
Track 1:Everyone who leaves online negative reviews,
austin_1_01-26-2024_121431:convicted
Track 1:felons, and people that failed the bar five times. And it turns out that our producer Aaron, is Canadian. So there's that too. Weekly docket what's on our docket today, Austin.
austin_1_01-26-2024_121431:the Supreme Court razor wire case involving Texas to protect its borders. Alright.
Track 1:SCOTUS borders and.
austin_1_01-26-2024_121431:And razor wire. Exactly. And then Apple watches have been banned again. So we're gonna talk about talk about that And then we're gonna answer a few legal questions touching specifically on non-compete. Airbnbs and them being restricted as a result of de restrictions and then suing fraudulent adoption companies, something I hope most people do not have experience with. Then we will do the rancid raves section talking about small business regulation.
Track 1:that's one of my least favorite things is regulation, but I'll be doing a lot of ranting about 10 90 nines and other oppressive things for small businesses And it turns out we've got
austin_1_01-26-2024_121431:securities
Track 1:filings for small businesses that, that may or may not.
austin_1_01-26-2024_121431:be required. Yep.
Track 1:So that's our show.
austin_1_01-26-2024_121431:Let's
Track 1:get kicked off with our first segment Legal news. So we've got the SCOTUS Supreme Court United States
austin_1_01-26-2024_121431:Wire.
Track 1:case.
austin_1_01-26-2024_121431:Now
Track 1:Now here's the facts on this thing, The Texas law enforcement, national Guard, whatever, who controls, our borders in Texas with Mexico.
austin_1_01-26-2024_121431:goes and
Track 1:and throws a bunch of razor wire primarily along the Rio Grande River.
austin_1_01-26-2024_121431:the
Track 1:the Biden administration
austin_1_01-26-2024_121431:doesn't
Track 1:like it. So they sue the state of Texas saying, Hey,
austin_1_01-26-2024_121431:you
Track 1:you gotta let federal agents remove
austin_1_01-26-2024_121431:the
Track 1:the razor wire. why is the razor wire a problem for the Biden administration? I personally think, the optics are bad.
austin_1_01-26-2024_121431:Sure.
Track 1:It's one thing. If you've got cartel members with tatted up faces, Trying to get over the Rio Grande, which by the way, I don't think they go with the Rio Grande. I think they have tunnels to get the drugs in and all that kind of stuff.
austin_1_01-26-2024_121431:the optics of maybe
Track 1:Pregnant women and children getting caught.
austin_1_01-26-2024_121431:wire is a cruelty inhumane type of thing. I
Track 1:I don't know whether that's really happening, but I'm certain that the Biden administration, the Democrats are alleging that's a poss a possibility. But razor wire might be a good thing for keeping cartel members out might be a bad thing for having
austin_1_01-26-2024_121431:people that
Track 1:that are sympathetic to the immigrants getting caught in.
austin_1_01-26-2024_121431:razor wire which I get
Track 1:so what's Texas' argument here? Essentially why? Why do we get to
austin_1_01-26-2024_121431:put razor wire
Track 1:down
austin_1_01-26-2024_121431:and
Track 1:and.
austin_1_01-26-2024_121431:over? So Texas is allowed to defend its border. Under Article one, section 10, clause three of the Constitution.
Track 1:that. A
austin_1_01-26-2024_121431:You've got the
Track 1:united
austin_1_01-26-2024_121431:Constitution. And the
Track 1:idea,
austin_1_01-26-2024_121431:the
Track 1:federal government.
austin_1_01-26-2024_121431:has to do its job in protecting
Track 1:The states. That's, that was part of the deal. And our framers ultimately put that in the constitution.
austin_1_01-26-2024_121431:in Article four, section four
Track 1:And then in their wisdom they figured maybe the federal government might not always protect the states.
austin_1_01-26-2024_121431:So in
Track 1:in the event the federal government fails to do its job, then the states can take a, take it upon themselves
austin_1_01-26-2024_121431:To,
Track 1:pro for, to protect their borders. And that is article one, section 10 clause three.
austin_1_01-26-2024_121431:And
Track 1:That's the letter that Governor Abbott penned to the Biden administration, and I think he hand deliver one of them. Anyway,
austin_1_01-26-2024_121431:He did
Track 1:that's the argument. Why?
austin_1_01-26-2024_121431:we get to, to do this. Yeah. And Ron DeSantis apparently sent National Guard members to Texas too, so we'll see exactly what they're gonna do, but yeah.
Track 1:And that was, I heard that was a result former President Trump basically called as on as many governors as possible to send National Guard to support Texas. And I wanna say something like 24 governors either have sent or have agreed to send National Guard to Texas to protect our borders. So
austin_1_01-26-2024_121431:that's
Track 1:wild in its own riot.
austin_1_01-26-2024_121431:It is.
Track 1:we're in Texas. Most of us in Texas wanna protect our borders. The bad news When I saw the letter is the letter cited, the dissenting opinion that was issued by Justice Scalia. In the Arizona case back in 2012, so
austin_1_01-26-2024_121431:we're
Track 1:basically Governor Abbott. Our governor is basically siting and deferring to a losing horse, right? We've lost this thing one time, so we're gonna, we're gonna take the same horse, same losing horse, and ride it again.
austin_1_01-26-2024_121431:and it was so strange to me, just the of course I know it's political grandstanding, but. It just, Abbott 100% knows that you can't cite a dissenting opinion as legal precedent.
Track 1:You can cite a dissenting opinion if you want. It's.
austin_1_01-26-2024_121431:you can. Persuasive. No, it's not.
Track 1:But that's now the good news is that was 2012 and the Supreme Court is a lot more conservative now after all of President Trump's 2016 appointment. So we've got that going for us in the state of Texas.
austin_1_01-26-2024_121431:the chance they could just overrule that specific holding. They could, but I don't know.
Track 1:Yeah.
austin_1_01-26-2024_121431:right
Track 1:Now. Now
austin_1_01-26-2024_121431:Here's some
Track 1:some other interesting news. After the Supreme Court, by the way, did not issue a full opinion. It was basically just a ruling, like a two sentence ruling.
austin_1_01-26-2024_121431:And
Track 1:And the Supreme Court said,
austin_1_01-26-2024_121431:okay,
Track 1:federal agents, you're allowed to cut away the razor wire.
austin_1_01-26-2024_121431:That was
Track 1:was the extent of the ruling.
austin_1_01-26-2024_121431:So
Track 1:some very, smart people in Texas decided. That that's a very narrow ruling. So
austin_1_01-26-2024_121431:Just
Track 1:as the federal agents are cutting away the razor wire,
austin_1_01-26-2024_121431:we'll
Track 1:send our law enforcement agents, just to put it back, so I'm, I have this visual of these guys on the Rio Grande, the feds are out there
austin_1_01-26-2024_121431:laying
Track 1:down razor wire, and our federal agents are like a, I'd always imagine the Texas Rangers, right? Some Texas Rangers in their cowboy hats,
austin_1_01-26-2024_121431:Yeah. And
Track 1:and they're like putting the
austin_1_01-26-2024_121431:wire
Track 1:up after the feds. You.
austin_1_01-26-2024_121431:Cut it down. So yeah, to me it's the height of ridiculous. Yeah. It's like that scene from the Simpsons where the dude's throwing the guy out of the bar and the guy comes up right behind him after he throws him out and he has to throw him out again. Yeah. It's the same thing.
Track 1:So you that's what we have. We have a Simpsons episode going on. Okay. And on the Texas Mexico border right now,
austin_1_01-26-2024_121431:That's where we're,
Track 1:Let's see where this goes. This case is ultimately not gonna be, the greatest, most interesting border case. I don't think we'll see
austin_1_01-26-2024_121431:if the
Track 1:the Supreme Court ends up taking it up for, to actually issue a proper opinion or
austin_1_01-26-2024_121431:Whether they
Track 1:they take up another border case or what happens with that.
austin_1_01-26-2024_121431:Alright.
Track 1:talk about something completely different than Texas Borders, which is Apple watches.
austin_1_01-26-2024_121431:Sure.
Track 1:Do you have an Apple Watch?
austin_1_01-26-2024_121431:an Apple watch.
Track 1:Okay I have an Android, right? And I'm, apparently,
austin_1_01-26-2024_121431:my
Track 1:family hates me because I have an Android. They, at one point they sent me a meme that says, when you have an Android, you're hurting your other family members. And I guess it's because my texts are a different color or something like that, but. Now, my wife is an iPhone and she has this Apple watch. Do you,
austin_1_01-26-2024_121431:And
Track 1:and by the way, this thing, she just got a new one and I think it's.
austin_1_01-26-2024_121431:which is
Track 1:is the big one. It's one of the ones, the series nine or ultra two. I don't know which one. The thing looks like a laptop on her wrist.
austin_1_01-26-2024_121431:So
Track 1:this is the kind of watch we're talking about. And
austin_1_01-26-2024_121431:as
Track 1:as part of these watches, specifically the series nine and watches.
austin_1_01-26-2024_121431:watches,
Track 1:Apple decided they wanted to put a blood oxygen reader, an oximeter in the watch. Alright. And The fact you have covid is perfect for this piece because when we all first got covid, like years ago, in 2020, we all decided that we needed a bunch of oximeters.
austin_1_01-26-2024_121431:And
Track 1:after that you get the sniffles. At least I do because I'm a hypochondriac and I'm like, okay, I've got, maybe I've got a, an upper respiratory thing.
austin_1_01-26-2024_121431:Where's my
Track 1:my oximeter? What's my blood oxygen level? And if, if I dip below
austin_1_01-26-2024_121431:like
Track 1:97, which is very high by way, I'm like, all right, you, or 94, I'm like, I'm going to the hospital.
austin_1_01-26-2024_121431:That's how
Track 1:how we do, that's how we do it now. But
austin_1_01-26-2024_121431:So
Track 1:so Apple decided people wanted these oximeters on the wash.
austin_1_01-26-2024_121431:these two
Track 1:two watches had oximeters on it, and apparently
austin_1_01-26-2024_121431:the
Track 1:patent was owned by a another company. And I don't have the name. I wanna say it was like Moss or something.
austin_1_01-26-2024_121431:Mossimo, is
Track 1:is that right? Fi Fight against Mossimo.
austin_1_01-26-2024_121431:That
Track 1:That sounds weird. Wasn't Mossimo like some shirt brand? Like back in the nineties, but I don't know. Maybe
austin_1_01-26-2024_121431:know.
Track 1:might be too. Yeah, you may be too young for that, but as my generation, maybe, I think we had some Mossimo closing, but I think that's the name of the company that had this patent for this oximeter. So Mossimo sues Apple and says, Hey, you're violating our patent. Apple probably knows they're violating it. I don't know. But
austin_1_01-26-2024_121431:Masimo
Track 1:wants a ton of money for the oximeter and the two of these companies cannot come to a deal.
austin_1_01-26-2024_121431:So
Track 1:it was like on, again, off again,
austin_1_01-26-2024_121431:The
Track 1:customs or border, whatever they decided. Okay, you can ship'em in, you
austin_1_01-26-2024_121431:ship'em in.
Track 1:in
austin_1_01-26-2024_121431:it
Track 1:stands now.
austin_1_01-26-2024_121431:no. If
Track 1:If you want a Apple watch with an oximeter, you're not getting one because it's yeah, they can't figure out the patent thing. And If you are, if you bought one and it already has the oximeter, you can keep it.
austin_1_01-26-2024_121431:Don't worry,
Track 1:worry, the patent police are not gonna come and take your watch.
austin_1_01-26-2024_121431:Hopefully not. If
Track 1:if you're looking to buy a new one and tell Mossimo and Apple do a deal, no, no dice on.
austin_1_01-26-2024_121431:Okay. Yeah. Alright, let's answer some
Track 1:Legal questions.
austin_1_01-26-2024_121431:Yeah,
Track 1:We've the first
austin_1_01-26-2024_121431:What's the
Track 1:the first question.
austin_1_01-26-2024_121431:Yeah. So we've frequently have people reach out to us to ask questions about non-competes
Track 1:The guy saying, all right, is my noncompete still enforceable if I'm fired? I guess that's funny because it's yes, it's, to attorneys it's maybe obvious that, your source of term or your reason for termination or separation may not be material to
austin_1_01-26-2024_121431:Whether you're
Track 1:your non-compete is enforceable. And just to make this, hit home.
austin_1_01-26-2024_121431:bit, you can take a job on
Track 1:A on day one or two sign noncompete,
austin_1_01-26-2024_121431:get
Track 1:get fired the next day and it
austin_1_01-26-2024_121431:still be
Track 1:be enforceable.
austin_1_01-26-2024_121431:Yeah, absolutely.
Track 1:The way these things work is you get hired by a company
austin_1_01-26-2024_121431:from
Track 1:and day one you get the.
austin_1_01-26-2024_121431:the
Track 1:agreement, the employment agreement, and these non-compete
austin_1_01-26-2024_121431:clauses
Track 1:have to be part of an ancillary
austin_1_01-26-2024_121431:Agreement,
Track 1:which is the employment agreement. And then
austin_1_01-26-2024_121431:the
Track 1:the employ, the non-compete clause recites
austin_1_01-26-2024_121431:certain
Track 1:consideration. And that consideration is typically the trading of confidential information.
austin_1_01-26-2024_121431:So
Track 1:if you were fired on day one or
austin_1_01-26-2024_121431:a
Track 1:a day, did you
austin_1_01-26-2024_121431:get
Track 1:get the consideration Noncompete
austin_1_01-26-2024_121431:enforceable?
Track 1:But yeah, non-competes are pretty, pretty rough thing there. In New York, by the way. I saw an article that they're thinking about saying I, I think it was like 200 grand or you can't be subject noncompete.
austin_1_01-26-2024_121431:but
Track 1:we do a lot of non-compete work at our firm and we often represent employees and those things can absolutely enforceable. And we've seen them, create absolute hardship on families and employees that sign these things. And
austin_1_01-26-2024_121431:most of the
Track 1:of the time, the guy wanted a job or the person wanted a job, wasn't thinking, signed it, what does it mean? And they got into an enforceable non-compete, and that was their.
austin_1_01-26-2024_121431:their
Track 1:Their livelihood. Okay. What's our next question?
austin_1_01-26-2024_121431:So HOAs frequently homeowners associations like to restrict people from operating their properties that they own in the HOA as Airbnbs or short term rentals.
Track 1:I've got a.
austin_1_01-26-2024_121431:Okay. And he a buddy, he's a buddy of mine, and he, we were, we're a member of this tennis club, and he
Track 1:We're in the locker room and he is Phil,
austin_1_01-26-2024_121431:you
Track 1:you gotta do something for me. I live, he lives in the gallery area in Houston, and he says, Phil I live in this nice town home and my wife and I love it. And we've loved it for many years, but in the last couple years we've noticed that it's being, been rented to.
austin_1_01-26-2024_121431:Out
Track 1:by the night on Airbnb and VRBO and
austin_1_01-26-2024_121431:he
Track 1:he said, Phil what happens is they go, these young people, they come in from all over the country
austin_1_01-26-2024_121431:and a
Track 1:a lot of'em are professional athletes and they're entourage and
austin_1_01-26-2024_121431:He
Track 1:He says he go, they go to these clubs on Westheimer and then they come into my
austin_1_01-26-2024_121431:town home
Track 1:home community and they have these. They have these crazy like sex parties
austin_1_01-26-2024_121431:And
Track 1:they're, doing drugs and there's girls walking around in thongs and they don't ever go.
austin_1_01-26-2024_121431:And
Track 1:And the after parties from like two, 2:00 AM
austin_1_01-26-2024_121431:to
Track 1:6, 7, 8 in the morning and my wife is just beside you gotta help me, Phil.
austin_1_01-26-2024_121431:And I'm
Track 1:I'm like, alright let's take a look.
austin_1_01-26-2024_121431:at
Track 1:the deeded restriction. And sure enough, the town home community was built before a Airbnb, I don't know when, or
austin_1_01-26-2024_121431:90 or
Track 1:90, whatever before Airbnb.
austin_1_01-26-2024_121431:And
Track 1:And it's got some really generic language in the restrictions that say, these town homes you're not allowed to use for commercial use. You, you're only allowed to use these for residential use.
austin_1_01-26-2024_121431:And my
Track 1:response to him that's
austin_1_01-26-2024_121431:get the job
Track 1:done. You know why I don't agree with it? Doing drugs and having sex parties and sleeping and eating and girls walking around in thumbs. Those are all kind of residential things, right?
austin_1_01-26-2024_121431:Normal residential activities, yes.
Track 1:Residential, not a commercial activity. So we can't rely on your deeded restrictions alone. We're gonna have to change the deeded restrictions. The problem is,
austin_1_01-26-2024_121431:okay, when
Track 1:when we change the deeded restrictions in Texas, you usually need a two thirds vote and it's a cumbersome process.
austin_1_01-26-2024_121431:So
Track 1:yes, we can go change the deeded restrictions
austin_1_01-26-2024_121431:and
Track 1:and then if we do that, we go through that process, then we can specifically say, no Airbnb, no VRBO, no short-term rental for less than, for less than 30 days.
austin_1_01-26-2024_121431:And
Track 1:And then we can get rid of all the after parties that are spilling over from Westheimer and Richmond and his wife can sleep and doesn't have to worry about strippers blowing Coke in the driveway. Okay.
austin_1_01-26-2024_121431:Good
Track 1:that's how we do that. What's our next question?
austin_1_01-26-2024_121431:this couple paid an adopted agency t or a little over$12,000 to the whole process and this little girl. And they go through the whole process but then the mother of the little girl shows up and. It says that she wants the child back. And so that, that's a happy story. But the adoption agency does not refund the couple, any of their money that they paid.
Track 1:Adoption fraud we have an adoption fraud ring
austin_1_01-26-2024_121431:exactly.
Track 1:circulating somewhere in, in Texas, which is absolutely despicable. Legal fraud occurring, and it's criminal, by the way. We're not criminal lawyers. We're civil. These people can of course file a complaint with the district attorney and see if they pick it up,
austin_1_01-26-2024_121431:but the
Track 1:the scheme that you're describing
austin_1_01-26-2024_121431:Where
Track 1:The ringleader, meets some unsuspecting
austin_1_01-26-2024_121431:family that
Track 1:that wants to adopt and says, Hey, we, pay a 10 retainer. These adoption services and we work these hourly rates, and then they get to the very end and
austin_1_01-26-2024_121431:all of a
Track 1:of a sudden the ringleader calls up and says, oh
austin_1_01-26-2024_121431:I'm
Track 1:I'm so sorry I, we were so close. But
austin_1_01-26-2024_121431:the
Track 1:the mom, the birth mother showed up and wants to keep the baby and. And the parents, being good people that wanted to go through this job oh, we understand. We understand and yeah. I'm so sorry about your 10 grand. It was, We worked so hard
austin_1_01-26-2024_121431:on, on
Track 1:on almost making it work. We'll just have to, we could just keep on and do it next time. That happened three or four times until people, I think people started talking to each other and they started getting wise and they realized.
austin_1_01-26-2024_121431:that
Track 1:It was the same birth mother, like showing up or something.
austin_1_01-26-2024_121431:That's how it
Track 1:how it got caught.
austin_1_01-26-2024_121431:And
Track 1:And then all of a sudden, these parents are just beside themselves. Okay, we've been defrauded by this ring, and you've got
austin_1_01-26-2024_121431:4,
Track 1:5, 6, 7
austin_1_01-26-2024_121431:families that have
Track 1:that have been defrauded. And they, Maybe they call us and they're like, all right what do we, What do we do?
austin_1_01-26-2024_121431:Yeah. And we
Track 1:We have a lot of these sad conversations that says, okay we, and they feel wronged, and yes, we can sue them for fraud. What are, what's the Do we have this in our show notes? What's the first element of fraud?
austin_1_01-26-2024_121431:Needs to be a material rep misrepresentation. Okay.
Track 1:We've got material misrepresentation, right?
austin_1_01-26-2024_121431:It's
Track 1:I represented, I had a child for you to adopt and there was never a child. All right, what's the second element?
austin_1_01-26-2024_121431:has to be made knowingly or recklessly with knowledge of its falseness okay.
Track 1:Okay. I absolutely, this was just a complete fraud.
austin_1_01-26-2024_121431:Knowingly
Track 1:made a fraudulent statement. What's the third element?
austin_1_01-26-2024_121431:of that misrepresentation must have been to induce you to act in a certain way. Yeah.
Track 1:Yeah. I wanted to induce you to gimme the 10 grand retainer.
austin_1_01-26-2024_121431:And then justifiably you act on that misrepresentation that was false and that causes you injury. So the
Track 1:the family paid the 10 grand. We're defrauded, lost the 10 grand. So you've got this, you've met your elements for
austin_1_01-26-2024_121431:Civil
Track 1:fraud, and
austin_1_01-26-2024_121431:you
Track 1:hire us. We go into court, we prove it all up, and then the clients are over there yeah, we've won.
austin_1_01-26-2024_121431:Yep.
Track 1:The problem is, now how do we collect, let's say we get a judgment for
austin_1_01-26-2024_121431:the
Track 1:the 10 grand plus attorney's fees plus punitives, and you get a hundred,$200,000 judgment and your client says where's my money? I
austin_1_01-26-2024_121431:They say,
Track 1:say
austin_1_01-26-2024_121431:the
Track 1:the person who defrauded you is actually in prison, been ordered to pay restitution,
austin_1_01-26-2024_121431:And
Track 1:they're absolutely penniless. So you've paid us all this money
austin_1_01-26-2024_121431:to
Track 1:to get you a judgment on paper. That's completely worthless. It's just tragic, but you don't wanna throw good money after bad money. Hiring an attorney to go after a.
austin_1_01-26-2024_121431:Yeah. I always tell potential clients who are in that situation that even if they get a judgment like this the judge doesn't have a pot of gold behind his desk, so he's not gonna be able to give that to you.
Track 1:And I, I remember one time I heard a judge who, the get up behind his bench and say, everybody come around here and look. There's no magic cash register back here to pay out your judgments. I just have a pen and paper. Alright, next on our
austin_1_01-26-2024_121431:on our
Track 1:our list,
austin_1_01-26-2024_121431:I think
Track 1:I think we've got a war story.
austin_1_01-26-2024_121431:So
Track 1:you only hurt yourself when you lie to your lawyer.
austin_1_01-26-2024_121431:That is true. Don't lie to your lawyer. Don't lie to your doctor. We'll find it out eventually.
Track 1:We get a lot of, we get a lot of potential clients that call us up and they want us to take the case, so they're making their case sound better than it actually is. And I'm not gonna say they lie. They may be just
austin_1_01-26-2024_121431:omit
Track 1:some material facts, right?
austin_1_01-26-2024_121431:And I
Track 1:and I always tell'em,
austin_1_01-26-2024_121431:in
Track 1:in the consult, it's look, tell me the worst things first. Okay? Tell me what I'm gonna have to deal with.
austin_1_01-26-2024_121431:Don't you
Track 1:you know don't trick me into taking your case.'cause ultimately you're, you're paying my hourly rate. You're doing yourself a disservice if we don't have all the bad facts. we ask this to every client before we put on the stand, which can be a little bit defensive, which is,
austin_1_01-26-2024_121431:you
Track 1:Now, Mr. Smith, you're not a convicted felon, are you? Would you ask me?
austin_1_01-26-2024_121431:So
Track 1:so we were trying this case.
austin_1_01-26-2024_121431:a little, it was, it is actually a
Track 1:a temporary injunction hearing and we put
austin_1_01-26-2024_121431:Mr.
Track 1:Smith on the stand on, on direct, and, thought we'd done this wonderful job on direct. And then, Up comes opposing counsel
austin_1_01-26-2024_121431:on,
Track 1:on cross
austin_1_01-26-2024_121431:first words
Track 1:words out opposing counsel's mouth is Mr. Smith, isn't it true that you're a convicted felon?
austin_1_01-26-2024_121431:And we're
Track 1:we're like, let's do one of these where we put our heads down and it's let's see. Let's see what he says. And Mr. Smith is I'm uncertain whether I'm a convicted felon and opposing counsel's. Now that's a new one. What do you mean you're uncertain? I, and he got up there and he hemmed and
austin_1_01-26-2024_121431:for
Track 1:like finally the judge was so
austin_1_01-26-2024_121431:off, alright,
Track 1:Everybody up here to the.
austin_1_01-26-2024_121431:to the bed,
Track 1:You counsel, take Mr. Smith back there and figure out whether he is, see if you can figure out whether he is a convicted felon. So we take Mr. Smith back and we're like, Mr. Smith, are you a convicted felon? And then we say, look,
austin_1_01-26-2024_121431:if
Track 1:this is, we're gonna make this real easy. Okay? Can you own a
austin_1_01-26-2024_121431:gun? Alright.
Track 1:Can you vote? And then when we asked it like that we decided, I think Mr. Smith became, sure that he was a convicted felon when we put it like that. So
austin_1_01-26-2024_121431:don't
Track 1:lie to your lawyer, because we could have handled the,
austin_1_01-26-2024_121431:were you
Track 1:you a convicted felon question a little bit better if we had a heads up. So
austin_1_01-26-2024_121431:to
Track 1:the,
austin_1_01-26-2024_121431:control if you know there's damage
Track 1:And let's rant and rave a little bit. And the first thing we're ranting and raving about is
austin_1_01-26-2024_121431:oppressive
Track 1:small business regulation.
austin_1_01-26-2024_121431:So
Track 1:this is a a topic that's very near and dear to my heart. As someone who's owned, many businesses and has
austin_1_01-26-2024_121431:been
Track 1:tasked with.
austin_1_01-26-2024_121431:doing all
Track 1:all the regulation, and I don't, Austin, I know you're, one of our many attorneys that work at the firm, but you probably don't realize how I labor behind the scenes,
austin_1_01-26-2024_121431:keeping
Track 1:us in compliance with things like, Taxes and trust requirements and insurance and
austin_1_01-26-2024_121431:all
Track 1:kinds of things. The government, oppresses me with right.
austin_1_01-26-2024_121431:right,
Track 1:all right, so you form llc, we form LLCs. You form some LLCs for people.
austin_1_01-26-2024_121431:And
Track 1:And most of the LLCs we form are for small business owners. Usually there are,
austin_1_01-26-2024_121431:couple of
Track 1:of guys that, hey, I wanna go buy an investment property or whatever.
austin_1_01-26-2024_121431:And. We
Track 1:can't figure out, and this is when I say we, as far as I know, all the attorneys out there representing small businesses,
austin_1_01-26-2024_121431:we are
Track 1:are incredibly uncertain as to when
austin_1_01-26-2024_121431:that
Track 1:a that small business owner is going to need a securities filing
phil-silberman_2_01-26-2024_125335-4:no, nobody knows. The answer to this, as far as I can tell for example, if you're going to raise a bunch of money in the public and you're advertising and you're going to say hey, to random people, give me 100, 000, give me 10, 000, whatever. That almost certainly requires some type of file. Now, the other end of that spectrum is, you're, you and your wife or a close friend start an LLC to buy a real estate property and it's all, your money. Certainly you don't need a filing for that.
austin_2_01-26-2024_125335-3:No.
phil-silberman_2_01-26-2024_125335-4:But then you have everything. In between, right? What if ask for your brother in law for some money? Or what if, like one of your friends and does that require a file?
austin_2_01-26-2024_125335-3:a file?
phil-silberman_2_01-26-2024_125335-4:And we've never been able to figure this out as best I can tell. And I've asked numerous securities lawyers, I've got another friend of mine and he was, he went to Harvard and he was, he's a securities lawyer and I sat him down and I'm like, Hey, can you tell me when a small business needs to file a new securities file when they're forming an LLC and he, he probably talked himself into circles for five minutes and by the time he was done, he forgot the question he was answering and we just, you just don't know. So I got so frustrated with it one day. And I said, I'm going to call up the Texas securities board. And I waited on hold for about an hour with the Texas securities board. And finally I got an attorney for the Texas securities board. I said, Hey, I'm a small business law firm. We represent a lot of small businesses across the state of Texas. And I've asked several securities lawyers. I've been, we all can't figure out, can you give us some guidance on when small businesses forming LLCs need to earn. Need to do some sort of securities filing. And she Talked a little bit. She said, and she, and then she started to whisper and she said Mr. Silverman, I'm going to tell you a secret. I said, okay, finally this woman at the Texas securities board is going to impart this amazing wisdom. And I've got my notepad ready. And I'm like, what are we going to do? And she says, Mr. Silverman, here's the secret. all doing it wrong, but we just don't enforce it until they do something really bad. And then we just tack it on for fun. okay, that's awesome. So what you're telling me is every time my clients form an LLC or most of the time, It requires some sort of filing, but nobody ever does it. But if any of them, go to steal and cheat a bunch of people, then you just tack on the penalty, for good measure.
austin_2_01-26-2024_125335-3:Well, that's at least good to hear that clarity from someone in government.
phil-silberman_2_01-26-2024_125335-4:I'll tell you how we handle it at our firm anyway is.
austin_2_01-26-2024_125335-3:who's
phil-silberman_2_01-26-2024_125335-4:If it's just, beyond a single member LLC. we're not securities lawyers. I have to tell you to go get a securities lawyer. Nobody ever does, but I have to tell you to go get 1 and check to whether you need a filing and they're like how much is the securities lawyer? They're like, 2500 bucks an hour or something like that. And they're all like, no, thank you. All right, and our final example of government oppression is, and you may not know this, but this is one of the things I supervise at our firm, is we are in 1099 season. And 1099s are informational returns. That small businesses have to file typically hundreds of these forms every year. If you're a small business and you pay vendors throughout the year, you have to, if you pay them over 600, you have to report how much you've paid them and you fill out a form, you give it to the vendor and you give it to the IRS. And that is the primary way that the IRS. Catches the small business owners, under reporting or not reporting income. The whole system, as a matter of fact, is based on small businesses snitching on each other. That's the whole system. And what happens is if you don't, if that guy didn't put it on his income tax return and you filed 1099 on them, then they're going to, the software is going to match it together. And that's how it's going to trigger an audit for that person. So the whole system is snitching now in the old days,
austin_2_01-26-2024_125335-3:in the old days,
phil-silberman_2_01-26-2024_125335-4:we would generally try to comply, but do you know how much the penalty was in the old days? And I know, because you're looking at the show notes, but how much the penalty was to, it was 15 bucks. Yeah you failed to file a 1099 15 bucks today. That penalty is 630 and, oh, by the way, that's not actually the maximum penalty. And I don't know how they, they do this, but I guess the IRS and their administrative. Code says, all right but there's no maximum penalty. So the minimum is 630 for intentionally and willfully not filing a 1099. But we could potentially find me more if we were really mad at you.
austin_2_01-26-2024_125335-3:Always good to options. 1000, 2000, 1000
phil-silberman_2_01-26-2024_125335-4:is just no cap.
austin_2_01-26-2024_125335-3:Yeah.
phil-silberman_2_01-26-2024_125335-4:That's not the worst of it. In order to file these returns, you have to use this system called, it's called FIRE. I think that's the most, I don't even know what it stands for, but if doing taxes aren't stressful enough, the IRS wants you to use a system called fire
austin_2_01-26-2024_125335-3:Yeah, of course.
phil-silberman_2_01-26-2024_125335-4:And the system by the way, was designed like in 1996 and it looks like something from Ms. The Ms. Doss era,
austin_2_01-26-2024_125335-3:DOS era.
phil-silberman_2_01-26-2024_125335-4:And you have to have this proprietary file and it takes forever and half the time it doesn't even. It doesn't even work. Okay. And here's my favorite part of the whole 1099 process is once you have all these businesses and once you get to the end and you've sent it to all your vendors, hundreds of forms and maybe, hopefully you got all of them, but maybe you didn't IRS is going to find you a gazillion dollars and try to say you intentionally just, disregarded
austin_2_01-26-2024_125335-3:the 10 99.
phil-silberman_2_01-26-2024_125335-4:you get to the very end and you're filing your tax return. And if you're, if you have an S corp, it's an 1120 S. If you have a C corp, it's 1120 or whatever it is. And the IRS, and by the way they're sneaky snakes is what they are. Okay. The IRS updated the return I don't know, five, six, seven, eight years ago. And they put this one little line in there. Okay. And they say has the corporation or will the corporation file all 1099s required and they ask you as the president or the vice president or the CFO, whoever signed this return, it wasn't enough to find us a gazillion dollars. They want us to sign a statement in this return under penalty, felony penalties of perjury that we filed every 1099 so they can send us to prison. If we don't that's the type of tax burden that our government wants to put on
austin_2_01-26-2024_125335-3:on. Sounds about right.
phil-silberman_2_01-26-2024_125335-4:that's what all business that's what we're doing. That's what all small businesses are doing this time of year is. That is our
austin_2_01-26-2024_125335-3:tax system
phil-silberman_2_01-26-2024_125335-4:at work. And by the way, here's a quick tax tip. If you want to avoid doing a bunch of 1099s. Only pay your vendors with credit cards, because if you pay your vendors with credit cards, then the credit card company takes care of filing the 1099. And then you don't have to. So that's a little tax tip
austin_2_01-26-2024_125335-3:That's a good workaround. Yeah.
phil-silberman_2_01-26-2024_125335-4:Good work around. So I think with that brings our show for a close. I appreciate you in there with COVID and doing what you can with the show.
austin_2_01-26-2024_125335-3:Yep, of course
phil-silberman_2_01-26-2024_125335-4:our listeners and fans will say you were
austin_2_01-26-2024_125335-3:were amazing.