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Arieh Mordechai Flemenbaum

Arieh Flemenbaum’s Answers

127 total


  • Sale of a Company

    I recently sold a company to an individual in NY. Now this individual is complaining left and right, and I can't deal with it anymore. There is one issue that is legitimate on his end, but the others are absurd. So I am willing to negotiate on ...

    Arieh’s Answer

    Thank you for the clarification Mr. Asch.

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  • S corp with no partnership agreement in place. We own equal shares. I put all the capital in. The other partner brought some

    accounts in. We have negative equity and debt. Can we allocate profits/losses based on % of capital contributions? What are my rights is she is not performing? She is supposed to go out and get new accounts and does nothing. I do all the acco...

    Arieh’s Answer

    Unfortunately, with an S Corp, the allocation of profits/losses, distributions and all other ownership rights are directly tied to your stock ownership. So, in your case, each of you own 50% of the stock, you each must be allocated 50% of the profits/losses, receive 50% of the distributions etc. This is true whether or not you have a shareholder agreement (or what you referred to as a "partnership agreement"). This is one of the main reasons why many of my clients choose to use an LLC rather than an S Corp - since you have the flexibility to use different percentages with respect to allocations of ownership, management, profits/losses, distributions, etc., and you still have the ability to obtain the same pass-through tax treatment as an S Corp.

    Nonetheless, there are other ways to address the disparity in your contributions (i.e., both capital and workload) that are not related to "ownership" rights or distributions. For example, you can pay yourself a salary, or if both of you already receive a salary, you can increase yours to reflect a fairer and more equal "distribution". However, you have to be careful not to violate the rules of your S Corp election. Also, most of your options will carry some tax consequences as well. So, you need to carefully review your options before you take action.

    Additionally, since each of you own 50% of the outstanding stock, there are some actions that you may not be able to take without your business partner's consent. If you cannot resolve the issue amicably, you should consult a local business attorney to discuss your options.

    I would be happy to discuss this matter with you. Please email me or call me at 312-236-8110.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Regarding my previous question.

    I posted if the general contractor has a contract with sub contractor and fails to pay. The General contractor has filed Chapter 7 bankruptcy. He listed myself as a creditor and the sub contractor.The sub contractor filed the lien against me 100 d...

    Arieh’s Answer

    Lien rights are generally governed by the Illinois Mechanics Lien Act - which provides certain protections to you as the owner. This is particularly true when you have paid the contractor for the work, but the contractor has neglected to pay his sub-contractors. So you may have a defense against the lien claim. Lien claims are often improperly filed by sub-contractors. So, I suggest that you consult with a real estate/construction attorney ASAP.

    You will also need to consult a bankruptcy attorney to file a claim against the contractor in its Chapter 7 bankruptcy.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local construction law and bankruptcy lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Can LLC operate while one equal right memeber does not agree?

    In the process of whether to close LLC or transfer interest of memeber. There are some disagreement on interest transfer. Is it legal to start run LLC when one member disagree?

    Arieh’s Answer

    While I am not licensed in California, your issue is one that deals with general legal principles that are similar to my state. I agree with my colleague, your operating agreement and/or other membership agreement should have some guidance on what to do. If you do not have an agreement or it does not provide much guidance, then you can look to California's statute for limited liability companies.

    As for whether it is legal to run the LLC when a member disagrees, the short answer is yes. The LLC can (and must) continue to operate even if there is disagreement among the members. You do not indicate how much of an interest the member who disagrees has, but assuming the member has less than a majority (50% or less), that member cannot hold the LLC "hostage", you (and the other members) can outvote the disagreeable member and continue to operate. You can choose to "fire" the member as a manager/officer and remove them for the operations, bank account etc. However, this does not necessarily mean you can "fire" them a member. They would continue to have rights to distributions, rights to vote as a member (on policy-making decisions) and access to the LLC's records- at least until you are able to buy them out or they transfer their interest.

    Also, you may not have the right to force them to transfer or sell their interest or determine a price for them - again you need to look to your operating/membership agreement. If you and the other members have the power to force a "redemption" of the member, then you need to pay fair value for the interest.

    If you cannot resolve the issue amicably, you should consult a local business/intellectual property attorney to discuss your options.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Is it trademark infringement if I write "STATE" on a product?

    I have a product I want to write "STATE" on which will allow people to use their own colored backlight LEDs. Will a college have a case against me?

    Arieh’s Answer

    • Selected as best answer

    While I am not licensed in Wisconsin, your issue is one that deals with general legal principles that are similar to my state (and mainly deals with federal trademark laws).

    With regards to a college's trademark, the trademark issue is not related to "state" - since this is a descriptive term referring to the geographical location. In this respect there are over 50 "State" colleges - most of the 50 states have a state college and there are others - such as Chicago State and South Florida State, etc. But their trademark rights are not in necessarily in the "State" but in the combination of the word "State" (as well as the other words, how it is written, what color is used and/or its use with a mascot. In short, your product does not necessarily infringe any particular college's trademark.

    However, while you are astute enough to realize you may have a problem with public universities, you may also have a problem with other trademark holders - I know of a "solid-sate" and "State of the art" trademarks for lights and LEDs. So, you need to investigate your use of "State" further before investing your resources.

    You should consult a local business/intellectual property attorney to discuss your options.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Pictures of my wife on a website advertising her as an escort

    Pictures of my wife are being advertised on a website for escorts and companions without her consent is that illegal she is by no means an escort we have asked him to take the pictures down and that was 2 days ago and they are still on the website...

    Arieh’s Answer

    You need to contact a business/internet lawyer (or litigator) ASAP. I assume the pictures of your wife were taken without her consent. Even if they were taken with her consent, the photographer may have some rights to the photos, but I assume the pictures have been misappropriated - i.e., used in a manner for which she did not consent. Also, a person's likeness cannot be used for commercial purposes without their consent and/or compensation. Finally, you may have a claim for defamation - in Illinois, publishing a photo and associating a person with statements & prices for sexual services, giving the impression that the person is an escort can be "de facto" defamation - a claim that can provide your wife with monetary damages.

    In short, her privacy rights have been violated. If the website owner does not voluntarily take them down, you will likely be able to get a court order requiring the website to stop publishing/distributing photos of your wife and advertising "her" services. You should also consider pursuing a claim to get him to destroy or turn the videos and pictures to you. However, it is unclear from your post whether the videos and pictures were taken without your consent or knowledge or it was his posting of them that was done without your consent. Unfortunately, this may make a difference in your ability to have them destroyed or returned to you.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Unemployment advice for employer

    We are a small business and are letting an employee go (she technically quit, but it was a mutual decision). We do not want to challenge unemployment, but we want to be honest to. How do we handle this?

    Arieh’s Answer

    While I am not licensed in Massachusetts, your issue is one that deals with general legal principles that are similar to my state. The short answer is you may not have to anything. If you do not want to challenge unemployment, then you simply do not protest the unemployment claim and/or respond to the notice form the unemployment office.

    You should consult a local attorney to determine your best option.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. You should consult a local business/employment lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Who has jurisdiction over an internet sale?

    I purchased 50 lacrosse jerseys from a company in San Diego, upon receiving the jerseys they were awful. The numbers were off center, cut uneven, some of the jerseys have burn holes in them. I have tried to call and resolve the issue but am gett...

    Arieh’s Answer

    While I am not licensed in Ohio (or in California), your issue is one that deals with general legal principles that are similar to my state. The short answer is you need to look to the purchase order form and/or terms and conditions to identify if there is a dispute clause. These type of agreements/documents usually have a clause that identifies what state's laws will apply and the venue/jurisdiction of any legal proceedings.

    Barring such a clause, you could sue the company in Ohio. However, you may have problems with service of process and/or obtaining a judgment on a party that is not located in Ohio. Even if you obtain a judgment, you probably have to register it and enforce it in California since it is unlikely that the jersey company has assets in Ohio. You may consider suing in small claims court in California. You should consult a local attorney to determine your best option. A local Ohio attorney should be able to refer you to a San Diego collections attorney.

    Otherwise, you could pursue your claim on your own. I would not rely on calls or emails. I would send a stern letter, threatening appropriate legal (or other) action if a satisfactory response if not received by a deadline that you set (i.e., 2 weeks). I would also call the local
    chamber of commerce, better business bureau and attorney general (as suggested by my colleague).

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. You should consult a local business property lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Is it slander if someone puts stuff on the internet about me if its untrue

    ok im on dissabilty and ssi for hurting my back and sleep apnea thyroid deaise some mental problems and dr approved thro ssi all approved

    Arieh’s Answer

    While I am not licensed to practice in Michigan, your issue deals with some general principles of law that may be similar to those in my state. I agree with my colleague, the statement may be defamatory (i.e., it somehow injures your reputation), but even if the statement is defamatory. This may not be enough for a defamation (libel) claim. There are several defenses to a defamatory statement. A typical defense for statements on the internet is the statement being mere opinion. The tone of the statement may indicate if it was said as a personal opinion.

    Even if the statement was defamatory, you must also demonstrate that there was some financial (or other similar) damage caused by the defamatory statement. You may be hard-pressed to show that this particular statement had any real financial effect. Finally, how would you enforce your claim? Do you know the person? Can they be found? Do they have assets? Unless they have significant assets that you can reach, it is unlikely worth pursuing legal action here.

    By the way, libel and slander are both defamation - wrongful injury to a person's reputation. Slander is spoken form, while libel is published (i.e., posted on the internet, printed in a newspaper).

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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  • Oregon State internet business question....

    The State of Oregon prohibits a sponsor of a contest or game of skill (for which a prize will be rewarded) to require, "... as a condition of participation in any promotion any person to disclose the person's personal financial data;" (OAR 137-02...

    Arieh’s Answer

    While I am not licensed in Oregon, your issue is one that deals with general legal principles that are similar to my state. I agree with my colleague and add that the disclosure of a person's personal financial data often includes the disclosure, use and storage of a person's bank account. So, taking a person's credit card, pay pal account etc. may very well qualify. You need to carefully review the definitions provided in the statute and its cross-references.

    I also add that you may be focused on the wrong statute (at least the wrong part of the statute). You seem concerned about the disclosure of the person's financial data, which is a concern, but you need to determine if your proposed website is considered gambling. While I am not an Oregon lawyer, it appears that "gambling" in Oregon means "a person stakes or risks something of value upon the outcome of a contest of chance" - notwithstanding that skill of the contestants may also be a factor. The statute provides for certain exceptions, including, the exchange of money for tokens (or credits) but has several limits on the amount of token a person is allowed to purchase, where they can be redeemed and what they can be redeemed for (i.e., the re-exchange for money is definitely prohibited).

    For your information, below you find a link to some of the gambling statutes found in Oregon. However, you need to contact a local attorney, have them evaluate your proposal and assess your options, so you can best determine how you can proceed with your website.

    This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.

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