Upcoming “Know Your Rights” Seminars
Todd Gallinger of Gallinger Law will be teaming with Sabrina Darwish of the Law Office of William W. Bruzzo to give free seminars on the topic of “Know Your Rights”. Todd Gallinger will focus on civil remedies available for protecting civil rights, particularly in the employment and housing settings. He will also cover individual rights in an immigration context. Sabrina Darwish, a criminal attorney, will explain people’s constitutional rights when interacting with law enforcement, specifically their right to be free for unreasonable search, seizure, or arrest.
Upcoming dates include:
Islamic Center of Irvine – 12 PM on Saturday, March 6th
Islamic Center of Riverside – 6 PM on Friday, March 12th
Madinah Islamic Center – 6 PM on Saturday, March 13th
All presentations are provided free of charge and attorneys Todd Gallinger and Sabrina Darwish will be available to answer community members’ questions following the presentations. For more information, including to book a workshop at your community center, please contact Todd Gallinger at tgallinger@gallingerlaw.com.
Gallinger Law Successfully Assists Victim of Human Trafficking
Recently, Gallinger Law volunteered pro-bono through the Public Law Center assisted a victim of human trafficking obtain a T-Visa. The T Visa provides protection for victims of a severe form of human trafficking. A T Visa allows someone to stay in the US and help federal authorities while they investigate and prosecute human trafficking offenses. After obtaining a T Visa a victim can then qualify to apply for permanent residency.
Our client was one of hundreds of Thai workers coerced into coming into the US and subjected to forced labor. He was promised a job, a living space, and many other things that would have afforded him an opportunity to blossom here in the US. However, this was not the case. After arriving in the US, our client realized that what he was promised vastly differed from the reality he was forced to endure. The actions requested were so detrimental to his legal status back in his homeland that he would have suffered unusual and severe harm if he returned home.
He and other victims were trafficked to the US to provide forced labor or services through fraud and coercion, for the purpose of subjecting them to slavery, debt bondage or involuntary service. Our client was food deprived, forced to live in a one bedroom space with 30 other people, physically and emotionally abused/beaten, had his travel documents confiscated, and had his livelihood threatened. It wasn’t until he found a way to escape his confinement that he was able to seek help and legal aid. Our client along with other trafficked victims reported the organization that brought them here and aided federal prosecutors in their investigation.
Gallinger Law worked with a Los Angeles Based Community Center to help provide our client an opportunity to start a new life in the US by obtaining this T-1 Visa. Now, the chance to meaningfully provide for family, friends, and possibly others who may have been subjected to the same circumstance is at our client’s finger tips.
Throughout the history of the United States, people have been determined to come to here as a means to obtain a better life for themselves and their family members. Organizations and persons prey on those desires in unimaginable ways. Our firm was proud to help give back the American dream to our client. If you or anyone you know was been a victim of human trafficking, please contact an aid organization or a qualified attorney as soon as possible.
Need for an Exit Strategy When Starting a Business
When business people are starting a new company together they are most often thinking about its future and their potential profits. Those initial investors and managers are, at that point, happy to be working together and see the true potential that they can provide their customers, as well as the potential gains for themselves. Unfortunately, however, many are short-sighted when it comes to considering the possible difficulties that can arise in any business relationship.
Problems can arise in a business for many different reasons. These include arguments over distribution of profits, how best to serve clients, which product is best for the market, what roles within the corporation individuals should play, and an infinite amount of other problems. If the initial investors have not carefully thought out how to deal with these problems prior to them arising, then they are required to negotiate in a situation where they are already upset with each other and unlikely to be able to reach a settlement happy to any, let alone all.
In order to prevent this situation, initial investors should begin by carefully setting out an agreement, which deals with potential problematic situations prior to them arising. This agreement could be part of the shareholders agreement in a corporation, the operating agreement in a limited liability corporation, or the partnership agreement in any form of partnership. This agreement should include different provisions, including what roles within the company all are going to play, i.e. who will be president, treasurer, secretary. The corporation should also decide at the shareholder and director levels who will enforce these rights and who will be a tie-breaker if a mutual cannot be reached.
Perhaps the most important element of these types of agreements is what is often known as a “Buy-Sell Agreement”. A Buy-Sell Agreement sets forth the terms and conditions under which any one of the initial investors can sell their investment. This prevents the original founders from being forced to work with people whom they did not originally foresee. It also allows for the setting of a fair price for ownership interest, should the group no longer be able to work together.
The setting of a new price is especially important when there will be a number of small investors and one large or majority investor. If a dispute arises, oftentimes that majority shareholder or majority owner will be able to control the business, to the great detriment of the minority shareholders. If this situation continues and the investors are unable to reach an agreement, the minority investors may have to bring a lawsuit for involuntary judicial dissolution of the business. This is often a disastrous consequence for all involved because it is very difficult for any one to get a fair price for a business when it is being split up and the sale mandated by a court.
In order to prevent this situation, the Buy-Sell Agreement should set forth the price under which the partnership interest, limited liability corporation member units or shares will be purchased in the event of a shareholder leaving. The simplest form is to set up what is known as a Right of First Refusal, where the corporation or other shareholders have the right to purchase the ownership interest at a price negotiated with a third party. However, this presents problems for the selling shareholder, since many are not willing to bid full price for a business when they know that another party can swoop in through exercising a Right of First Refusal.
Other ways to set value can be based on book value, i.e. the value of the assets owned by the business. Companies and investors might also elect to value based upon revenue or profits. Another popular choice is to retain an independent appraiser with expertise in that specific field of business to set a fair value for the business interest being sold. None of these situations is right in all circumstances; instead, they depend greatly upon the specifics of the business in question. For this reason, it is important to consult with a corporate attorney licensed in your jurisdiction whenever engaging in any investment opportunity.
New State Bar Rule Makes It Easier for Attorneys to Represent Pro Bono Clients
One of the most important aspects of being an attorney is respecting the duty of loyalty that every attorney owes to their clients. But unfortunately, concern over violating this duty of loyalty has sometimes prevented attorneys from representing indigent clients. Prior to accepting representation of any scope, attorneys will often engage in a comprehensive conflicts check, to ensure that the issue under which they wish to assist the client would not be in conflict with the interest of any of their current or previous clients. This duty to prevent conflicts has often interpreted to apply even when the representation would be extremely limited, such as a short consultation during a free legal clinic.
In order to allow attorneys to more freely represent pro bono clients in legal clinic settings, the Supreme Court recently approved new Rule of Professional Conduct 1-650. This rule limits an attorney’s liability for a conflict of interests in a legal clinic setting to times where the lawyer knew or should have known that a conflict of interests exists. The rule also protects the attorney’s law firm from imputed conflicts of interests in this situation.
This new rule will allow private attorneys to participate in legal clinics and limited scope representation of indigent clients without worrying liability or Bar sanctions for violating their duty of loyalty to their current and past clients. This should permit greater participation by attorneys and law firms of all sizes, particularly large firms which generally have many more potential conflicts of interest. It is expected that the change in this rule will result in more legal assistance for indigent population, something which Gallinger Law agrees is greatly needed within our communities.
Involuntary Dissolution of California Corporations Limited Partnerships and Limited Liability Companies
Involuntary dissolution is the choice of last resort for aggrieved investors and business owners. It is an extreme judicial remedy which comes about by a lawsuit from an investor, almost always a minority owner, who feels that they are being locked out of the business or otherwise treated unlawfully. Involuntary dissolution is not a preferred outcome, because it very rarely leads to any of the business owners getting a fair value for their investments. However, it is sometimes the only choice to those deprived investors.
The dissolution of a California corporation can only be initiated by a lawsuit brought by half of the directors or shareholders holding at least one-third of the issued shares. If these people bring a lawsuit, they must show that the company has either been abandoned, that the board is deadlocked and unable to make decisions necessary to run the business, that the shareholders are deadlocked and unable to reach necessary decisions, that the company and its investors have been the victims of fraud, mismanagement or abuse by the company’s managers, that the term for the corporation set forth in the Articles of Incorporation has expired, or, in a corporation of thirty-five (35) or fewer shareholders, that liquidation is necessary to protect the rights of the complaining shareholder.
A California limited partnership is a type of entity wherein a general partner, which runs the business, takes individual liability for the conduct of the company. Limited partners, who play no role in running the business, are protected from liability, like shareholders in a corporation. Although this is sometimes the best form under which to conduct business, most often used in real estate investments, it can lead to the general partner exercising their authority for their own benefit, rather for the benefit of all partners.
Under California law, any partner in a California limited partnership may bring a case for judicial dissolution. That individual partner must show that it is not practical to carry on the activities of the business in conformance with the partnership agreement. This means that the general partner must be exercising their powers in an unfair manner, and refusing to do otherwise, and that the limited partners have not been able to remove the general partner and/or that the business contemplated by the partnership agreement is impossible or illegal to currently conduct.
Many people are familiar with a Limited Liability Company (LLC), a relatively new statutory entity which provides liability protection to investors. If an investor in an LLC feels they are unfairly treated, they also can bring a case for judicial involuntary dissolution of the company. This lawsuit may be brought by any member (investor) or manager (those who run the company). In order to show that the company should be dissolved, the plaintiff in the lawsuit must show that it is not reasonably practicable to carry on the business in conformity with the Articles of Formation or the operating agreement, that dissolution is necessary to protect the rights of the complaining investor, that the business has been abandoned, that management is deadlocked in subject to internal dissention and unable to operate the business, or that there has been fraud, mismanagement of abuse on behalf of the managers.
If the plaintiff in any of these cases is able to prove what a statutory necessary for a court to dissolve the business, the court is then confronted with several options. It will, most often, order an auction of the business, wherein the business will be sold in its entirety as an operating concern. Rather, if the court concludes that it is in the best interest of the investors for the business assets to be sold separately, then it can so order. Of course, neither of these results are likely to be bring full value for any of the investors. For this reason, California offers escape from involuntary dissolution by the purchase at fair market value, set at the liquidation, i.e. auction value, by any of the investors. If any of the owners are willing to do this, then they can avoid this extreme judicial remedy.
Gallinger Law Celebrates First National Pro Bono Week
This year, both the California State Bar Association and the American Bar Association have both designated October 25th to October 31st as the First National Pro Bono Week. This week serves as a call to service for attorneys, to help those in need.
We at Gallinger Law have long recognized the need within the community for attorneys to serve as pro bono counsel to the less fortunate and community organizations. We are proud to work on cases in many different types of areas and with many different community organizations. Some of the organizations that we have provided pro bono legal services through include the Public Law Center, Council American Islamic Relations (CAIR), American Civil Liberties Union (ACLU) and others. Additionally, we often help service providing nonprofits directly, providing needed counsel to such organizations.
Our attorneys have helped clients in need across a wide variety of areas. This includes applying for visas for victims of human trafficking, Thai farm workers smuggled into this country under false pretenses. These brave individuals are now willing to assist in prosecutors the human smugglers who brought them here and Gallinger Law is assisting them in being able to maintain presence in the United States legally.
Gallinger Law has long prided itself on working with non-profit organizations. We have recently assisted groups an educational group, focusing on teaching schoolchildren about our coastal environment and ecosystems, in forming their new non-profit group and applying for the necessary state and federal exemptions. We also assist non-profit organizations on a pro bono basis throughout their life cycle, including when they hit troubled times. Recently, we assisted a community based Counseling organization in filing for dissolution and properly closing their books so that their hardworking volunteers and directors would not face continuing liability.
Over the past year, Gallinger Law has helped pro bono clients in many other areas as well, including family law, small business disputes, real estate foreclosure issues, Fair Credit Reporting Act errors and many others. We are proud to be able to serve the community in which we operate and believe that giving back is a large reason as to why we exist.
If you or somebody you know is in need of legal assistance and cannot afford it, we recommend that you contact organizations such as the Public Law Center at (714) 541-1010, www.publiclawcenter.org and/or the Legal Aid Society of Orange County at (800) 834-5001 or (714) 571-5200, www.legal-aid.com. These groups can help individuals in need find attorneys who have the expertise and willingness to take on their cases.
Upcoming Seminar on Islamic Trust and Estates in Mission Viejo – 10/6 at 7pm
This Friday Attorney Todd Gallinger will give a presentation on Islamic Trust and Estates at the Orange County Islamic Foundation (OCIF) in Mission Viejo. OCIF is located at 23581 Madero Dr., Suite 101, Mission Viejo CA 92691and will start at approximately 7 pm.
The seminar will cover the basics of California Law dealing with Trust and Estates: the importance of having a will, how to avoid probate, potential tax consequences, and the function of trusts. It will also examine how to enact a Shari’ah compliant estate plan in California.
This information, while important for all, is especially vital for those preparing for the annual Hajj pilgrimage. There is no fee for this seminar and it is open to all members of the public. For more information, please contact the Orange County Islamic Foundation at (949) 595-0480 or Gallinger Law at (949) 862-0010.
Nationalities Eligible for an E-2 Visa
The E-2 Visa is a form investor visa available for citizens of countries with which the Unites States has entered into a reciprocal treaty with. Though there are a number of requirements for the investment and applicant, which will be more fully examined in a later blog post, the first threshold issue is whether the applicant has the necessary nationality. One factor to keep in mind is that because the spouse of an E-2 visa holder is also eligible for work authorization, an application can be submitted based upon the nationality of either member of a married couple.
The countries from which citizens are able to apply for an E-2 investor visa are:
Albania, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Cameroon, Canada, China (Taiwan), Colombia, Congo (Brazzaville), Congo (Democratic Rep. of the), Congo (Rep.), (Kinshasa), Costa Rica, Croatia, Czech Republic, Ecuador, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Gibraltar, Grenada, Haiti, Honduras, Iran, Ireland, Italy, Jamaica, Japan, Jordan, Kazakhstan, Korea, Kyrgyzstan, Latvia, Liberia, Lithuania, Luxembourg, Macedonia, Mexico, Moldavia, Mongolia, Morocco, Mozambique, Netherlands, Netherlands Antilles, Norway, Oman, Pakistan, Panama, Paraguay, Philippines, Poland, Romania, Serbia Montenegra, Slovakia, Slovenia, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Thailand, Togo, Trinidad & Tobago, Tunisia, Turkey, Ukraine, United Kingdom, Uzbekistan, Yugoslavia, Wallis & Futura Islands, Western Sahara.
Current State of the Estate Tax
The Estate Tax (sometimes called the death tax) is a federal tax on the property of a deceased individual upon its transfer to another individual or entity. The assets subject to the Estate tax include, but are not limited to, the following: cash, securities, real estate, insurance, trust, annuities, business interests, and other assets. The total dollar amount of all the items to be transferred in an Estate tax is known as the Gross Estate. As the Estate Tax is levied on the amount of the Gross Estate in excess of the current threshold, savvy planners will reduce their Gross Estate through charitable donations, lifetime gifts, irrevocable trusts, and other methods.
Due to a compromise between Congressional Democrats and Republicans, the Estate Tax is currently in flux. Today the taxable rate of an estate is set to a maximum of 45% of the estate, which is a considerable drop from recent years. In as recently as 2001 the taxable rate was 55%. It was during this year that the Senate passed the 2001 Tax Act, which began to drop the taxable rate of an estate and at the same time allowed amount excluded from the estate tax to rise.
The tax is applied to the amount of the Gross Estate over the exclusion amount. This amount has been increasing from the $1,000,000 it was set at in 2001. From 2004 to 2005 the exclusion amount was $1,500,000, the amount then rose to $2,000,000 from 2006 to 2008. Currently, in 2009, an estate valued at $3,500,000 or more is deemed taxable and required by the IRS to file an estate tax return. The amount of a Gross Estate in excess of this amount, $3.5 Million, is likely to be subject to the 45% tax. Unless the law is changed shortly, there will be no Estate Tax levied, regardless of size of estate, in 2010.
Under current law, however, the excluded amount is reduced to $1,000,000 in 2011. This means that many more estates are likely to be subject to the tax than presently. An individual with foresight can reduce taxes by reducing the size of their Gross Estate. This can be accomplished by charitable donations, lifetime gifts, the use of irrecovable trusts, or other methods.
Currently President Obama is seeking to pass legislature to keep the estate tax in 2010, with the current amounts of exemption and taxable rates of 2009. President Obama is also perusing a freeze on these amounts at the 2009 levels for the subsequent years to follow. As of April 2nd, 2009 the Senate passed Amendment SA 873 to federal budget, changing the amounts of the estate tax from the years 2010 to 2014. If enacted the tax exemption level would raise to $5,000,000 and the taxable rate would drop to 35% and un-repeal the estate tax in 2010. Those with significant wealth and estate planning professionals will need to keep an eye on this and similar legislation for the foreseeable future.
USCIS Introduces New Naturalization Test
Recently, the United States Citizenship and Immigration Service (USCIS) introduced new versions of the civics and English tests which applicants for citizenship must pass. The new test will be required of all people who have their citizenship interview after October 1, 2009 and for those who applied after October 1, 2008.
Questions to the civics test have been changed and it now focuses on three areas: American government, American history, and integrated civics. The content of American government and history are relatively straightforward. The integrated civics section is a bit of a grab bag, with questions on geography, symbols of the US, and holidays. Though some questions have changed, the passing score remains the same: six out of ten asked questions.
The English test has undergone a much more extensive overhaul than the civics portion of the test. The English test is now broken up into three separate sections: speaking, reading, and writing. The speaking section remains the same, the interviewing officer reviews the applicants abilities in speaking the English language while going over the Naturalization application and while administering the civics test.
It is the reading and writing portions of the English test which have been significantly changed. On the reading portion of the test, the applicant must correctly read one of three sentences presented. Similarly, on the writing test, the applicant must correctly write one of three sentences read by the interviewing officer. The questions in both sections will focus on US history and civics. The USCIS is not releasing the sentences which will be used, however, they are releasing vocabulary lists containing the words that the sentences will be primarily composed of for study purposes.
More information, including study materials, can be found at the USCIS website, www.uscis.gov/newtest. People interested can also purchase study guides or flash cards from the U.S. Government Printing Office at bookstore.gpo.gov.
