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How to catch a thief?
May 7, 2014 6:33 AM   Subscribe

Company A owes a lot of money to several freelancers, the IRS and such, so it's undergoing bankruptcy. Somehow the owner managed to create a second business, Company B, with the exact same name as Company A, the same clients, and the same people working there (but with a different address and fiscal number). So, it's like Company B is the same business as Company A, only they don't have any debts...

This is a business with the following M.O.: they recruit freelancers in our industry to do all sorts of jobs for their clients. The clients pay the company and then they screw the freelancers... either by paying them way too late (years late, even) or not at all. All of this while lying to everyone involved (claiming the clients haven't paid yet and so on) and threatening those who denounce the matter (on social networks and such) with defamation suits and all sorts of stuff to discourage unhappy freelancers from protesting too much...

I was one of these screwed freelancers and I sued them a few years ago. Justice in my country is notoriously slow and inept, but eventually we settled for a payment plan, which Company A promptly screwed up. Many, many incidents later, including bouncing checks (fees paid by yours truly!), I only managed to recover about half what they owe me... I would love to get the other half as well -- we are talking about a minimum of 12K (late fees excluded) and that means one year worth of living expenses for me.

What happened in the past couple of years was that they started their bankruptcy process, and everything halted... And then we learned that somehow the owner managed to create Company B, doing exactly the same business as before and leaving the creditors hanging.

I had sort of given up on getting paid, and I was more or less "fine" with it, as long as the company (and its owner) went out of business and stayed far, far away from this industry. This, clearly, hasn't happened.

YANML, I know. I have got one, but the court route isn't working out. Any suggestions on how to deal with this situation? We are not dealing with "normal" people here, hence the difficulty.

Thanks in advance!
posted by lost_lettuce to Work & Money (20 answers total) 3 users marked this as a favorite
 
Which country?
posted by Houstonian at 6:40 AM on May 7 [1 favorite]


What does your lawyer say about all this?
Any reason you can't contact the IRS and give them this information?
posted by eatcake at 7:05 AM on May 7


Does your industry have a professional society in your country? Maybe you can get them to make an official statement warning prospective clients and freelancers away from this problem owner.

Alternatively, but probably less effectively, you could set up your own website to make the same information public. If the work is very public you could contact clients or freelancers directly to warn them. This is unlikely to get you any money, but getting money would probably require (more) lawyers, or you explaining to the company that if they made good on their debts, you would not have reason to warn others against them.

If they owe money to your equivalent of the IRS, there may be a mechanism to report this "new" business to them. I believe there is something similar in the US.
posted by pseudonick at 7:11 AM on May 7


I think you need a lawyer. If you know several freelancers in the same boat, you could hire a lawyer together.
posted by theora55 at 7:13 AM on May 7


If you have a judgment against them that they failed to pay, you should ask your lawyer about whether you can seek to garnish their funds and/or register a lien on the business or its assets. This can be a relatively speedy process.
posted by Mid at 7:13 AM on May 7


This is fraud. Report them to your country's serious fraud office, and to the tax office.
posted by devnull at 7:13 AM on May 7


It is possible the law/your lawyer may be able to help with this, depending on where you are located. This is not the first time something like this has ever happened (http://en.wikipedia.org/wiki/Piercing_the_corporate_veil).

If you don't feel like your lawyer is particularly helpful, it may be worth finding another lawyer.

If you really just want to make sure others don't get suckered into this scheme, YMMV, but I've always found in situations like this it's healthiest to set a time limit (say, an afternoon), trying to spread the word as much as you can in that time, and then moving on with your life and trusting to karma.
posted by _Silky_ at 7:16 AM on May 7 [1 favorite]


(The poster memailed me. They are not in the US, but they'd rather not identify their country.)

FWIW, in Texas, this is handled by the labor board/workforce commission, which is a state-level government agency. The worker submits a wage claim to the board, which is a form stating that they did not receive wages. Then the person who owned the business must resolve all the issues submitted to the labor board before they can open another business. The full process is in this .pdf.

I'm guessing from your question that you don't have such a process nor a labor board. Are you looking for answers that are not going at it from the legal standpoint? More like, how to get the word out about this person and things like that? Because it occurs to me that maybe the best you can do is starve him out. If he has no freelancers, he can't rob freelancers, right? If your line of work has a professional organization or union of any sort, I'd start by getting the word out there. Instead of loud broadcasts via social media, do it more quietly face-to-face, in email, etc. Organize with the other people who have been robbed so that you guys can reach more freelancers.
posted by Houstonian at 7:49 AM on May 7 [1 favorite]


(I wasn't clear if you meant the actual IRS or the relevant tax authority in another country... this is presuming you meant the former but you are out of the country...) If you know things like the old and the new fiscal numbers, I would drop a dime on them to TaxSqueal and do all the relevant bad-reviewing on Yelp and other associated places which will help tank their Google appearance.
posted by jessamyn at 8:00 AM on May 7


OP mentioned the IRS, so i'm gonna answer houstonian's question with a wild-ass guess: the united states of america. loled at "justice in my country is notoriously inept and slow", you get all the justice you can pay for. _silky_ has it right, "piercing the corporate veil" is precisely the concept you're looking for.

a bankruptcy filing imposes an automatic stay, and ultimately, discharge of the debts, unless you can show fraud, either a deliberate intention not to pay at the time the debt arose, or fraud in the bankruptcy petition itself, the failure to list assets which might be available to creditors. examine that petition closely, and if you don't know what to look for, bring in someone who does.

don't worry about defamation suits. truth is a defense to defamation, and most states have an anti-SLAPP statute. SLAPP is "strategic lawsuit against public participation". there's an outstanding blog run by activist lawyers which regularly takes on this shit and recruits pro bono counsel to assist people just like you when corporate malefactors try to intimidate them into silence. popehat.com.
posted by bruce at 8:10 AM on May 7


This sounds suspiciously similar to a case that I'm tangentially involved in. Please MeMail me.
posted by valkyryn at 8:21 AM on May 7


The poster is not in the United States.
posted by Houstonian at 8:27 AM on May 7


Regardless of country, what you've basically said is that you already have a lawyer, which implies you want non-legal advice, but I don't know what anybody could possibly give you in the way of advice that's totally unrelated to the legal issues. You could ask nicely, I presume you've tried this. You could ask not-nicely, ditto. You should probably not break anybody's kneecaps or do anything similar. That pretty much exhausts the things I can imagine that wouldn't involve the legal system. The thing about civil court systems is that collecting money from people who owe you money is the better chunk of what they're there for. If your attorney says there's absolutely zero additional legal recourse for this, then I think you're looking at needing to either accept that or ask other attorneys to see if they agree.
posted by Sequence at 8:52 AM on May 7


Since it seems your civil case is dead, might the company's actions be subject to criminal statutes? Is that pretty much what you're going for at this point? (I don't blame you, they sound ripe for punishment!)

If so, in your question, do you really mean the IRS of the US, or another country's tax authority? US-based posters might have some advice if you actually mean the IRS in the US. Along those same lines, does this company do business in the US, or any other countries whose laws they might be breaking?

Since you don't want to reveal your country on mefi, maybe ask your lawyer how individuals can report corporate fraud or have criminal complaints pursued in your country. It might not get your your money, but I hope these people will eventually go down hard, with a satisfying crunch.

As far as further civil punishments for these guys, it wouldn't ultimately benefit you, but is this company violating the terms and conditions of their banks or payment processors, either in your country or abroad? Do you have evidence to report them?
posted by lesli212 at 9:43 AM on May 7


I don't think this question is really answerable as posed. I would advise the OP to contact a lawyer in his/her country and ask that attorney these questions. All other responses are mere speculation.
posted by dfriedman at 11:09 AM on May 7


All right. Here go some clarifications:

IRS= the tax authority here.

I already have (had?) a lien against their assets but they then started the bankruptcy process and everything got really messy.

The work is public, and some clients have heard of this business's shady practices. Some left; others don't care. Such is life.

The thing with my lawyer is that they are doing this pro-bono (I just pay for the filing fees and the like) so they aren't terribly invested (which is understandable!).

Actually, I was looking for non-legal (not necessarily illegal!) routes, as the courts aren't doing their job... You have given me some ideas, though. Thanks for all your input so far.
posted by lost_lettuce at 11:33 AM on May 7


This is the definition of fraud, so there should be redress against them with the courts. Since you don't want to do that, is there any way you can get them to front you some money for say parts for a new project and then just keep the money and not do any work?

Also, lots of negative publicity might make them pay you.
posted by unreasonable at 12:09 PM on May 7


The other thing you are looking for successor liability. I don't understand what course of action suggestions you hope to acquire with this question, but it sounds shady. You really need an attorney, preferably one that practices employment law.
posted by wocka wocka wocka at 1:12 PM on May 7


What do you want to accomplish? Get your money back? Put them out of business? Let people know what bad guys they are?

It is not clear how well managed your country's business laws are. Here in the UK, anyone smaller than say, a large online retailer who used to specialise in books has to tread very carefully to get away with not fulfilling their obligations. Treading carefully basically means not getting noticed by those who can do something about it.

If you have a suspicion of criminal activity then let the appropriate authorities know. E.g., if they behave like this then they almost certainly fiddle their tax, the tax authorities take a very dim view of this in general. Declaring insolvency while actually solvent in order to avoid debt will be viewed with great interest by those who enforce such matters.

What do you want out of this?
posted by epo at 1:23 PM on May 7


My pretended outcome: If I (and many others) won't get paid, at the very least I want them out of business. If we could manage both, great.

I will talk then to my attorney to determine what can be done legally about my situation. I've been feeling hopeless about the judicial system here, but (sadly) it seems to be my best bet in that regard...

As for putting them out of business, there seem to be some non-judicial routes, and some MeFites have given me a couple of ideas that will be worth a try. Thanks, everyone.
posted by lost_lettuce at 2:27 PM on May 7


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