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Lawsuit: Lobster Company Co-Owner Behind $1.5M Embezzlement

Owning a business is like having a second family. No business owners ever want to believe that an employee, or worse yet a fellow co-owner, is embezzling funds from their company. But unfortunately it happens more often than is ever known, and this time, it happened to a lobster company in Maine. The other owners caught on to the shell game, but not before having tens of thousands of their lobsters sold, without ever receiving a dime. The Case of the Hot Lobster Sea Salt, a seafood wholesaler in Saco, Maine, alleges that one of its newly minted part-owners, Matthew Bellerose, set up a sham distributor customer, and then sold this fake customer one to two million dollars worth of lobsters without billing them. Bellerose then sold the lobsters to other businesses, mostly restaurants. Little did these end customers know that they were buying hot lobsters, as in, stolen goods. Bellerose was pocketing the money from the sale of the lobsters from the fake company to the end user, and never paying Sea Salt for the lobsters. Sea Salt started to notice that they were not being paid for all of their inventory, and after a forensic accountant came to research the problem, it was clear that at least $1.5 million worth of lobsters had been “stolen” from Sea Salt — allegedly shipped to the fake customer with no bill of lading or invoice ever created. Sea Salt claims Bellerose admitted to embezzlement when he was fired in June 2018, offered to pay back the money, and blamed the expense of having to buy into his 20% ownership stake as the reason he embezzled. Can You Sue for Embezzlement? Bellerose is being sued for at least $1.4 million in damages for conversion, breach of fiduciary duty, negligent representation, breach of contract and violation of Maine’s deceptive trade practices laws. Why isn’t he being sued for embezzlement? Because embezzlement is actually a criminal offense, similar to theft except for that the suspect stole from someone they had a relationship with in which they promised never to steal. This is called a…

Goop Settles Lawsuit Over Unscientific Health Claims

Gwenyth Paltrow’s company, Goop, settled a lawsuit this week brought by 10 California counties for false advertising after numerous medical and consumer protection groups complained that their products didn’t do what they claim they could. Goop agreed to pay $145,000 in fines as well as refund customers that bought three of its products: the Jade Egg, the Rose Quartz Egg, and the Inner Judge Flower Essence Blend. The first two are egg-shaped products that are vaginally inserted and left for varying lengths of time to balance hormones, regulate menstrual cycles, prevent uterine prolapse, and increase bladder control. Wow — talk about a panacea! The Inner Judge Flower Essence Blend is a blend of essential oils that can either be consumed or put in bathwater. Goop claimed it counteracted depression. No Scientific Evidence of Forum’s Claims According to the lawsuit, plaintiffs contend that “none of these products were scientifically tested to prove what Goop claim they did.” In Goop’s settlement papers, it specifically agrees to no longer make any claims “regarding the efficacy or effects of any of its products without possessing competent and reliable scientific evidence that substantiates the claims.” However, Goop refuses to admit liability. But rather, Goop sees this as an “honest disagreement.” The company believes that it provides a forum for practitioners to present their views and experiences regarding Goop products, and the company didn’t think the forum amounted to advertising, which is governed by stricter laws than forums. Other False Advertising Claims Goop has been hit with numerous truth-in-advertising claims, stemming from both its own products as well as third party products it promotes on its site. In addition to the vaginal eggs and essential oil, other hotly contested products include crystal harmonics for infertility, black rose bar for psoriasis, wearable stickers for anxiety, and vitamin D3 for cancer. All total, over 50 claims have been made against Goop by professional groups for false advertising. If you would like a refund for your Goop vaginal egg or essence blend, contact Goop customer service by calling 844-WTF-GOOP. If you are concerned that your website’s forums may amount…

New Tesla Whistleblower Claims Spying, Drug Dealing at Nevada Plant

Tesla is on a good run of bad luck in the public relations department. In June, whistleblower Martin Tripp alleged that Tesla manufactured batteries with puncture holes and systematically used waste material in vehicles to chase production goals. Tesla responded with a $1 million lawsuit for hacking and stealing trade secrets. Two weeks ago, Elon Musk almost broke the internet over his tweet to re-privitize the company, which resulted in an SEC investigation. Last week, in an interview with the New York Times, Musk broke down in tears, saying his work/life balance is “excruciatingly” out of whack, and offered anyone that wanted to take a crack at running the company to give him a call. Spies, Drugs, and Thievery: a John le Carre Novel? Or Tesla Gigafactory? Now, Karl Hansen, the latest whistleblower, has accused Tesla of spying on employees’ cell phone communication and computer usage through surveillance equipment, and failing to act after learning that a Mexican cartel had been dealing “significant quantities” of cocaine and crystal methamphetamine through its Nevada Gigafactory battery manufacturing plant. Hansen also alleges that Tesla didn’t disclose to investors that it had been robbed of $37 million worth of copper and other raw materials earlier this year. Hansen claims that he brought all of these issues to Tesla’s attention during his employment on the internal investigation team, but was subsequently retaliated against, and fired on July 16. Hansen filed a tip with the SEC on August 9. The tip has not been published, but details have been released through Hansen’s attorney, Stuart Meissner. Tesla claims it is taking this seriously, but has no further comment. Hansen can’t be reached for comment. The SEC is declining to comment. The DEA is declining to comment. And Sheriff Gerald Antinoro of Storey County, where the Gigafactory is located, declined to comment on the drug dealing, but did state that regarding the theft, Tesla had disclosed that there had been a theft, but not what was taken. Whistleblowers as Heroes Whistleblowers have served our country well over the last decade, and have had a profound influence on both…

California Pool Hall Would Rather Close Than Become ADA-Compliant

The Americans with Disabilities Act requires that public accommodations must provide reasonable modifications in their policies, or procedures for those with disabilities and remove structural, architectural, and communication barriers when such removal is “easily accomplishable and able to be carried out without much difficulty and expense.” The Act also allows a private person to bring a lawsuit to enforce these requirements. And while increasing access for disabled persons is essential, even the best intentions can be manipulated for personal gain. That’s what Mike Murphy, owner of Jointed Cue Billiards in Sacramento, California, thinks is happening. The pool hall was sued by Scott Johnson, a quadriplegic attorney who claims the location is not ADA-compliant. Rather than upgrade the facilities or settle with Johnson, however, Murphy is closing the 50-year-old pool hall down. No Benefit to the Disabled Community “He’s using that as an advantage to benefit himself,” Murphy told the Sacramento Bee. “Nothing this guy ever does is to benefit the disabled community. He’s using (the law) to benefit himself.” According to the paper, Johnson is listed as a plaintiff in over 2,000 federal ADA lawsuits — all filed in the same district that includes Sacramento — and routinely settles with defendants out of court for $4,000 to $6,000. His attorney Russell Handy, however, pushed back on Murphy’s characterizations: “The fact that the ADA was passed 28 years ago and that businesses still flagrantly violate the law is frustrating to him and many persons who use wheelchairs for mobility,” Handy said. “As for making money for himself — Mr. Johnson has never stated this as a primary motivation but I cannot help but believe that it is gratifying to Mr. Johnson that he is compensated for his effort and for the infringement upon his civil rights.” Murphy also claims that, while many disabled persons — including those in wheelchairs — have been able to access the pool hall facilities, Johnson has never been one of them. Handy alleges that Johnson has eaten lunch at the attached restaurant. Not Getting Anything So why not just bring the Jointed Cue up to code?…

21-Year-Old Made $1.6M in 23 Days; Yep, It Was a Scam

You may have heard the term ‘drug mule’ — a person who, wittingly or not, transports illicit drugs across the border. You may not, however, have heard of a ‘money mule.’ These folks set up bank accounts to funnel ill-gotten money from U.S. business to international scam artists. Being a money mule can be incredibly easy, unbelievably lucrative, and most definitely illegal, as over 20 Floridians indicted for a laundry list of federal financial crimes recently found out. Money Making Destiny Asjee Rowland was one of those Floridians. The 21-year-old’s Asjee Luxury, opened in July 2017, had $1,651,699 in the bank after its first month. How? Rowland’s guilty plea to federal wire fraud charges explains that her TD Bank account was opened “so that proceeds of a wire fraud scam could be deposited into the bank accounts; Rowland then agreed to have a portion of the fraudulently obtained funds wired to other bank accounts in return for a cut of the proceeds.” According to the Miami Herald, Rowland was part of a $16 million international email con network that included 74 people worldwide — 42 of them in the United States and 23 of those residing in South Florida. Scammers in Rowland’s case posed as a Wisconsin company’s business partner, and convinced that company to wire money to Rowland’s bank account. Fortunately for the victim company, Rowland and others were busted while the money was still in her account, before it made its way across the border. Money Laundering While Rowland pleaded guilty to one wire fraud, 23 other Floridians were charged in this and other, similar criminal schemes, most for money laundering or conspiracy to commit money laundering by recruiting others to the scam. Almost all of those charged were working from their homes, for their self-owned “businesses.” “Operation Wire Wire,” a collaboration of the FBI, Department of Treasury, Secret Service, and even the U.S. Postal Inspection Service, also nabbed 29 people in Nigeria and others in Canada, Poland, and Mauritius. We all want to be our own boss, and working from our couch (especially if it’s air-conditioned in…

Public Nuisance Lawsuit Leads to Bar Booze Ban

Multiple shootings, assaults, aggravated robberies, narcotics, and other crimes. At least four patrons arrested on charges of driving while intoxicated. One intoxication assault of a police officer. A grand total of 90 arrests at the location since it opened. Perhaps Harris County District Attorney Kim Ogg wasn’t far off when she called Houston sports bar Bombshells a “crime factory.” Ogg’s office filed a public nuisance lawsuit against the bar last week, and obtained a temporary restraining order banning the bar from serving booze until the case is resolved. And rather than serve food exclusively during the ban, the bar’s owners chose to shut up shop completely. Magnets for Crime “We’re trying to stop the carnage that results from many intoxicated people leaving Bombshells and hurting someone else,” Ogg said after filing the nuisance suit. “Bombshells on I-45 has been a magnet and a source for a lot of crime in the restaurant-bar, the parking lot, and this is classically what we call a nuisance.” The lawsuit against Bombshells has been seen as part of the new district attorney’s office task force attempting to trace alcohol causing drunken-driving crashes to its source. Bombshells petitioned District Judge Steven Kirkland to dismiss the restraining order, but that request was rejected this week. Bar owners have yet to comment publicly on the matter. Liability for Nuisance Public nuisance refers to a range of minor crimes that threaten the health, morals, safety, comfort, convenience, or welfare of a community. Businesses declared a public nuisance can face criminal penalties like fines, and may also be required to remove the nuisance or to pay for the removal. And businesses normally can’t escape liability by arguing that others are also contributing to the harm — liability and damages are usually apportioned according to the business’s share of the blame. Additionally, a business could be liable under nuisance law even if its actions (like, say, serving alcohol) would not have constituted a nuisance without the actions of others (like assaults, shootings, and drunk driving). Being declared a public nuisance can shut down your business. Make sure to avoid public…

How to Reduce the Risk of Cybercrime for Your Small Business

As a small business owner, you probably just want to go about your day-to-day operations, running your company, and thinking about ways to expand or improve. The last thing you need is the headache and financial stress caused by some cybercriminal trying to hack into your system. And yes, small businesses are at risk even though large corporations are the ones who garner all the cyber-attack headlines. Luckily, according to Entrepreneur, there are a number of preventative measures you can take to reduce the risk of cybercrime affecting your business. Train Your Employees You can take lots of precautions when it comes to cyber security, but in some sense, you’re only as secure as the practices of your employees. Make sure they’ve received proper training and understand the importance of protecting company data. Two keys areas include passwords and cybercrime awareness. Passwords When it comes to password security, there are a few things to keep in mind: Employees should use longer, more complex passwords that are difficult to guess (for example, no names and birth years). Employees should be required to change their passwords regularly. Consider two-factor authentication features, such as access codes which are texted to the employee for each log-in. Cybercrime Awareness Many employees are unaware of all the ways cyber criminals can gain access to company data. Provide proper training to help employees spot suspicious activity like email phishing scams, and what to do about them. Employees who know what to look for – suspicious attachments or links, emails asking for personal information, misspellings and grammatical errors – are better equipped to help avoid data breaches. Protect the Company Besides employee training, small business owners can also take a few overall precautions to reduce their risk of cybercrime. These measures include: Email Encryption: This adds a layer of protection to company emails, making it more difficult to hack in and steal sensitive information. Security Software: Investing in security software can also help guard against attacks. Ensure that each computer and device used for company business has malware, spyware, and firewall software installed to block potential threats. Cyber…

FAQ About Cyber Insurance for Your Small Business

Another news cycle, another malware story. With everyone from the biggest credit agencies to the smallest home businesses at risk for cybercrime, many small biz owners are reassessing their risk of being hacked. And while preventative measures are essential, they’re not always perfect — that’s where insurance comes in. Cyber insurance can cover everything from pre-incident security audits to post-incident criminal investigations. So how do you figure out if cyber insurance is right for your small biz? Here are five big questions — and answers — regarding small business cyber insurance. 1. Is Your Small Business a Target for Hackers? You may think that your company is too small to show up on hackers’ radar. But if you’re doing business online or otherwise collecting customer billing information, you could be a target. Two-thirds of all cyberattacks are small businesses, often because they don’t take the same security precautions that larger companies do. 2. Do I Need Cybersecurity Insurance for My Small Business? The Department of Homeland Security says cybersecurity insurance can help thwart cyberattacks by “promoting the adoption of preventative measures in return for more coverage” and “encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection.” So, insurance isn’t just good for mopping up after a data breach. 3. Can Kidnapping Insurance Protect Against Ransomware? Holding a business’s data ransom has become a popular tactic for cyber criminals lately. So can cyber insurance (or old-fashioned kidnapping insurance) help? 4. How Could the New Small Business Cyber Security Act Affect Your Small Biz? DHS and the Small Business Administration are teaming up to help keep startups and small business safe from cyberattacks by developing cybersecurity infrastructure, threat awareness, and employee training programs to prevent future attacks. 5. Can Cyber Insurance Pay Off for Your Business? In the end, it’s all about accurately assessing the cybersecurity risks and rewards for your small business. If you need help figuring out of cyber insurance is right for your company, or finding the right cyber insurance policy and coverage, contact an experienced small business attorney. Related Resources: Find Business…

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