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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91861
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I was just served an Administrative complaint and notice of

Customer Question

I was just served an Administrative complaint and notice of rights from the department of financial regulation, detailing that a company I am no longer involved with, since last year, is being ordered to cease and desist operation, refund clients funds and pay a potential administrative fine for every violation... a fine which would total in the millions. Besides the fact we haven't owned this company for almost 2 years, it has been disbanded by the other owner and I do not know exactly what is going on. Regardless. IF we dont answer the complaint, if we can't afford an attorney, and they levy the fine against us. Is that something that can be included in a BK? The business was an LLC first and foremost in Florida, but we haven't been working and are behind in bills and were planning on filing BK regardless. Will a Chapter 7 allow us to absolve that debt?
Submitted: 2 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 2 years ago.
If you have not owned the company for almost two years, you are still going to have to respond to the notice and provide proof that you no longer own the company, but if this is from violations that occurred when you owned the company I am sorry to say you would still be liable and will have to defend this action. Unfortunately, you will need an attorney to respond and I am afraid as it is a company you will need an attorney to respond. If you do nothing, they will enter a default judgment against you and will come after the owners personally. These penalties "might" be extinguished in bankruptcy, but only if they are not alleging that fraud was involved and you would likely end up having to file both corporate and personal bankruptcy to get them extinguished I am afraid.


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Customer: replied 2 years ago.


We don't have any money to defend ourselves. We already went that route to the tune of $75k. They started in June of 2010. We fought them through February of 2011, only to have them 'go away'. This came out of no where. There is no fraud alledged, just that we were not licensed to take these clients. The law is murky at best in regards XXXXX XXXXX we were doing. Even they didn't know what we could do and didn't levy any complaints against us until almost 2 years later. Is there some place I can read up on whether these fees are dischargable without having to go see an attorney right away?


 

Expert:  Law Educator, Esq. replied 2 years ago.
It all depends on what they are charging you with. In general, under US bankruptcy code §523(a)(7): Government fines, penalties, and forfeitures that were assessed, not as compensation for pecuniary loss, but to punish the debtor are also not dischargerable. See also: Dischargeable debts. Thus, depending on the entire situation, you may not get these fines discharged and they may be levied against the individual owners of the company at the time as personal obligations.
Customer: replied 2 years ago.

These are certainly fines to punish.


 


How does that read on ones credit? A judgment? What is their recourse as far as coming after us? Garnish wages? Levy bank accounts? We don't have much, maybe $1800 bucks to our names. We do own a house, but it's so far upside down, it's not even funny. I have a car with a few thousand on it, but we were going to sell it anyways due to the looming BK.


 


There is no way for us to pay a $9m verdict, ever. Essentially, this is a death sentence for us. We'd have to live off the grid and by way of other peoples credit. We'd never be able to own a home again or even get an apartment for that matter.

Expert:  Law Educator, Esq. replied 2 years ago.
It will read as a judgment on a credit report. They can also garnish wages, levy bank accounts, place liens on real estate and can also garnish retirement accounts as this is an exemption to the prohibition of garnishments on retirement income as it is a government debt. This places you in a pretty bad situation and it is likely best to work to at least negotiate a payment plan and possible reduction of the fine if you cannot afford an attorney to fight the fine based on it being from a violation that was in a gray area, as you put it.
Customer: replied 2 years ago.


This is a catch-22. I have 21 days to respond, I can't respond because I have no money.


 


One last question. Is it the business that has to defend itself and if the business is found guilty of violating licensure, they can come after the owners of the LLC?

Expert:  Law Educator, Esq. replied 2 years ago.
Sadly, many people find themselves in these terrible situations. You will have to respond with something to deny the liability, such as the argument that the alleged violations were a gray area and as such not worthy of such a violation. It is whoever the party named in the action that has to defend. If they only named the business, it is the business that has to defend, but either way ultimately it falls to the owners as they will suffer personal liability here if the business cannot pay.
Customer: replied 2 years ago.


Can my wife and I respond on our own w/o including the other two parties? Does the business have to respond first? I am very familiar with procudural law as far as civil suits are concerned, but not something from a government agency.

Expert:  Law Educator, Esq. replied 2 years ago.
If the business is named, the business has to respond. If other parties are named individually, each of those parties also has to respond. You can respond on your own behalf and your wife can respond on her own behalf. In the response you would make sure to mention you no longer own the business or have any connection to the business and attach the proof to your response.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91861
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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Law Educator, Esq.
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All corporate law, including non-profits and charitable fraternal organizations.