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I am an insurance agent and am looking to have the legal capacity

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to say that I represent...
I am an insurance agent and am looking to have the legal capacity to say that I represent my own business or agency. The agency would receive no revenue or commissions, and I would not charge a fee for talking to individuals about their insurance needs. I would also like to be able to advertise my this business name as not-for-profit. How would I need to set up such a business which is a business for DBA purposes only?
Submitted: 9 years ago.Category: Business Law
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12/4/2008
Business Lawyer: Law Pro, Attorney replied 9 years ago
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All you have to do is open up with your name - you can be in business just under your own name like many other businesses.

 

However, advertising as a "non-profit" would mandate that you incorporate as a "non-profit" corporation.

 

Really, is this any different than any other agent selling insurance. Won't all agents discuss your "insurance needs" with a potential client/customer without charging a fee?

 

 

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Customer reply replied 9 years ago

This is true, however instead of saying "Hi, my name isXXXXX and I represent Insurance Company A, and I would like to set up an appointment with you to take a look if our product is a fit for you and your family," I would like to say "Hi, my name isXXXXX and I am with New York City Health Professionals. We are a non-for-profit organization that takes a look at your current setup and recommends products based off this consultative approach.”


I would think I would need to register the DBA name with someone, right?


My future plans include building a website to act as a lead generator where I can geographically target indiduals looking for health insurance products and set up meetings with them under said business name.

Business Lawyer: Law Pro, Attorney replied 9 years ago

Your being fraudulent and misrepresentative to the consumer if you so much as sold on item of insurance to the consumer - it's false pretenses - fraud.

 

You can't be a non-for-profit organization - it's either a non-profit corporation or nothing - there's no such thing otherwise and fraud if so stated.

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Customer reply replied 9 years ago
I'm not sure we are understanding each other. The actual products I would be selling would be legitimate products underwritten by legitimate companies (Aflac, AIG, UHG, Aetna, Assurant, etc.). The only thing I am looking to do is to represent myself as an agent for these companies doing business as a not for profit entity.

If I must register this entity as a not-for-profit corporation, then that is what I need to do to reserve the name and do business on the corporation's behalf.

There is no fraud or misrepresentation going on. I simply want business cards and advertising to show "Agency Name" instead of my own name.

Are we on the same page now?
Business Lawyer: Law Pro, Attorney replied 9 years ago

Your actually double talking here - you are stating that you would be selling insurance.

 

Would you be making money if you sold one of their products?

 

 

Do you or would you tell the consumer where they might be able to purchase such insurance - other than you?

 

 

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Customer reply replied 9 years ago
This is really very simple.

I am an independent agent, representing a number of companies. A broker, in the most general sense.

Instead of advertising the products I am selling in the newspaper as "AIG Health Insurance. Call (my telephone number) for Information," I would like an ad to read "Jamestown Health Professionals, a Non-Profit Firm committed to helping you sort out the sea of health products. Call us at (my telephone number) to set up a free consultation."

So I am back where I started.

The actual business/corporation, if I would need to register one, would not serve any purpose other than the DBA.

I don't know of any other way to put this.
Business Lawyer: Law Pro, Attorney replied 9 years ago

You did not answer my earlier questions:

 

Would you be making money if you sold one of their products?

 

Do you or would you tell the consumer where they might be able to purchase such insurance - other than you?

 

 

Again - it is very simple - your attempting to sell insurance based upon a false representation that your non-profit - that's fraud/misrepresentation. It's just that simple.

 

You cannot legally represent that you are operating as a non-profit organization when you are an insurance agent representing many insurance carriers and when you sell a policy you receive a commission therefore. In fact, it's criminal.

 

 

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Customer reply replied 9 years ago

To answer your earlier questions:

Would you be making money if you sold one of their products?


A: Yes


Do you or would you tell the consumer where they might be able to purchase such insurance - other than you?


A: I am not sure I understand the question. I would advise individuals where to purchase products that I could not sell, however I can't imagine anyone asking, "I like what I see, but where else can I purchase this product, other than you?"


In regards XXXXX XXXXX constant mentioning of the word "fraud," I need to know where in the Official Code of Georgia I would be conflicting with the actual law. You simply saying that my actions would be fraudulent without providing any legal basis or precedence for the opinion is not going to help me, and quite frankly, I don't appreciate you throwing the word around while not even being able to provide me a satisfactory answer to my question.


If it seems that you can not answer my original question with known, existing laws and definitions, then please just state that you do not have an answer. This would save your time and mine.

Thanks.

Business Lawyer: Law Pro, Attorney replied 9 years ago

You wouldn't be honest - your not a "non-profit" company. To the contrary, your out for the money in this situation - just using a marketing ploy.

 

Yes, I do have an answer but you don't want to accept the answer.

 

Fraud

Black's Law Dictionary (8th ed. 2004) defines fraud as "a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment." The injury in fraud is usually depriving a person of money or other property that rightfully belongs to that person. Fraud crimes are classified according to the type of transaction in which the deception occurred. Fraud is a serious and broadly defined criminal offense. Criminal fraud is a charge that can be brought against a business, as well as against an individual (a business cannot be put in prison, but can be hit with substantial fines). A charge of fraud - let alone a conviction - can ruin the reputation of a person or company charged. Zealous legal representation is critical in fraud cases, as in all criminal cases. It is critical for an accused to seek help from an experienced white collar criminal defense attorney.

Mail Fraud

The federal mail fraud statute (18 U.S.C. § 1341) can be used against a wide variety of crimes. Mail fraud requires proof of four elements: a scheme devised or intending to defraud or for obtaining money or property by fraudulent means; intent; materiality; and use of or causing to use the mails in furtherance of the fraudulent scheme. The actual mailing does not have to be fraudulent, it just needs to be in furtherance of a scheme to defraud. Use of the mails does not need to be an essential element of the scheme; it is sufficient if the mailings are incident to an essential part of the scheme. The scheme to defraud element covers a wide variety of frauds including insurance fraud, medical fraud, credit card fraud and securities fraud.

Wire Fraud

The federal wire fraud statute (18 U.S.C. § 1343) functions parallel to the mail fraud statute. The elements of wire fraud are essentially the same as mail fraud, except wire fraud requires a transmittal in interstate or foreign commerce by means of wire, radio or television communication of writings, signs, signals, pictures or sounds, instead of use of the mails. There is no requirement that the defendant knew or foresaw that the transmission would go interstate, only that it did.

Bank Fraud

The federal bank fraud statute (18 U.S.C. § 1344) was passed in response to the increase in financial fraud in the early 1980s. The bank fraud statute makes it a crime to "knowingly execute, or attempt to execute, a scheme or artifice to defraud a financial institution, or to obtain . . . property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises."

Securities Fraud

Securities fraud is the intentional deception of investors, resulting in financial gain. Anyone who offers, buys or sells securities such as stocks, notes and bonds is subject to securities laws. A corporation can be liable for securities fraud if it submits false information about its financial status to the public. Analysts, who must act in good faith and put their clients' interests first, can be liable for securities fraud if they have a conflict of interest. Analysts can also be liable if they engage in a "pump and dump" scheme (a scheme in which they make sales calls pitching a stock in an effort to increase demand for it and drive the price up so that shares can then be sold for a quick profit).

Insider trading is one of the more common types of securities fraud. The markets for publicly traded securities operate on the notion that no one trader is supposed to have an advantage over another trader. All trading is supposed to be based on information available equally to all participants. Insider trading is when a person who has information not available to the general public that could affect the price of a company's stock - an "insider" - uses that inside information to make trades in securities. The inside information may be about a company the insider works for, or owns stock in, or it may be about a related company. Inside information could also be something you learn about a company you have no connection with, but that you learned from someone else - a "hot tip" from an insider. The essential thing about inside information is that it is something the public at large does not know.

Insider trading cases often involve traders who are employees, officers or directors of a company. They also may involve professionals who work closely with a company, and who are in a position to know confidential details about a company, such as accountants, attorneys, brokers or investment bankers. Charges also may be brought against traders who are not insiders, but who receive advice or information from insiders. Examples of this type of trader include other clients, customers or even the family members of an insider.

Other Types of Fraud

There are several other fraud crimes including:

  • Bankruptcy fraud
  • Credit card fraud
  • Tax fraud
  • Telemarketing fraud
  • Computer fraud
  • Health care fraud
  • Insurance fraud
  • Welfare fraud

Conclusion

A charge of fraud carries not only the threat of severe punishment, but even mere accusations of fraud can have harsh reverberating effects throughout the defendant's personal life. Fraud charges can taint the reputation of a person or a business for a long time after the formal criminal charges have been dealt with. If you or someone you know has been accused of criminal fraud, now is the time to consult with an experienced white collar criminal defense attorney.

 

 

I'm not sure what else I can tell you if you don't understand - maybe try going to the District Attorney's office and describe to them what you want to do and let them tell you what their thoughts are!

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Business Lawyer: Law Pro, Attorney replied 9 years ago
I am very sure - that if you sold insurance to my parents when you came to their house under the pretenses of a "non-profit" company - I could sue you for fraud in civil court and be awarded damages.
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Customer reply replied 9 years ago
Was that followup answer really necessary??

I am really not trying to do anything malicious here, but I am trying to do it the right way, which is why I am on here for advice.

I am convinced there is a legal way to do this.

The "non-profit" part is only part of my question.

The underlying question had to do with actually forming a business entity that could be marketed as a no-fee based health insurance consulting service.

It is a marketing tool, as I have stated from the beginning. I think your use of the word "ploy" is grossly representative of your opinion on the whole issue, and it is this opinion that is causing you to argue with me about semantics instead of acting like a legitimate counsel trying to help me.

If "not-for-profit" or "non-profit" are protected terms that I could not use, then I am asking for a solid legal basis for why I could not use them for a corporate entity that would not, itself, in any way be generating revenue for the service its agents (myself) provide.
Business Lawyer: Law Pro, Attorney replied 9 years ago

I know of many health insurance agents that do come and talk for free most anywhere you want them to. Only upon purchasing of the policy do they make any income. I know many insurance agents - that just want to get their foot in the door - once accomplished they have a fairly good "closing" rate. Your trying to get your "foot" in the door under false pretenses - it's fraud.

 

To use the term "non-profit" you would have to set up a "non-profit" corporation and thereafter maintain the legal requirements of a "non-profit" corporation. I don't think there is anyway you could do so given your circumstances and what you want to do.

 

No, my opinion is personal but it's also a "legal" opinion - I'm trying stop you from potentially being charged with false pretenses, fraud, and/or misrepresentation from the pursuit of this activity.

 

There is a famous axion in law, "sum over substance" - meaning what is it that you are really trying to do here. The reality as I see it, it using the term "non-profit" business to gain the confidence and access to consumer/purchasers to sell them health insurance.

 

A non-profit organization (abbreviated "NPO", also "not-for-profit") is a legally constituted organization whose objective is to support or engage in activities of public or private interest without any commercial or monetary profit.

 

Whereas profit-making corporations exist under the premise of earning and distributing taxable business earnings to shareholders, the non-profit organization exists primarily to provide programs and services that are of benefit to others and might not be otherwise provided by local, state, or federal entities. While they are able to earn a profit, more accurately called a surplus, such earnings are retained by the organization for its future provision of programs and services, and are not owned by nor distributed to individuals or stake-holders. In the United States, the laws governing charitable non-profits are based around the Internal Revenue Code, Section 501(c)(3) and the tax-deductible contribution guidelines of Section 170. Corporations classified as such, with gross receipts over $25,000, must report financial activity annually to the IRS, by means of a Form 990.

The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

 

I'm just not sure what else I can tell you here - you cannot legally do what you want. There have been all types of scams where the State Attorney General pursues alleged "non-profit" companies for wrongful use of the business form.

 

It's a classis case of people collecting for the "War Widows Fund" - if one penny is given to that fund - it better reach that fund or there be documented expenses therefor. You are marketing yourself as "non-profit" business to gain entry into their homes - when in actuality your trying to sell them insurance - from insurance companies that your an agent for.

 

 

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Customer reply replied 9 years ago
Ok. We are still where we started.

I am looking to form a business entity that allows me to market insurance advice (non-fee based) and products as this business name. as opposed to my own name. Me, the agent, doing business as "Business Name."

If I can not say "non-profit" or "not-for-profit," can I advertise this business and its services (my services) as non-fee based consultation?

I appreaciate the last answer, but I am still looking for how the actual business entity would be formed and the extent to which I could advertise the "effect" of non-fee based service.
Business Lawyer: Law Pro, Attorney replied 9 years ago

Yes, certainly. You can name the business anything you would like - whatever you want to - just not use the designation of "non-profit".

 

Would you want to incorporate? I would suggest against it because of the formality requirements.

 

You could designate a fictious name and just register the name with the State of Georgia and pay the one-time filing fee therefore. List as services - consultation or consulting services or even insurance consulting services.

 

 

You could advertise the "non-fee" consultation services anyway you would like. But you would have to walk away from any type of sales of insurance policies.

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