Air America Made Easier/More Interesting

I've been getting a lot of email from a lot of different people about some of the legal analysis provided by my "lawyer-in-the-know". I'm sorry to say that I've confused Paul from Wizbang, and so it's probably time to boil it down with a little more simplicity.

Let's just say that Company X is a very shady company, very much like, say, Progressive Media. Let's say further, in this hypothetical, that the CEO of this Company X also happens to be on the board of a charitable organization that we'll call, hypothetically, Gloria Wise Boys and Girls club. And in this hypothetical, said CEO (we'll ascribe a random name to him, like "Cohen") bilks about $500,000 from his charity into the treasury of Company X.

Now, in this hypothetical, instead of paying the salary of Al Franken and buying a bunch of radio equipment, they use that $500,000 to build a local Subway Restaurants franchise. Later, MachoNachos comes along and buys said Subway Restaurants franchise from Company X (for a legitimate price). When it later comes to light that the Subway Restaurants franchise in question was bought and established through fraudulent means, the government can't now come after me for the $500,000. And I think that's pretty much fair.

Now, there are a couple of scenarios in which that changes - if, for example, I bought the Subway Restauarants franchise for, say, $20, then a prosecutor could make a pretty ironclad case that Company X was in reality diverting assets to avoid having to pay back the money, and they'd probably go ahead and confiscate the franchise from me to make the payment. However, if they determine that I did, in fact, pay full value of what the assets were worth, then it becomes a legitimate transaction and the government leaves me alone. Again, this seems fair.

Now, what is less clear (to me) is what the legal ramifications are if I had full knowledge before the transaction that the franchise in question was paid for with fraudulent funds. Lawyer-in-the-know says that this "could raise fraudulent transfer or abuse of the corporate form issues."

Of course, we have no way of knowing at this time whether Piquant LLC had any knolwedge of Cohen's previous activity, but they certainly got on the ball quickly with the B&GC promo, which took place about a month after the transfer of the company. Given that (I'm assuming) these things take some time to put together, it certainly seems that the new ownership was aware posthaste about the matter, if not prior to the sale of the company itself. These are questions that still need to be answered.

UPDATE (07-29-05 13:55:00 CDT): Paul wasn't confused. He was being lazy. My bad. :-)

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