Small Business Fraud in Colorado

We hear stories and hope it never happens to us, but when we step back a moment and think about how often small business fraud occurs in Colorado, we quickly realize that we need to be vigilant. As a small business owner, there are a couple of types of fraud you are particularly vulnerable to. I will address a three common types of fraud here, all of which have happened recently in Colorado. I invite you to ask questions about any additional types you’d like me to comment on:

Employee Theft

This is perhaps the most difficult to experience, especially if the employee is a friend, or someone you’ve come to regard as family (or, in the most unfortunate cases, the employee is family). Unfortunately, being regarded as family is a designation deceivers work hard to achieve because of the access it affords them. Staying later, taking on extra duties, and helping out without asking for additional compensation may all be indicators of a bad apple, according to Entrepreneur. It might also just mean you have an employee who is trying to make a good impression, but it is important that you put checks and balances in place in case there is more going on. You can have the employee share responsibilities with someone else – it’s harder to hide deception when there are two people sharing a task. You can also insert an accounting procedure or accountability audit that can be verified by some other means than the employee’s word, for example. Think about how a bank or retailer counts out a cash drawer – there are always two people present and both must sign off on the amount. Come up with a similar means of vetting the work or tasks your most trusted, hardest working employee is engaged in, especially if you are relying exclusively on his or her word to confirm numbers or data being provided to you.

Trusted Advisor Theft

Many of our business advisors have certifications, credentials, and excellent references but those credentials don’t guarantee we will never experience trusted advisor theft. Case in point; a Colorado attorney was recently sentenced to six years in prison for for bilking the company he worked for out of nearly 5 million dollars. A Colorado finance firm owner pocketed fees that were paid to help source loans for his clients. He has been sentenced to prison as well. The prison sentences are reassuring, and hopefully act as a deterrent to would-be thieves, but they don’t erase the stress and financial turmoil these types of thefts cause a business owner. In the instances of employee theft and trusted advisor theft, trust is the door the thief enters through. Jonathan Marks, a partner at Crowe Horwath LLP, provides excellent guidance on observing tell-tale behavior, and reminds us that trust is one side of the coin when deception is the other.

“Fraud is not about obstruction. It is about deception,” Marks said. “In other words, trust is a professional hazard. If you trust someone, you’re at risk of being deceived, so you must verify, verify, verify.”

If your employee or trusted advisor has demonstrated a willingness to deceive, even if it appears the other guy “deserved” it, or if he or she is remarkably arrogant or braggadocios, you may need to do some digging to determine if these behaviors extend to a belief that he or she is “above” the law.

Small Business Credential Theft

By credential theft, I am talking about the credentials you use to access your business banking accounts or business funds, as well as data that could be useful to a thief attempting to pose as you. First and foremost, don’t engage or allow any employee to engage in the Employee Password Worst Practices as outlined in the 2015 Password Workplace Report. The report is worth a read and offers good tips such as requiring complex passwords, and requiring passwords to be changed often. And absolutely make sure that anyone making multiple attempts to access information with the incorrect password is locked out.

If you don’t currently route your company network through a secure collocation data center (or don’t even know what that is) or aren’t sure just what sort of shared access employees have to your computer network (meaning can employee A access the computer of employee B via your network?) you should consider hiring an expert to evaluate your situation. If you don’t know one, I can refer you. If you think you are doing alright with regard to network security, take a moment to read this article with tips on boosting your workplaces network security, just to be certain.

If you need legal help or want to talk over ways of securing your interests against small business fraud, feel free to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Patent Accessibility for Small Business Owners

Patent Accessibility for Small Business Owners

Patents and the Small Business Owner

While some people launching a small business for the first time might not have legal help at the top of their mind, most everyone would agree that even thinking about pursuing a patent means it’s time to call an attorney. While your lawyer will probably agree that legal advice is a good idea when it comes to patent applications, there are things you can do on your own in the early stages.

Legal Help When You Need It

Giant corporations can afford to keep attorneys on staff or on retainer. If you’re a small business owner, you probably have to budget carefully for legal advice. The good news is there is a great deal of free information and support available from the United States Patent and Trademark Office (USTPO). They offer good early planning advice and ideas that can be a big help to hopeful entrepreneurs considering a patent. If this describes you, check out the Getting Started section of their website that includes a patent basics section with good information on Types of Patent Applications, Process Overview, Using Legal Services, and Inventor Resources.

However, much of the material is written for lawyers, not laymen. For example, you can download the 36 page guide to filing a design patent, but you may be dismayed by the opening paragraph:

Since a design is manifested in appearance, the subject matter of a design patent application may relate to the configuration or shape of an article, to the surface ornamentation applied to an article, or to the combination of configuration and surface ornamentation.

Huh? Not to worry! There is plenty of simple, straight forward advice on researching your business idea to see if someone already holds a trademark, copyright, or patent on it. And while you may not yet be entirely clear about what type of patent you are filing for, the USTPO has a good FAQ page where you can start to explore the possibility of obtaining a patent for your idea. Here are a couple of tips from the FAQ section you will want to consider:

1. Avoid Being Scammed
The USTPO recommends that you check on the reputation of an invention promotion firm before engaging one to help you in the patent process – something you can do easily online or on their website.

2. Get Help from the IAC
The Inventors Assistance Center (IAC) provides patent information and services to the public and is staffed by former Supervisory Patent Examiners, experienced Primary Patent Examiners, various intellectual property specialists and attorneys who can answer general questions (but cannot give legal advice).

How to Contact the IAC
Hours: Monday – Friday, 8:30 AM – 8:00 PM (ET), except federal holidays
Toll-free: 800-PTO-9199 (800-786-9199)
Local: 571-272-1000
TDD/TTY customers can dial 800-877-8339 for customer assistance

Greater Clarity, Better Service

While the patent process is complicated, the USTPO has recently launched the Enhanced Patent Quality Initiative (EPQI) to strengthen their “work products, processes, services, and how we measure patent quality at all stages of the patent process.” While this may not translate into an immediate do-it-yourself model for patent applications, it does have Denver-area intellectual property lawyers hopeful about a more streamlined process, including more affordable alternatives to the appeals process.

Can a Denver Small Business Lawyer Help?

Patent law is highly specialized and not part of the practice for any small business attorneys that I know of in Denver. However, when it is time to hire a patent attorney, I can refer you. Meanwhile, if I can help you draft company documents, review your online legal standing, or decide on the right language for an employment contract, you can reach me, Elizabeth Lewis, at the Law Office of E.C. Lewis PC, home of your Denver Business Lawyer: 720-258-6647 or email me at Elizabeth.Lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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When Facebook Doesn’t “Like” Your Pot Shop Page…

Remember when news releases were the go-to method of publicizing events directly related to your business? These days when companies want to get the word out about corporate happenings, publish internal news, or inform their customers of specials or promotions, a faster and less cumbersome way to do it is on Facebook.

But if you’re in the pot business, you may want to try another platform.

Recently Facebook started shutting down the pages of legal marijuana businesses around the country, and Colorado’s cannabis retailers were captured in their net, along with legitimate medical dispensaries in other states.

While the targeted companies are properly licensed and compliant at the state and local level, it’s impossible for them to be federally compliant for one simple reason: cannabis is still illegal at the federal level. Facebook’s Community Standards preclude it from encouraging any kind of drug use, and a promotion or special on cannabis products advertised on the site can be interpreted as such.

In the Regulated Goods section of the Community Standards, it states that Facebook “prohibits any attempts by unauthorized dealers to purchase, sell, or trade prescription drugs, marijuana or firearms.”

It’s unclear why a business licensed by the state of Colorado and subject to its regulations could fall under the umbrella of “unauthorized dealers.”

Facebook hasn’t been particularly forthcoming about the decision, but issued a statement regarding it that read in part:

“In order to maintain a safe environment on Facebook, we have Community Standards that describe what is and is not allowed on the service,” the statement read. “Anyone can report content to us if they think it violates our standards. Our teams review these reports rapidly and will remove the content if there is a violation.”

Some of the biggest dispensary chains in Colorado had their pages deleted, including The Clinic, LivWell, Sweet Leaf, and The Green Solution. In certain cases when the dispensary appealed, some of the pages were reinstated without explanation.

A few business owners simply started over; they revamped the pages to make sure promotions or coupons that could be interpreted as advocating drug use didn’t appear on their site, thereby violating Facebook’s community standards. They lost the “likes” from the first round but simply encouraged their followers to re-click.

Last year, sales of legal marijuana rose 17 percent for a total annual intake of $5.4 billion. Current projections have 2016 on track to pull in $6.7 billion.

If you need legal help, don’t hesitate to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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The Arrival of Sales Tax on Amazon Purchases in Colorado

A fridge? A best-selling novel? Organic coconut oil?

If you order it on online you can get pretty much anything delivered to your door — maybe even with free shipping. But as of February 1 in Colorado, if it comes from Amazon it will also come with sales tax.

Colorado recently became one of 28 states required to pay sales tax on purchases made on Amazon. The gigantic online retailer used to famously side-step sales taxes, but as needed distribution centers were opened in additional states to fulfill orders and delivery demand, Amazon agreed to apply the tax.

Collecting sales tax on online purchases has been an ongoing legal battle in Colorado fought by the Direct Marketing Association for the past six years. (It made it to the Supreme Court but was recently sent back to the federal court.)

Under federal law, if a retailer doesn’t have a physical presence in the state they can’t be forced to collect the taxes, which triggers a self-reporting requirement by consumers. Yes, buyers in Colorado are supposed to pay taxes to the state when they make an online purchase in the event that sales tax wasn’t added.

State law dictates that online stores keep a record of purchases made by Coloradans and report the sales tax that should have been collected. Those online companies are also obligated to advise the buyers of taxes owed.

Those who support compelling Amazon to collect sales tax in states where it has distribution centers or subsidiaries related to its business say that it has a clear advantage over brick and mortar stores that have no choice but to collect sales tax. Those on the other side of the argument say that states could simply eliminate the tax — and thereby the problem.

The Denver Post described the issue this way:

“DMA [Direct Marketing Association] continues to spearhead a legal challenge to Colorado’s unconstitutional tax and data-collection scheme,” he said. “Requiring out-of-state sellers to disclose private purchase information to the state’s Department of Revenue violates both the Commerce Clause, as well as the privacy of the business-to-customer relationship. DMA has won every argument in this litigation and we are confident the Tenth Circuit will support DMA’s argument and find Colorado’s notice-and-report requirements unconstitutional.

However, on February 23rd, 2016, the Federal 10th Circuit Court of Appeals court upheld the law against the DMA’s challenge. The judge posited that overturning it would result in a statewide “tax shelter” for online retailers. As a result, the decision could lead to a re-energized push for internet sales tax nationwide.

If you need legal help, don’t hesitate to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
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3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Full-strength Beer and Wine: Why Aren’t They in My Local Grocery Store?

Last July, the Colorado Liquor Enforcement Division published this information:

“The boom of the alcohol industry in Colorado is quite evident. In the last three years, the number of manufacturer breweries has more than tripled; from 60 to 182. During the same time, the number of distilleries has gone from 33 to 70; over double.”

Yet even though Colorado is one of the top states in the nation when it comes to craft and micro brews — just take a look at how breweries have sprung up like summer dandelions in Denver, Boulder, and the surrounding areas — the laws around selling beer higher than 3.2% alcohol by weight in grocery stores is still in effect. Why?

Prohibition. That’s where it all started.

Here’s a mini refresher: in 1933, Congress voted to repeal Prohibition. (FDR actually campaigned on the importance of alcohol to our nation, and vowed to end Prohibition if he were elected.) In 1935, the Colorado General Assembly enacted the state’s liquor code, underlining the difference between “non-intoxicating” 3.2% beer and other types of alcohol. Private liquor stores were allowed to sell only alcohol, no food, and grocery stores could sell beer only if it was 3.2% alcohol by weight.

The part that doesn’t really make sense is that this law is still in effect in Colorado, while a whopping 42 of the states in the union sell “real” beer and wine in grocery stores.

Since the U.S. is the second highest producer of beer and the third highest of wine in the world, those beverages are crucial when it comes to our economy.

Your Choice Colorado, a coalition backed by King Soopers, Safeway, and Walmart, is drafting a ballot that will allow Colorado voters to decide if they should be able to pick up full-strength beer and wine at the same place they buy their roast chicken and salad fixings.

Hard liquor sales will remain unique to liquor stores.

“The customer is changing, and we have to change with the customer,” said Kelli McGannon, a spokeswoman for King Soopers, the Colorado-based division of Kroger Co. “Our customers value time as much as money and are looking for convenience. Colorado’s market has changed — Colorado is one of the fastest-growing states in the country, and people are moving here from other states where this is something they had.”

One of every store in a retail chain per state can have a full liquor license, which is why you can’t buy wine in Trader Joe’s in Boulder but you can in Denver.

Liquor store owners, who have traditionally opposed changing this law, say that they will be hard hit if it goes through, as their sales will be negatively impacted. We’ll see if the ability to put a bottle of Sauvignon in the same cart with your fruit and veggies will trump tradition when it goes to a vote.

If you need legal help, don’t hesitate to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Employee Paid Time Off

In an age of technology enabling new ways to conduct business anywhere on a smartphone and work-from-home opportunities for many workers, it can be difficult to disconnect and get away from your business or job. If you are trying to open a new business or keep a small-business going, it can be especially stressful to even think about taking time off or having employees take time off. The worries about who will pick up the slack or how can the business afford it are powerful concerns.

Recently, there have been some federal and state proposals to mandate that employers provide their workers with more opportunity to take job-protected paid time off that would essentially expand the Family Medical Leave Act. Simply put, FMLA already provides workers with job-protected leave that is unpaid for a personal or family member illness or after a baby is born.

Here in Colorado, there is a proposal that would have every worker pay several dollars a week from their paycheck to fund a program that would allow workers to apply for all or a portion of their wages to be paid by the program if they need to take time off for maternity/paternity leave, an illness, or other similar circumstance. The program would pay a portion of the workers normal income that would be higher for low-wage workers, and a lower portion for higher-wage workers. The idea is that it would be a way for more employees to get access to paid time off, without burdening businesses, especially small-businesses, with the cost of paying the worker while they are gone.

However, it seems that most businesses and business groups oppose the measure, citing the administrative costs in managing the deductions and payroll with such a program and the challenges associated with finding temporary replacements for employees on job-protected leave. Businesses also fear that if the paycheck deductions are insufficient to fund the program, that businesses will end up covering any deficits.

On the other end of the spectrum, there are many companies and small-businesses that say that their workers already have access to these kinds of benefits. They say that they make sure that their employees get the time they need through a time off plan that suits their employer-employee relationship on a more individualized level.

Another interesting approach is one from a Denver-based tech company, FullContact. They have an extraordinary vacation policy that they call “Paid, PAID Vacation.” With this approach, they give their employees a minimum of 15 days of vacation with full pay every year, but they also give each employee $7,500 to pay for the vacation itself. The only catch for getting the bonus is that employees must actually go on vacation, they must “disconnect,” and they cannot work during this time off. Part of the inspiration for this program came when the CEO and founder was on vacation in Egypt. He was riding on a camel, in Egypt, with the Pyramids in view, and he was staring at his smartphone. There is a framed photo commemorating this moment at the company’s office. The company has called it a “giant experiment” that is designed to reward their employees and also help the company through benefits like increased productivity and employee retention. FullContact has had this program since 2012, so it looks like the company is satisfied with the results of this experiment.

If your business has questions about laws covering employee time off or about having an employee handbook or policies drafted with legal issues in mind, don’t hesitate to reach out to the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.