News

Hixson Man Gets 47 Months in Prison for $2.7 Million Ponzi Scheme

Food-snack distributor Richard Alan Bazzell was sentenced to 47 months today for running a $2.7 million Ponzi scheme, the Times Free Press reports. U.S. District Judge for the Eastern District of Tennessee Harry Mattice handed down the sentence to the Hixson businessman and ordered him to undergo mental health counseling and repay $2.5 million to 22 victims. Bazzell’s scheme began in 2010 when he attempted to grow TrailSteaks, but prosecutors say he had spent all of his investors’ money by 2013.
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ABA Opposes Bill Requiring Suspicious-Activity Reports by Lawyers

American Bar Association President Hilarie Bass says a proposed anti-money laundering bill would undermine attorney-client privilege and impose “burdensome and intrusive regulations” on small businesses and their legal representation, the ABA Journal reports. Bass made the statement in a letter to the Senate Judiciary Committee, adding that the ABA commends lawmakers for fighting money laundering and supports “reasonable and necessary domestic and international measures to fight these illicit activities.” The bill would require lawyers to make suspicious-activity and money-laundering reports to the government.
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U.S. Attorney’s Office Supports Media Push for Unsealing Pilot Flying J Documents

Assistant U.S. Attorneys Trey Hamilton and David Lewen have filed a response to the legal effort by local media outlets to unseal a cache of court documents related to the trial of former Pilot Flying J executives, Knoxnews reports. The documents involve secret recordings made by the FBI and IRS of former Pilot Flying J President Mark Hazelwood and his subordinates making racist statements. Hazelwood and three other former employees are currently on trial for their involvement in a scheme to rip off small trucking companies with fuel discounts they never intended to pay.
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15th Annual Bankruptcy Forum in Gatlinburg

The 15th Annual Tennessee Bar Association Bankruptcy Forum will take place April 27-29, 2018, at the Hilton Garden Inn in scenic Gatlinburg. This event offers 10 hours of CLE credit including 3 hours of ethics.
 
This high-quality program will begin on Friday with presentations on recent bankruptcy case developments in the Sixth Circuit and around the country. A faculty of prominent bankruptcy judges will be present, encouraging participants to analyze, discuss, and argue different approaches to relevant case studies.
 
Make plans to join us in this wonderful and relaxing setting for unique and informative presentations, while networking with attorneys of an associated practice. 
 
Speakers and producers include:
  • Joel Giddens, Wilson & Assoc PLLC, Memphis 
  • Lawrence Ahern III, Brown & Ahern, Nashville 
  • Paul Bonapfel, United States Bankruptcy Court - North District of GA, Atlanta 
  • James Croom, United States Bankruptcy Court for the Western District of Tennessee, Jackson
  • Laura Ketcham, Miller Martin PLLC, Chattanooga
  • Randal Mashburn, U.S. Bankruptcy Court, Middle District of Tennessee, Nashville
  • Michael McCormick, McCalla Raymer Leibert Pierce, LLC, Roswell
  • Shelley Rucker, U.S. Bankruptcy Courts for the Eastern District of TN, Chattanooga
  • Kara West, Chapter 13 Trustee, Chattanooga

For more information and to register for this event, click here.

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Memphis Landlord Trying to Save Shuttering Toys 'R' Us Location

A Memphis Toys R Us is among as many as 182 stores likely to close as part of its bankruptcy reorganization plan, but a local shopping center owner will try negotiating to keep it open. The beleaguered company announced its filing of Chapter 11 bankruptcy filing last September, acknowledging that it needed to revamp its long-term debt totaling more than $5 billion.
 
"I was a little surprised,'' Michael Lightman said of learning that the Toys R Us made the closure list. "I thought that store was doing just fine. I'm still trying to reach the right people at Toys R Us to find out more detail,'' he said.
 
The company noted that some closings may be avoided if it is able to negotiate more favorable lease terms. But most of the stores listed in the documents are expected to close as Toys R Us tries to reinvent itself as a leaner, smarter retailer. "The reinvention of our brands requires that we make tough decisions about our priorities and focus," Toys R Us chief executive Dave Brandon said in a letter posted on the company's website.
 
Toys R Us will shrink its store fleet by about 20 percent if all planned 182 stores are closed. Lightman's location is among two planned Tennessee closures for the company. Babies R Us on Nolensville Road in Nashville is also planned for closure. A complete list of closing stores can be found here.
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Director of Consumer Financial Protection Bureau Comes Under Fire After Closing Payday Lending Investigations

Mick Mulvany, director of the Consumer Financial Protection Bureau, has recently closed investigations of payday lending companies in Kansas and South Carolina, causing concerns that the Trump administration is taking a lax approach to regulations on this polemic industry.
 
The CFPB, formed in 2011 amidst the aftermath of the Great Recession, is tasked with making sure banks, lenders, and other financial companies treat citizens fairly. In a memo released by Mulvany, he announced a new direction for the bureau stating "We don't just work for the government, we work for the people. And that means everyone: those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them. All of those people are part of what makes this country great. And all of them deserve to be treated fairly by their government. There is a reason that Lady Justice wears a blindfold and carries a balance, along with her sword."
 
The move has been met with consternation from critics who believe Mulvaney may have a conflict of interest due to receiving campaign contributions from a number of payday loan companies. Payday lenders gave $31,700 in 2015-16 federal campaign cycle contributions to Mulvaney, ranking him ninth among all congressional recipients from the sector, according to data analyzed by the Center for Responsive Politics. When asked whether the contributions influenced his position on the rule and could pose a conflict of interest, Mulvaney said, "I don't think so, because I am not in elected office anymore."
 
Tennessee, who is among 25 states the US have already passed serious legislation to regulate the functioning of payday loans, has most predatory lenders in the U.S. according to a recent report. The same report found people without 4-year college degrees, home renters, African-Americans, and those earning less than $40,000 a year are most likely to use a payday loan.
 
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Construction Industry Faces Shortage of Workers Amid Unprecedented Growth

A recent WSMV story highlights concerns of builders in middle Tennessee regarding a shortage of construction workers. The area has seen unprecedented growth, with an estimated 75 people a day moving into the Nashville area alone.
 
"What used to take us about 120 days on average to build a house is now taking us 180 days plus," said Dave McGowan, the owner of Regent Homes, a locally owned home building company in Nashville. "There's a shortage of bricklayers. There's a shortage of different tradesmen from everything, from people who do our carpet work and do our floor work. All the people that really requires skill, there's a true shortage of those people," he continued.
 
This comes at a time when several planned, large-scale construction projects including repaving Interstate 440 and Nashville's proposed metro transit upgrade, will only further exacerbate the problem. Nashville is also on the short list of cities for Amazon's second headquarters, Amazon HQ2, an 8.1-million square foot campus that will create an estimated 50,000 new jobs for the area and a huge need for skilled construction laborers.
 
One way to build the workforce is through high school recruitment. Go Build Tennessee, a nonprofit comprehensive workforce development initiative that seeks to address the problem by getting teens interested in joining the construction workforce, routinely visits area schools to inform young people, parents, educators and influencers about shortages and opportunities in the various construction related trades.
 
"If they are able to go to trade schools and learn that skill set, they would be able to have a job," McGowan said. With only one person replacing every five leaving the construction field, Tennessee will certainly be tasked with finding new and novel ways to address these challenges.
 
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Don't Forget: Winter CLE Blast Tomorrow!

Need CLE hours fast? We can help! The annual Winter CLE Blast is less than a day away. With this program, you can complete up to 11 hours of Dual CLE credit on your own time. Our registration desk will be open from 7 a.m. to 6:45 p.m. on Feb. 21, providing you the flexibility to create your own schedule and take as many or as few hours as you need. Payment will be determined at checkout depending on the number of hours you attend. 

Highlights

  • Flexible to your schedule
  • Up to 11 Hours of CLE
  • Ethics Credits
  • Compliance CLE
  • Live Credit Hours

When: Feb. 21, registration begins at 7 a.m., CST

Where: Tennessee Bar Center, 221 4th Ave N., Nashville, TN 37219

 

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Morgan County Man Sentenced in Scheme to Hide Millions from IRS

A Morgan County man who concocted a plot to rip off the Department of Energy and hid millions from the IRS was sentenced today to a year and a day in prison, Knoxnews reports. Senior U.S. District Judge Thomas Phillips sentenced Joseph A. Armes II, who paid family members off the books using a government contract. Armes is currently a key contractor for Google in its efforts to bring fiber optic cable to Nashville.
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Tennessee Department of Revenue Reaches Agreement with Airbnb

Airbnb recently struck a deal with the Tennessee Department of Revenue to collect and remit state and local taxes on behalf of its 7,700 hosts, according to the Nashville Business Journal. This arrangement has been used in other markets to address concerns regarding tax revenue from their short-term rentals not being on par with that of their hotel competitors. Tennessee joins neighboring states of Kentucky, Missouri, Alabama, Mississippi and Arkansas as areas with similar agreements. 
 
This news comes as Metro Council was scheduled to vote on BL-937, an ordinance amending Title 6 and sections 17.04.060, 17.08.030, 17.16.250 and 17.16.070 of the Metropolitan Code of Laws to add a new Chapter 6.83 pertaining to a short-term rental properties advisory committee and to establish regulations regarding short-term rental properties and distinct land uses for "Short-term rental property - Owner-Occupied" and "Short-term rental property - Not Owner-Occupied." The vote, however, was commuted to Jan. 23 because of inclement weather.
 
The company has long been a source of controversy in the area because of various concerns of taxation, noise complaints, even sparking First Amendment debates regarding anatomically correct sex dolls. In fact, problems with Airbnb rentals have become so numerous, Nashville Mayor Megan Barry established a devoted hotline tasked with aggregating and addressing these concerns.
 
The new statewide tax agreement, which will take effect March 1, is the second such deal Airbnb has struck in Tennessee, following an earlier agreement with Memphis. Airbnb has touted the agreements as a revenue generator and a reason for governments to work with — not against — the company.
 
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Join Us for the 2018 International Law Annual Forum

Make plans to join us for the 2018 International Law Annual Forum. This seminar will be held at the Tennessee Bar Center in Nashville on Feb. 15.

The forum will be produced by Terrence Olsen of Olsen Law Firm, the program will also feature presentations from James Forde of Foreign and Commonwealth Office (FCO), British Consulate General Atlanta Nadia Theodore of Consulate General of Canada, Todd Gardenhire of Tennessee Senate, Marty Ross of Volkswagen of America Inc., Billy Hoover of Southern Champion Tray, Steve Brandon of Oriental Weavers Hospitality Carpet, Dave Pomeroy of Nashville Musician Association, Allen McKendree Palmer of Palmer Global Ink, Daniel Frazier of Touring Manager and Ellie Westman Chin of Williamson County Convention & Visitors Bureau.

For more information or to reserve your spot today, click here.

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Rep. Faison Files Bill Aimed at Ending Private Prison Usage in State

Rep. Jeremy Faison, R-Crosby, has filed legislation taking aim at private prison usage in Tennessee, according to the Tennessean. SB1585 proposes an amendment to TCA Title 41, Chapter 24, prohibiting contracts for the operation of prison facilities from containing occupancy level guarantees, in which the state promises to keep its prison at 90 percent capacity or pay the contractor as though the prison were 90 percent full even if it's not. Private prison opponents argue that these guarantees act as a monetary incentive for states to keep prisons full.
 
Faison predicts the bill will be hotly contested, as Tennessee is home to the second largest private corrections company in the United States, CoreCivic, formerly Corrections Corporation of America. The spokesman for the company, Amanda Gilchrist, recently told the Tennessean that "fewer than half of our contracts include such a provision. Those contracts that include a guarantee ensure our government partners that sufficient space to safely and securely house their offenders in the facility is available to them." 
 
CoreCivic has long been the center of controversy, most recently because of a report from the state Comptroller’s Office, which cites inadequate staffing and supervision of inmates, both persistent problems for the beleaguered corporation. "The U.S. Constitution says that government is supposed to carry out justice," said Faison. "Our Tennessee state Constitution says that government is supposed to carry out justice, not, 'somebody who’s trying to make money gets to carry out justice.' That's crazy."
 
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SCOTUS Grants Review of SEC Judicial Appointment Process

The U.S. Supreme Court on Friday accepted a challenge to the appointment process for administrative law judges at the Securities and Exchange Commission, the ABA Journal reports. SEC judges are selected by the chief judge and approved by the SEC personnel office. Lucia v. SEC questions whether the judges are actually “inferior officers” under the appointments clause and subject to appointment by the president, the head of a federal agency or a court. 
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Tape in Trial of Former Pilot Flying J President Include Racist Comments

Secret recordings of former Pilot Flying J President Mark Hazelwood featured derogatory comments, including racial epithets, Knoxnews reported from trial testimony yesterday. Hazelwood was recorded secretly at a meeting for company executives in 2012. On the recordings played for jurors, he was heard requesting an explicitly racist song, and singing along to the words with his colleagues. Hazelwood and other executives are on trial for wire fraud and conspiracy charges in connection with a scheme to rip off smaller trucking companies.
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Waller’s Nashville Office Hires Hospitality Team from Bone

The Nashville office of Waller Lansden Dortch & Davis LLP has hired a whole team of retail and hospitality attorneys from another prominent firm, the Nashville Business Journal reports. William Cheek, Robert Pinson, Olatayo Atanda and Kimberly Faye all departed Bone McAllester Norton PLLC for Waller. Cheek is known for his work in alcoholic beverage law, and is a founding member of the Alliance of Alcohol Industry Attorneys and Consultants.
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Court Extends Business Court Pilot Project

The Tennessee Supreme Court released an order Friday to continue the business court docket pilot project, following recommendations from its Business Court Docket Advisory Commission. Since its founding in 2015, 129 cases have been transferred to the specialized docket with litigants ranging from large, national companies to small businesses. “This specialized court model provides the judicial branch with the opportunity to focus on what is often very complex and time-consuming litigation and provides efficient and effective outcomes for business owners when there is an issue,” Gov. Bill Haslam said of the project. Effective Jan. 1, the court will assign cases transferred to the business court docket to Judge Joseph P. Binkley of the 20th Judicial District. Cases transferred prior to Jan. 1, shall remain assigned to Davidson County Chancery Court Part III.
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Nashville Healthcare Company Finalizes $31 Million DOJ Settlement

Executives with Nashville-based Envision Healthcare have signed a settlement with the U.S. Department of Justice to resolve a government investigation into allegations that it potentially worked to unnecessarily boost admissions at hospitals in several states. The Nashville Post reports that the alleged impropriety occurred between the company’s EmCare division and hospitals managed by Health Management Associates. The company will pay $31.3 million to resolve the claims and avoid further litigation.
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Prosecutors Say Bookkeeper for Christian Group Stole $394K

The bookkeeper for Titus International, a Christian organization based in Chattanooga, stole $394,000 from the group, Chattanoogan.com reports. Gwen Lively has agreed to plead guilty to bank fraud and aggravated identity theft. She had been with Titus since 2010, and federal prosecutors accused her of beginning the scheme shortly after she joined. She used two methods to defraud the group: transferring funds from the Titus account into one controlled by her, and using pre-signed checks with the director’s name to make them payable to herself.
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Pilot Flying J Trial: Former President on Tape Making ‘Inflammatory Racial Epithets’

As a part of an investigation into the Pilot Flying J fraud scandal, former president Mark Hazelwood was captured on tape making what a judge called “vile, despicable, inflammatory racial” comments, Knoxnews reports. U.S. District Judge Curtis Collier said that if the tapes had been made public while Hazelwood was still president, black employees who had been fired would have cause to sue. Collier said he will allow the recordings to be heard by the jury in the case against Hazelwood and three other former employees.
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December Issue Covers Pirates, Trusts, Banks and Shopping for Toys

Glasby's Fortune by Brentwood lawyer James H. Drescher, a novel about a pirate, is reviewed by the Tennessee Bar Journal's resident "pirate law scholar" Russell Fowler in the December issue. Columnist Eddy R. Smith asks if most trusts should last indefinitely, and Kathryn Reed Edge explains the phases of banking law: good economic times, recessionary times ... and "wedding season." Humor columnist Bill Haltom reminisces over Christmases Past. The bankruptcy of Toys 'R' Us has him feeling guilty for not shopping there anymore now that his kids are grown.

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Tennessee Uniform Limited Partnership Act of 2017

Attorneys Lee Popkin and Thomas Norris Jr. address the Tennessee Uniform Limited Partnership Act of 2017, which will apply to all new limited partnerships formed on or after Jan. 1, 2018, and limited partnerships created before Jan. 1, 2018, that elected to be covered under the new Act. This one-hour webcast will be replayed Dec. 22 at 3 p.m. and is also available on demand.

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Lawsuit to Challenge Nashville Home Business Ban

Nashville record producer Lij Shaw and cosmetologist Pat Raynor are suing the Metro Nashville government to challenge a ban on home businesses, The Tennessean reports. Both Shaw and Raynor previously saw special zoning exemption applications for their small in-home businesses denied by the Metro Council this year. The council has attempted to change the ban multiple times over the years, but neighborhood advocates have argued that home businesses create nuisances, such as noise, and take up street parking.

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Haslam Identified on Secret Pilot Flying J Recording

In the trial of Pilot Flying J executives accused of a scheme to rip off small trucking companies, the subject has turned to whether CEO Jimmy Haslam knew of the dealings, Knoxnews reports. For the first time, Haslam was identified as one of the participants in a conversation that was secretly recorded and included references to the name “Manuel,” which has been shown in testimony as a code word for the fraud.

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Tennessee Supreme Court Answers Question from Federal Court on Collection of Airplane Repair Bill

The Tennessee Supreme Court addressed a certified question from a federal district court on an aircraft maintenance company’s effort to collect a bill for work done on a commercial airplane. Nashville-based Embraer Aircraft Services performed maintenance work on a plane leased by Colgan Air but owned by AeroCentury Corporation. Embraer acquired a repairman’s lein on a the plane itself in case of nonpayment. Colgan never paid after the work was completed, and later went bankrupt. Embraer then filed a lawsuit against AeroCentury in effort to collect the money owed. The federal district court handling the case asked the Tennessee Supreme Court whether a repairman’s lien under the statute can be enforced by a method other than allowing the creditor to take possession of the property and sell it to pay the debt. The Supreme Court held that it only allows creditors to enforce a repairman’s lien by sale of the lien-subject property, which in this case, is the airplane.

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AT&T, Time Warner Merger Sets Stage for Antitrust Lawsuit

The Justice Department might seek to block a planned merger between AT&T and Time Warner, setting the stage for “the antitrust case of the decade,” The New York Times reports. The DOJ demanded that AT&T sell either DirecTV or Turner Broadcasting to gain approval for the deal. Antitrust professor at the University of Tennessee College of Law Maurice Stucke noted that there has been a growing sense that antitrust enforcement has been too lenient in recent years.
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