Legal Question in Business Law in California

Legal? or a kickback?

I am a sales rep that calls on a large Fortune 500 company. I previously sold this company office supplies but decided to change industries and sell them printing services because they bought much more printing then they did office supplies. I knew NOTHING about the printing industry and needed to learn. My main buyer suggested that I hire his wife on a consulting and ongoing training basis because she has 20 years experience in the printing industry and is a stay at home mom and could use the work. I readily agreed and we worked payment at 1% of sales. She was great at first and I learned a lot. However, I don't need her anymore (in fact I haven't even spoken to her in months!) and I am still paying her HUGE monthly commission checks ($175,000 in 05' so far).

My main question is this.Is it legal to hire my main buyers spouse and pay her a commission based on sales that her husband controls? Is it ethical? I can assure you that this is on the up and up and it started out quite innocent, however I never knew the $$ amounts would get so out of control. Should I extract myself from this situation? if so,how?

I can deal with slightly unethical, but I dont want to put myself in any type of criminal jeopardy.

Any advice?


Asked on 12/04/05, 4:07 pm

2 Answers from Attorneys
Christopher M. Brainard, Esq. C. M. Brainard & Associates - (310) 266-4115

Re: Legal? or a kickback?

Looks unethical. Some practical considerations though. Feel free to contact me, I am open to helping.

Read more
Answered on 12/04/05, 10:09 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Legal? or a kickback?

Make no mistake, what you are doing constitutes a conspiracy to commit mail and wire fraud, a federal felony crime as well as a state felony crime. I realize you have been ensnared in this mess like a slow-boiled frog, and I realize that, human nature being what it is, you might decide to continue what it is you are doing. As a lawyer I cannot advise you to continue breaking the law. You should be fully aware of the risk of doing so, which includes the possibility of a felony conviction, and prison time followed by parole and thereafter having to pay back the money from whatever minimum wage job you might possibly be able to get with a felony conviction on your record. You need to seriously think about the many ways these types of arrangements can, and do, go south. The husband and wife could encounter marital difficulties and start ratting each other out to the authorities (you being caught in the middle). Or one or both of them gets fingered by the Feds and starts singing like a bird and wearing a wire in your presence. If I were you, I would take whatever financial hit you have to take, make some excuse why you can't handle the account anymore, and stop the arrangement as quietly as possible. Then wait and pray that the statute of limitations expires before you get caught. If you are approached by law enforcement, clam up, immediately ask for a lawyer, do not voluntarily go to a police station (or the equivalent), and do not consent to any searches. In many cases the first person to cooperate gets the lightest sentence, but you must use your own lawyer to negotiate.

Read more
Answered on 12/05/05, 2:57 am


Related Questions & Answers

More Business Law questions and answers in California