Legal Question in Business Law in Texas

Is this considered a Kickback?

My friend works at at Architecture firm. He heads up the 3D viz deptarment there. His firm outsources a lot of 3D viz work because of a lack of time and manpower. I do 3D viz as a private contractor. He suggested, as a way for us both to make some money doing some moonlighting, creating a company in my name and convincing his superiors to give me the outsourced work, and he and I would work on it together, splitting the profits. He said he would be a silent partner though, and we could not tell his superiors that he was also working with me on the side. He said they would know, but that they'd have to feign ignorance so they wouldn't be liable. Can his firm get in any legal trouble over this? Basically, he'd be getting paid by them, salary, for his normal job, and then again, at a contract rate, for the work he and I'd be doing together. Is this a kickback? Is this illegal? Can I get in trouble for this as well? If so, would I only get sued by the firm he works for or would I be in trouble with the IRS as also?


Asked on 4/12/04, 5:30 pm

2 Answers from Attorneys
Charles White Charles G. White

Re: Is this considered a Kickback?

Those little secret deals can get the employee and you in trouble. Here is the applicable Texas statute:

� 32.43. Commercial Bribery

(a) For purposes of this section:

(1) "Beneficiary" means a person for whom a fiduciary is acting.

(2) "Fiduciary" means:

(A) an agent or employee;

. . .

(b) A person who is a fiduciary commits an offense if, without the consent of his beneficiary, he intentionally or knowingly solicits, accepts, or agrees to accept any benefit from another person on agreement or understanding that the benefit will influence the conduct of the fiduciary in relation to the affairs of his beneficiary.

(c) A person commits an offense if he offers, confers, or agrees to confer any benefit the acceptance of which is an offense under Subsection (b).

(d) An offense under this section is a state jail felony.

(e) In lieu of a fine that is authorized by Subsection (d), and in addition to the imprisonment that is authorized by that subsection, if the court finds that an individual who is a fiduciary gained a benefit through the commission of an offense under Subsection (b), the court may sentence the individual to pay a fine in an amount fixed by the court, not to exceed double the value of the benefit gained. This subsection does not affect the application of Section 12.51(c) to an offense under this section committed by a corporation or association.

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Answered on 4/12/04, 5:49 pm
Peter Bradie Bradie, Bradie & Bradie

Re: Is this considered a Kickback?

See Mr. White's answer as to the trouble you and your partner in crime could get in.

The only saving grace is that you wouldn't be in trouble with the IRS. Unless, of course, you improperly deducted your legal fees.

His employer wouldn't be in trouble, and your friend would probably be fired for his undisclosed conflict of interest.

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Answered on 4/12/04, 6:06 pm


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