Valid Business Arrangement?

[EthicalIhope]

What is the name of your state (only U.S. law)? Pennsylvania

I'm a recent law graduate and I'm thinking of walking down a fine line in the future, and I wanted to run it by everyone here.

My single girlfriendless father is about to retire (in about a year.) He expects to get around 100-150k a year from a mixture of old pension plans, social security, and (primarily) from capital gains on his various stock investments.
He would be amenable to providing some additional assistance to my cost of living. My father's afraid he is going to be bored as **** when he retires, and was considering doing some part time work just for the sake of working.

I want to start my own practice (in a few years). I pitched taking him on as a paralegal/assistant.
I would start my own firm, which would presumably lose a substantial amount of money.
Whatever money I did make, I would pay to him up to 50k or so, as a hopefully reasonable salary, further assuring I would be in the red or at least minimally in the black.
He would continue to support me financially, likely assuring I would have at least a minimal standard of living although I would be (in theory) reporting virtually no income.

1. Would I qualify for Government assistance? Welfare? Foodstamps? Subsidized Health Insurance?
2. Would I be committing tax fraud?
3. Would I be committing fraud of any sort, violating any ethical rules, or committing any sort of crime?

Clearly, this is an attractive concept - Having some available money as gifts from my father, while simultaneously making next to no money and receiving government aid.... while working a job as a self-employed attorney.
But it seems too good to be true, and I'm afraid I would be crossing some sort of line and committing fraud.

Why?
Because although I would be paying my Father a reasonable salary, and he would actually work for that salary, he would be gifting virtually everything he receives back to me, and I would receive considerable benefit solely because of that arrangement.

Give me your best shot, or point me to an attorney (name and contact info if possible) that might know the answer.

 

[quincy]

What is the name of your state (only U.S. law)? Pennsylvania

I'm a recent law graduate and I'm thinking of walking down a fine line in the future, and I wanted to run it by everyone here.

My single girlfriendless father is about to retire (in about a year.) He expects to get around 100-150k a year from a mixture of old pension plans, social security, and (primarily) from capital gains on his various stock investments.
He would be amenable to providing some additional assistance to my cost of living. My father's afraid he is going to be bored as **** when he retires, and was considering doing some part time work just for the sake of working.

I want to start my own practice (in a few years). I pitched taking him on as a paralegal/assistant.
I would start my own firm, which would presumably lose a substantial amount of money.
Whatever money I did make, I would pay to him up to 50k or so, as a hopefully reasonable salary, further assuring I would be in the red or at least minimally in the black.
He would continue to support me financially, likely assuring I would have at least a minimal standard of living although I would be (in theory) reporting virtually no income.

1. Would I qualify for Government assistance? Welfare? Foodstamps? Subsidized Health Insurance?
2. Would I be committing tax fraud?
3. Would I be committing fraud of any sort, violating any ethical rules, or committing any sort of crime?

Clearly, this is an attractive concept - Having some available money as gifts from my father, while simultaneously making next to no money and receiving government aid.... while working a job as a self-employed attorney.
But it seems too good to be true, and I'm afraid I would be crossing some sort of line and committing fraud.

Why?
Because although I would be paying my Father a reasonable salary, and he would actually work for that salary, he would be gifting virtually everything he receives back to me, and I would receive considerable benefit solely because of that arrangement.

Give me your best shot, or point me to an attorney (name and contact info if possible) that might know the answer.

First, starting five identical threads on this forum is starting four identical threads too many. A single thread is all that is needed.

Second, while it is true that recent law graduates often know little about the law and how to apply it, they generally have learned well how to do their own research and they are familiar with the rules that govern their future profession. Although the volunteers of FreeAdvice tend to provide good information and advice, I would hope that your years in law school provided you with better resources than free legal forums.

At the end of this post are links to information, the first to Pennsylvania's Rules of Professional Conduct, the second to a Pennsylvania Bar Ethics Hotline, the third to the Pennsylvania Bar Association, where you can find an attorney in your area who knows the law, and the fourth to information on Pennsylvania paralegals (so you and your father will both know what is required for him to become one).

That said, because you do not plan to start your own practice for a few years, you have time to earn money to support yourself. I suggest you take advantage of the knowledge and guidance of the attorneys you will be working with and around.

Pennsylvania Professional Rules: http://www.padisciplinaryboard.org/attorneys/rules/
Pennsylvania Ethics Hotline: http://www.pabar.org/public/Membership/ethics.asp
Pennsylvania Bar Association: http://www.pabar.org/
Pennsylvania Paralegals: http://www.paralegaledu.org/pennsylvania/

I would not count on government assistance. You have an education. Use it.

 

[EthicalIhope]

Thank you kindly for the response.

I've already done a good bit of research myself, but I have been unable to find any resources on point.
Unfortunately, I feel unable to disprove the existence of penalties or repercussions for the above described course of conduct. My question appears novel, and may not even have been litigated in the past.

I believe that my question involves aspects of tax law, business entity law, professional ethics, criminal law, and administrative law.
Therefore, I have turned to the collective wisdom and experience of the inhabitants of these forums from the several relevant bodies of law to determine if any of them can spot a likely flaw in the above conduct. I apologize for flooding the forum.


More pointed questions, then:
For those of you with IRS litigation experience, do you believe that the above conduct would qualify as a "Nominee" or "Alter Ego" arrangement?
If you are unable to answer that question, have you ever read an opinion where "Nominee" or "Alter Ego" status was applied, for TAX purposes, in even semi-similar arrangements?

For those of you with business law, administrative law, or professional ethics experience:
Have you ever encountered a situation where transfer of money via a business entity was used to qualify for welfare related benefits, which was later found to be illegal, fraudulent, or in *any* way improper?

For those with business entity experience:
Have you ever encountered an opinion where alter ego status was applied by a court in a remotely similar circumstance?

 

[quincy]

... More pointed questions, then:
For those of you with IRS litigation experience, do you believe that the above conduct would qualify as a "Nominee" or "Alter Ego" arrangement?
If you are unable to answer that question, have you ever read an opinion where "Nominee" or "Alter Ego" status was applied, for TAX purposes, in even semi-similar arrangements?

For those of you with business law, administrative law, or professional ethics experience:
Have you ever encountered a situation where transfer of money via a business entity was used to qualify for welfare related benefits, which was later found to be illegal, fraudulent, or in *any* way improper?

For those with business entity experience:
Have you ever encountered an opinion where alter ego status was applied by a court in a remotely similar circumstance?

From what law school in Pennsylvania did you graduate, exactly?

Here are more links. Read and learn.

Nominees, Alter Egos, Successors: https://www.justice.gov/sites/default/files/tax/legacy/2006/03/02/exh14.pdf

Pennsylvania Office of Inspector General, Bureau of Fraud Prevention and Prosecution: http://www.oig.pa.gov/Pages/PreventionandProsecution.aspx#.V8Eq4mLD9zQ

Guild Food Stamp Program: https://www.law.upenn.edu/probonoprojects/foodstamp/am-i-eligible-for-food-stamps.php

You really should do some more research yourself, or you can seek out help in your area of Pennsylvania either from one of your former law professors or perhaps from one of your former fellow students.

 

[adjusterjack]

Unfortunately, I feel unable to disprove the existence of penalties or repercussions for the above described course of conduct.

And you won't.

What you are planning on doing is scamming an entire system of laws and rules by which everybody in the US is expected to live by.

Any one, or all, of your scams could have consequences and penalties for which there is no way to prepare or avoid.

Enron people went to jail, Bernie Madoff went to jail, Martha Stewart went to jail, Hillary Clinton SHOULD go to jail, just to name a few.

This is not a "how to scam the system" website.

Be a good boy and go peddle your schemes elsewhere.

 

[quincy]

... Be a good boy and go peddle your schemes elsewhere.

In some fairness to EthicalIhope, he is not peddling schemes as much as inquiring about the legalities involved in his proposed schemes.

Although it is of concern that, as a recent law school graduate, EthicalIhope still needs to ask about the legality of what he has proposed, it perhaps only indicates he did not learn all that he should have in school and perhaps also indicates he needs to do a bit more research and studying if he hopes to pass the Bar exam and become employed as a lawyer.

But at least EthicalIhope learned enough in school to ask first about the legality of a questionable scheme before implementing plans and regretting it later.

I only hope that EthicalIhope's father has a good attorney of his own who will advise him on how best to protect his assets after he retires so he doesn't invest unwisely in any questionable ventures.