Earlier today we posted that the Federal Election Commission is investigating the 42nd Congressional campaign of Lee McGroarty for possible federal campaign law violations. We were made aware of the investigation by the McGroarty campaign who posted the complaint, and their response, on their website.
While looking at the attachments to the complaint, specifically attachment 1 and 2, I noticed that the "Business Entity Form" listed McGroarty's corporations as being "suspended." McGroarty owns the corporations RetireAmerica Corporation and 401 (k) Administrators Inc.
I went to the Secretary of State web site to look it up and see what "suspended" meant in this context. I searched for RetireAmerica and 401 (k) Administrators. It brought up both listings, one had "Leon P McGroarty" as the "agent for service of process," the other listed "Lee McGroarty." Both said, "suspended."
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According to the Secretary of State "suspended" means, "The business entity's powers, rights and privileges were suspended or forfeited in California 1) by the Franchise Tax Board for failure to file a return and/or failure to pay taxes, penalties, or interest; and/or 2) by the Secretary of State for failure to file the required Statement of Information and, if applicable, the required Statement by Common Interest Development Association. "
According to the Franchise Tax Board, the entity is suspended for one of the following,
"Failure to file one or more tax returns.
Failure to pay the business' balance due. This can include the penalty for failing to file the annual Statement of Information with the Secretary of State."
According to the Secretary of State, if "A business entity that does not timely file a required Statement of Information is provided with a notice of delinquency, and after a 60-day delinquency period, the Secretary of State certifies the name of the business entity to the Franchise Tax Board. Upon certification by the Secretary of State, the Franchise Tax Board assesses a penalty against the business entity."
This means that after receiving a delinquency notice and 60 days passing, the main reason for having your entity suspended is owing money to the State of California. You may owe either taxes, and/or the penalty. The attachment to the FEC complaint showed it was printed in February, and it is now May. Meaning more than 60 days have passed if it was suspended the day before the FEC complaint was filed.
Besides owing money to the state, the Franchise Tax Board says the following.
"Suspension or forfeiture affects a business in many ways:
The business loses its rights, powers, and privileges to conduct business in California.
The business loses the right to use its business name in California. In turn, another business could register with the suspended or forfeited business' name, and the name would then belong to the other business.
The business cannot initiate lawsuits, defend itself against lawsuits, or enforce its legal contracts. But other parties can enforce their terms in these contracts.
If the business enters contracts while suspended or forfeited, it can never enforce those contracts unless it obtains relief of contract voidability.
Suspensions and forfeitures are public information.
The business loses the right to get an extension to file a tax return. "
So, that means that two of McGroarty's corporations have lost their, "rights, powers, and privileges to conduct business in California." Wow, seems like something you would want to clear up before running for Congress. Especially if you might owe taxes or penalties to the state.
The McGroarty campaign has had several major problems during their campaign including the FEC investigation and having a testimonial page on their web site that were quotes made up by the campaign, including one from Gayle Pacheco that she called, "a complete fabrication by the McGroarty campaign."
McGroarty is challenging Rep. Gary Miller, David Su and Phil Liberatore for the Republican nomination in the 42nd Congressional district.
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Wonder what this means to his clients who have 401k s with his company? If his license is suspended what happens to those accounts and the millions of dollars in retirement?
ReplyDeleteGreat point Denise!
ReplyDeleteAs part of the suspension McGroarty's corporations, "The business cannot initiate lawsuits, defend itself against lawsuits, or enforce its legal contracts. But other parties can enforce their terms in these contracts.
If the business enters contracts while suspended or forfeited, it can never enforce those contracts unless it obtains relief of contract voidability."
I just looked at Lee's website and it says that they have cleared the matter up. Maybe we should read and consider this before we jump to conclusions?
ReplyDeleteLucky,
ReplyDeleteMcGroarty has responded and it is a good laugh. You should read it.
He claims the state didn't forward some paper work they were suppose to in 2008. Yeah, 2 years ago. McGroarty must not have thought it was that important.
I don't know of any businessman that would file paperwork as important as that and not follow up on it.