1 Sam sends his personal assistant, Lydia to buy a large quantity of stock in XYZ company. The stock is currently trading at $12 a share. Sam then goes on vacation in St. Barts for a month. Lydia buys $50,0000 worth of XYZ stock for herself and waits a few days. By then, heavy trading in the stock has driven the price up to $16 per share. Lydia buys stock for Sam at $16 a share and then sells her stock, leaving her with a nice profit. Sam comes back from vacation and sells his stock at a significant profit. Both Lydia and Sam made money. Has Lydia done anything wrong? Briefly explain. 2 The Diablo Landscaping Company owns 8 trucks, 24 zero turn mowers, 24 trimmers and over 100 rakes, shovels and brooms. Yet, Diablo has no employees except the owners, John and Debbie. Every morning at 7:00 am, two dozen "independant contractors" report for work and are told where to work and how to perform their jobs. Diablo supplies all the equipment. Diablo pays the workers in cash. Diablo has no worker's compensation insurance and pays no payroll taxes, medicare or social security withholdings. Is Diablo a smart company to save all those expenses? Briefly explain. 3 Allied Rent-A-Car Company is hiring a new office manager for it's Leominster location. David is 50 years old with two children in college. David has 25 years of experience in the auto rental industry. The vice president of Allied is overheard talking to the HR manager. The vice president says, "David is the best person for the job but hire someone right out of college, we can get him or her for half the salary that we would have to pay David. Besides, I want to project a young image to our customers". Has the vice president violated any laws? Briefly explain. 4 Jimmy is the general partner in Jimmy's Best Pizza Limited Partnership. Jimmy takes on over 100 limited partners who each invested $10,000 in the company. Each limited partner also gets unlimited free pizza at all Jimmy's locations. Jimmy uses his business to launder money for an organized crime family. Federal law enforcement personnel break down the doors of several limited parthers in an early morning raid and charge them with various crimes. Jimmy is the only person who is actually involved in the business operations. Are the limited partners liable for Jimmy's crimes? briefly explain. 5 Franco organizes his cannabis distributing business as an "S" Corporation in MA. The only shareholders are Franco and his wife. Mia. Franco hasn't filed an annual report with the MA Secretary of State in five years and has never once conducted an annual meeting. One of Franco's employees comes to work drunk on bourbon and severely injures someone while driving a company truck. The injured person sues Franco individually and goes after Franco's personal assets. Will a court allow this or will the injured party have to look only to corporate assets? Briefly explain
