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Sunday, July 27, 2014

Honduras President Blames U.S. For Honduras' Problems

The emerging Southwest border crisis is spawning some curious and ill-advised comments from foreign leaders who are blaming the United States for the stream of humanity going, well, towards the United States.

Perhaps the attitude of these foreign leaders, which is also surely on display in their home countries, is what is prompting people to flee.  And naturally, people seek entry to lands where conditions are more hospitable (they hope) than the land they have fled from.

But immigrants are not always poor. Throughout history, and particularly before technological advances in the 20th Century democratized transportation, overseas or continental travel was the domain, not of the poor, but of the wealthy.

The vast migrations of past centuries which populated the Western Hemisphere consisted mostly of people who could afford the trip. The poorest were left behind. Religious exile did not exempt you from this rule; you still had to be able to afford passage. Conditions being what they were, many immigrants sold all they had in order to make the trip -- contributing to the American lore of the impoverished immigrant coming through Ellis Island. They were poor after the trip, not before.

Nothing drives out the successful, ambitious and hardworking from countries -- and even from families -- than the envy, resentment and greed personified in the sentiment, "Your Problem Is Our Problem."  Consider the audacity of the President of Honduras, a nation unwilling to control itself yet declaring that the United States is not "doing its part" to combat the problems of, well, Honduras.

Never mind that the United States does more to combat the use, transport and production of illegal drugs than any other country on the planet.

Never mind that the United States sent billions to that nation after Hurricane Mitch struck Honduras in 1998.

Never mind...oh, never mind.

But consider who is expressing these sentiments.

Honduran-American entrepreneurs who immigrated to this country, that's who. 


Thursday, July 24, 2014

Playing To Win: Christie Allocating RGA Monies With Both Eyes on 2016

THE RGA, CHRISTIE AND 2016. 

New York Republicans are (supposedly) up in arms over Republican Governors' Association head (and New Jersey Governor) Chris Christie all but declaring the gubernatorial campaign of New York Republican Rob Astorino a "lost cause." 

Careful: Read the quotes in press accounts carefully. Christie did not say Astorino's campaign was a lost cause. One can infer that was his intent. Christie is a shrewd man, much shrewder than most. But even the village idiot knows that a candidate trailing by 30 points in the polls in a deep blue state that historically has gone Democratic in presidential elections by at least double digits and sometimes as much as 20 points is unlikely to win. 

But the reality is this -- New York is a lost cause...for Christie...in the 2016 presidential election. That is the election that matters. This is all about 2016!

New York State will go for the Democratic candidate (and it might even be carpetbagger-turned-favorite-daughter Hillary Clinton) in 2016 by at least ten points, and possibly as much as 30 if it's Hillary versus any "red state" conservative (i.e., not a Northeastern moderate like Christie, or Mitt Romney). 

Why on earth would Christie waste one dime of other people's money on a state where he has nothing to gain? 

Why? Because that's what he's "supposed to do"?

That is the naive perspective. 

Frankly, that's the amateur perspective.

Candidates need to earn that support.  

The smart underdog asks for RGA support, not to help his own campaign, but as part of a larger, long-term strategy for making the party competitive in a deep blue state. 

In other words, the smart underdog appeals to the rational selfishness of the decisionmaker.

The smart underdog asks for support by saying, in essence, "It's not about me. It's about you. This is how I can help you." And that, by the way, might make perfect sense.

Chris Christie is doing the smart thing (for himself) by spending that capital in states where he can build himself up in the fight for the 2016 nomination which will be in full gear after the midterms. Give Christie full marks for having the foresight years ago to angle for the RGA chairmanship. History favors those with the most foresight.

Eric Dixon is a New York and New Jersey based lawyer and political strategist with no connection to any of the candidates or public officials mentioned here. 

Thursday, July 17, 2014

New York Attacks Bitcoin: Episode One

New York State's new proposed regulations on virtual currency (e.g., Bitcoin) may drive new virtual currency founders out of the state and soon make it hard for any New Yorker to buy or sell Bitcoin.  (Bitcoin accounts for approximately at least 90% of the trading volume of all virtual currencies worldwide.)

In the name of consumer protection, one wonders if this is just another regulation that will lead to eventual domination of an emerging field by large multinationals (which as licensed banks are exempt from the regulations), who may eventually end up hiring the very same regulators in the symbiotic revolving door between big business and big government.

The regulations are proposed and have not even been officially issued by the state's Department of Banking and Finance. Official date of issuance is July 24, 2014, and that starts an official 45-day comment period.

The major impact of the "bitlicense" regulations will require anyone in the business of buying and selling virtual currency to a  "New York person" to get a state-issued bitlicense. Some of the regulations largely mirror the state requirements for regular banks. However, as bitcoin businesses are on the internet, there is the concern about cybersecurity. The "bitlicense regulations" do not only cover cryptocurrency exchanges but also impose some requirements which for startups and small businesses are absolutely draconian in expense (both in time and money) in relation to the size of business conducted. These requirements include the institution of written anti-money laundering, know-your-customer and cybersecurity policies as well as the requirements to report "suspicious" transactions. These are serious undertakings.

For sake of comparison, these are the requirements otherwise imposed on commercial banks.  This isn't a problem for established banks, which as I mentioned before, will be exempt from the regulation. To put things in perspective, if you want to start a commercial bank in New York, the state actually advises that new banks doing business in Metropolitan New York City have at least $50 million in net capital.

As a lawyer who does regulatory interpretation, I have to candidly wonder whether the burden of these regulations makes it worth it for a bitcoin business to either stay in New York or accept business from "New York persons" which makes that business, no matter where it is located, subject to the New York regulation.

Perhaps most critical is the question: What is a "New York person" under the regulation?  It is any person or entity who "resides in" or "is located" or "has a place of business" or "conducting business" in New York State. 

Now, what does it mean to "reside in" the state?

The New York tax regulations specify that all your income is subject to state tax if you live in the state more than half the year. Hmmmm. Where is that definition here? (Answer: It's not here.)  What does that mean? I interpret it to mean -- and this deserves official clarification -- that residing at all in New York makes you a New York person.  Any part-time residence (even if lived in far less than 183 days) may make you subject to the regulation as a customer (and businesses not licensed can't touch you, as I explain below). I do not interpret this as the New York tax resident standard, whereby part-time residents are taxed full-time if they are in the state more than 182 days out of the year. This is the regulation forcing wealthy people to count their days, diary their entire calendar for the year and even assiduously flee the state before the stroke of midnight or arrange for flights arriving after the stroke of midnight to save a few days. I interpret this as the "tag" rule: any quasi-permanent contact with New York makes you subject to the new rules and you could feel the impacts I outline below.  Residing part-time in New York could make you subject to the rule as a customer, meaning businesses might not touch you (just as some stock brokerages will only handle customer accounts for people living in certain states where they are licensed).  And of course, any trust, corporation or other entity with any connection to New York, even a satellite office, becomes subject to the regulation whether it is engaged in the exchange business or other specified "virtual currency business activity."

The initial reaction to this regulation -- which has only been proposed and is likely to be sharply contested -- is that it may drive some bitcoin vendors out of the state, for the simple reason that the rest of the world and certainly neighboring states have no such requirement.  

There is another possibility: big institutions ("Big Finance") will either be exempt (which they would be if they already are licensed by the state ("chartered") to conduct exchange services, or they will get the licenses. Generally, larger institutions are able to absorb the formidable costs of regulation and applying for licenses. This may soon transform Bitcoin into the domain -- at least within New York -- of Big Finance, but smaller competitors will have the option of moving to competition-friendly or regulation-free states or countries.  (I expect to hear plenty of conspiracy theorists saying these regulations are designed to lock down the Bitcoin sector for Big Finance.)

Another danger: As a "coin" or unit of virtual currency is really just a bit, that is, a unit of data, and a bit used as a coin and a bit used for storing information is really just the same thing with the nature of the item being really no different, then this leads to draw one of two possible conclusions: One, the regulation means (but fails so far) to regulate Bitcoin on the basis of how it is used and not what it is, or two, the regulation really does mean to regulate Bitcoin in its form as units of data. (Admittedly, there is a third possibility: the regulation was just poorly drafted. I don't think that is likely.)

If the regulation is truly intended to reach the latter interpretation, then Bitcoin cannot be used or exchanged in New York except for consumer-to-business merchant commerce.  Any other uses of Bitcoin or other blockchain based technologies are subject to the act's requirements. This means that Bitcoin cannot be used as a database for any exchange or storage of information, because, well, information has value. Especially and particularly in our information society. That is because Section 200.2(m) of the regulation defines "virtual currency" as:
"...any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology."
What is the impact on regular New Yorkers? I think New Yorkers will eventually have no problem buying Bitcoin; they may have less competition and prices (spreads) may be cartel-like in their uniformity, they may not particularly like doing business with any big institution and the character of the still-early-stage Bitcoin community in New York may transform. (Or flee.)

Think of it as the mom-and-pop stand-alone coffee shop suddenly being surrounded and undercut on price, hours and ancillary services by a certain international coffee chain. 

That is the initial take on the impact on the still very small Bitcoin industry. But what about the impact on regular people who just want to buy and invest in Bitcoin?

That, my friends, is the major problem: The regulations do not only cover doing business in New York. They affect anyone in the world doing business with someone living in New York State.  They make New Yorkers a hot potato. The regulations don't just discourage Bitcoin startups and prompt them to leave for an unregulated (for now) climate. They essentially prevent those startups, no matter where located, from taking New Yorkers' bitcoin business (but the large institutions can come right in, and that may be exactly what is intended).

A different problem with the regulations is the requirement that anyone "controlling, administering or issuing" a virtual currency has to get a state license ("bitlicense").  This is sure to drive any virtual currency innovators out of New York. Want to develop an alternative virtual currency? Why bother with the New York regulations when most other states -- or countries -- are not even looking at regulating virtual currency?

The indirect but foreseeable consequence of the regulations is that restricting or discouraging Bitcoin through regulation will reduce the amount of any virtual currency floating around in commerce. This will affect (adversely, because the effect is never net positive!) any New York merchants whose business depends in any substantial part on Bitcoin.

As for myself -- Eric Dixon the lawyer, Eric Dixon LLC -- I am admitted to practice in New Jersey as well as New York, my 20 years of experience (I am a 1994 graduate of Yale Law School) mean I can waive into most states without taking their bar exams, and I would likely be welcomed to practice by most countries in the world. This may affect where I do business.  The impact on you -- if you need to move, I can move with you.  And if you want me to handle the regulations, we can certainly talk.  The regulations do not kill you if you are in New York, but you need to know what you are facing in order to have access to the New York market.  Email me at edixon@NYBusinessCounsel.com. 




Tuesday, July 8, 2014

Freudian Take On Americans' Reaction to the Immigration Crisis

The American people owe an apology to every legal immigrant and visa holder, and particularly to those who leave this country dutifully when their work authorizations or student or tourist visas expire. They see first hand that their obedience to the law is rewarded with an exit stamp, while others exploit the narcissism of the American people who are both obsessed with being recognized by others as compassionate and terrified of having anyone impute the vilest of motives to them for daring to object. This emotion is not compassion, for the root goal is not to help anyone. The true goal is to be acknowledged as being helpful. Actual humanitarian relief is but a collateral consequence. Th e "compassion" is a false flag, a fraud, and is nothing to commend. This is selfishness as well as an attack by one group of people who have not earned the right to judge, to audaciously assert their moral superiority over anyone who objects. This abdication of the core governmental function to secure the homeland border will only end, not with a border fence, but with the American people regaining their boldness.  Until then, we are a nation of spoiled children.

Thursday, July 3, 2014

The Real Issue Under Hobby Lobby

Dig beneath the surface of the Supreme Court ruling allowing closely-held family businesses to exempt themselves from the contraceptive-payment mandate of the Affordable Care Act. (The amount of commentary on the case is copious and you can find it elsewhere. What you cannot find is the strategic analysis I set forth here.)

When you dig, you'll see the real issue.

You'll see that 99% of people are missing the point. Perhaps that is on purpose. Deception, you see, has its uses. The explanation now follows.

The stated issue is access. The real issue has nothing to do with access to birth control. This is all about an attack on religion and attacking anyone -- and I mean, anyone -- who dares to express a Judeo-Christian traditional religious value. 

That is the end. The invocation of access is just the means to construct an argument which allows its proponents the easy access (cough, cough) to impute negative motives to anyone who questions or opposes them. 

This strategy explains the many attacks you see in "politics."

And the progressives are just absolutely brilliant in executing this strategy. 

Friday, June 27, 2014

Principled Man Or Saboteur? When Those Under Indictment Continue In The Public Eye, Beware!

Sometimes extreme adversity and how you respond to your personal "black swan" event will determine more than family wealth, educational achievement or personal financial wealth your ultimate outcomes in life. 

Sometimes, the people around you can determine (fairly or not) quite a bit about your outcomes. That is, if you let them.

The Gospel According To Matthew is a useful guide. From Matthew 7:15 -- 
"Watch out for false prophets. They come to you in sheep's clothing, but inwardly they are ferocious wolves.
A real leader will not tarnish the principles or products with which he is associated by continuing to promote them after his personal problems, such as a revelation of unsavory character, indictment, arrest, plea of guilty or impending imprisonment. 

The person who is willing to degrade those principles, and by association, compromise or degrade the character and destroy the reputation of those sharing those principles, is not a martyr. That person is not a principled person, unless principle is defined as a narcissistic impulse to save oneself at the expense of anyone close by. That person is using everything and everyone around him as a shield.  You are collateral damage to him, nothing more. 

What is that person? That person, my friends, is a saboteur. 

Respond accordingly.


Wednesday, June 25, 2014

Warrants Needed For Cellphone Searches

The Supreme Court has ruled in a broad 8-1 ruling that warrants are needed to search your cellphone.

This decision is a major and much-needed victory for adherents of technological privacy, and a rebuke to the post-9/11 trend of eroding constitutional protections in the name of administrative or government convenience. 

Tuesday, June 24, 2014

Enron-Type Life Sentences For Port Authority Fraud? Could Be!

New Jersey state and Port Authority of New York and New Jersey officials who had the Port Authority raise $1.8 billion from a bond offering to use those funds to repair an "access road" to the Lincoln Tunnel could be facing jail time (20+ years, or effectively, "life") comparable to that of the upper management at notorious companies like WorldCom, Refco and Enron.  More on that below.


The New York Times speculates on the real legal trouble for people in the Port Authority and the Christie Administration. 

Even worse is what the article DOES NOT say. If a billion dollars were raised and spent fraudulently, and a federal securities fraud criminal prosecution were brought, anyone considered to have been a criminal conspirator would be liable for the entire monetary loss in the alleged fraud. (Conspiracy to commit a crime requires only that someone intended to do any one single component of the crime, so someone who is 1% culpable could be on the hook for everything.) With the federal sentencing guidelines based almost entirely on the dollar amount of the fraud, any of the co-conspirators could be facing more than 20 years in prison! That's because, under the 2010 federal sentencing guidelines covering financial crimes (because the offering was in 2010), the "offense level" for a fraud of this magnitude is a whopping 42. The base level for the crime is six points, but the amount of the fraud being over $400 million adds 36 points to give you 42. Under this 2010 sentencing matrix (go to page 401), even a Level One offender (no prior convictions) could be facing 360 months to life. 

Now, there are myriad ways to get "downward adjustments" for such a draconian sentence. You could "cooperate" with the government and try to get the government to recommend leniency. (If you feel like learning more, go to Section 5K1.1 of the Guidelines. Bring an oxygen tank and plenty of nonperishable food.).  You could also seek leniency on various hardship grounds, like family or caregiver considerations. Some audacious white-collar criminals have even reportedly discovered their alcoholic or substance abuse problems and gotten credit for going into rehab. And the guidelines are now "advisory" pursuant to a 2004 Supreme Court ruling, so judges have quite a bit of latitude to depart from the guidelines matrix (in both directions, I might add).

Finally, a second point arises from the article's mention of the Martin Act, which is the New York State securities statute (the "blue sky law"). The Martin Act was recently abused by then-Attorney General Eliot Spitzer to go after all sorts of small fry, because the Act allows for state criminal penalties without finding criminal intent!


I will continue to monitor developments.


Monday, June 23, 2014

Missisippi's Open Primary and Party Raiding

Missisippi's runoff election for the Republican nomination for U.S. Senate is tomorrow. It is reported that forces involved with the Democrats -- the opposing party -- are trying to boost crossover voting in that state's open primary to boost turnout for incumbent Senator Thad Cochran.

Missisippi has what is called an open primary. That means anyone can vote in the primary regardless of party affiliation.  In many states, however, the primary vote is restricted to people who have chosen their party in advance or in some cases, at the polling place. Primaries in these states are referred to as "closed primaries."  The mechanism these states use to enforce the sanctity of the electoral process is "deferred enrollment," where you have to switch parties well in advance of the primary election.

Before you think that closed primaries somehow disfranchise voters, know that the practice has been upheld by the Supreme Court.  The basis is that it deters the practice they call "party raiding," and helps preserve the integrity of the primary election and by extension supports the right of association of voters who choose to enroll in a political party. The New York State practice (which currently is an almost 11-month deferred enrollment period) was upheld decades ago in an excellent 1970 decision in Rosario v. Rockefeller

What do you think about open primaries? Do you think an open primary defeats the purpose of selecting a political party? 

Thursday, June 19, 2014

Redskins Part 2: Another Offensive Sports Logo

The cancellation of the Washington Redskins trademark has disturbing implications for business, but what about the implicit hypocrisy of inaction towards other potentially disparaged and offended groups?

As a proud Roman Catholic, I believe the name SAN DIEGO PADRES and its original logo of a fat bat-swinging monk is highly derogatory and disparaging to Roman Catholics and all people of faith everywhere. 

If you are a Roman Catholic (and even if you're not), have you been offended?

If so, you may have standing to petition the Patent and Trademark Office to revoke the Padres' trademark registration.  After all, now there is precedent with the ruling against the Washington Redskins. 


Rethinking Forgiveness: The True Mission of Religion?

Are major world religions increasingly missing their core mission?

Mind you, this is not a point on doctrine. It is a point on the institutions, the human and thus altogether quite fallible institutions which are supposed to support worship.

From time to time there are new reports of investigations of abuse (especially of children) at the hands of various religious leaders or lay people within the setting of a religious institution. The various priests and other church officials now admitting they didn't report certain abuses (of all types) just totally lost sight of their mission and primary duty, which is to minister to followers and congregants. 

What are they concerned about when they consciously avoid making judgments and taking action?  Well, it's the institution.  That can be dressed up and rationalized -- e.g., by protecting the Church we are helping so many more people through our programs, etc. -- but even that act of rationalization is fatally flawed in its motive (it doubles down on depraved indifference) and by degrading the credibility of the institution successfully compromises its ability to perform any other aspect of its mission in either the spiritual or secular realms.

All institutions behind a faith have a mission. But protecting the "institution" is not part of that mission. What is central is the faith, the doctrine, and only by extension, those secular acts which help fulfill that faith. Treating the institution as a sentient being which warrants special treatment because it is an "instrument" of a divine being is, well, one creative rationalization. It may work in certain monastic closters and even in some courts of law, but it will also dissipate the moral high ground upon which religion depends.

The failure to report abuses within a religious setting may not necessarily be criminal (this is different from the underlying act), but it is such a severe failure in judgment that it cannot be "forgiven." 

And lest we forget, there is no obligation to forgive. That obligation deserves further examination. Let's explore the thought process behind the sense that we are obliged to forgive when people "apologize." Consider whether there is contrition. Consider whether the wrongdoer has done this before, whether the apology is genuine, and whether the apology is sincere or just done to avoid responsibility (or worse, to live for another day, a day to repeat the crime on another victim).

Such an obligation is a fiction voiced by the manipulative who seek future opportunities to repeat their sins. This impulse to forgive needs to be resisted fiercely and viewed for what it is: a moral weakness of its own kind that borders on narcissism. Resist it! 

Those of us being asked to forgive must -- it is a duty -- remember who we are responsible for defending, those to whom we and we alone owe a duty

We must resist the call to forgive, particularly when the forgiveness carries with it the risk, borne by the totally innocent, of future harm. To protect those we love, we must neither forgive nor forget, and be very willing to face the claims of moral judgment from even those who have forfeited any moral claim to judge anyone.


Wednesday, June 18, 2014

Redskins Trademark Cancelled For Disparagement

Could private property rights and even basic civil liberties be under even more extreme attack? Has the eminent domain-type sense of government seizure of real property been extended into the intellectual property domain?

The United States Patent and Trademark Office has now cancelled the trademark registrations of the Washington Redskins because "Redskins" and an Indian headdress in the logo are considered disparaging to Native Americans. The full decision includes a discussion on the merits of the racism argument, and is worth reading. 

Are the next targets the Cleveland Indians or Chicago Blackhawks? (The Blackhawks' logo also features the head of an apparent Native American, and includes four feathers.) 

The federal government apparently is using its full weight to pressure a private business to change its name, in the process destroying millions of dollars in brand equity.  There is no compensation to the Redskins' owner (Daniel Snyder) for the loss in value to his franchise, which is valued (perhaps wildly optimistically) at $1.7 billion by Forbes magazine including a separate value of the brand -- that is, the name "Redskins" -- of $145 million. Perhaps overzealous government confiscation (or transformation) of property -- there is really no other way to view this -- is now a very real "risk factor" for any business.

Can your property be taken away because someone, with or without cause (and that's operating on the honor system, to be honest), targets you with a claim of "disparagement"?  If so, then the mugger's most effective weapon of choice becomes an Alinskyite imputation of the vilest of personal characteristics to his mark, with the apparent sanction and blessing of the federal government. This development may usher in a new age of legal plunder.

The real objection that deserves to be made is against the concept that select groups, claiming to speak for victimized classes, have a de facto right of approval or disapproval on the operations of a business. Are we entering an era where concentrated public opinion against certain businesses can be used to extort financial settlements or changes in business operations, including ones where the enterprise is made to suffer a financial penalty such as with the Redskins' potential signficant loss in brand value? Are self-proving cries of racism or other offense an acceptable motive to engage in the equivalent of the now-rightfully-banned practice that used to be called "redlining"?  And at what point do these rulings and private efforts start to echo the same egregious civil rights violations that were finally found unconstitutional by the U.S. Supreme Court in the 1950s and 1960s?



Monday, June 16, 2014

Warrantless Spying On One Hand, Stonewalling With The Other

The New Jersey Attorney General's Office -- whose Attorney General is not elected, but is appointed, by the Governor (Chris Christie) -- has reportedly solicited test cases to establish that the State has the right to get the phone records of people without getting a warrant.  This means that people not convicted of a crime, and people as to whom no probable cause that they have committed a crime has been established, would still be subject to having their personal records searched.

Your Fourth Amendment rights would be under new jeopardy.  The Fourth Amendment, lest you forget, provides as follows:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon Probable Cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The basis for this story is a troubling memorandum out of the New Jersey Attorney General's Office and just reported earlier today by the Newark Star-Ledger.

It deserves noting that the Attorney General's Office, being a part of the state Executive Branch, is effectively a defense counsel for a gubernatorial administration currently under siege in various scandals.

Theoretically, at least, the right to warrantless access to personal communications records would give the Attorney General's Office, operating under the auspices of the Governor's Executive Branch, the ability to inspect and surveill (and in a darker scenario, harass and intimidate) members of the press, public-minded civic activists and media and political critics.

In the meantime, the Christie Administration has routinely deflected public records requests under the state's Open Public Records Act.  (I have a client who has sued to get some of these records.)  Transparency, it seems, is a one-way street.

This initiative is a big threat to civil liberties, and warrants (no pun intended) continued attention.



Monday, June 9, 2014

Bitcoin Smart Contracts: Redefining Legal Profession?

Here is my new research report, courtesy of the independent New York think tank Financial Policy Council.


Monday, June 2, 2014

Real Electoral Reform: It Should Be Harder To Vote!

Americans love to whine! People love to complain about politics and political gridlock. An accepted principle is that the country "needs" greater voter participation, that not enough people are engaged in the process. When commentators don't know what to say, or have nothing to say, they say this and repeat it ad nauseam. 

What if that idea were utter rubbish?  What if the solution lay in the historical trend, dominant throughout human history, towards the precise opposite, towards using merit (however subjectively defined) to restrict the franchise to those who care and value it the most?  In other words, is the solution to society's "political dysfunction" the enactment of restrictions on voting to limit and concentrate voting power towards the stakeholders who have the most to lose by its abuse? 

Today's Imperfect Practices

Right now, the United States has a dystopian voting culture where government employs the honor system as the means to enforce the barest of qualifications upon the franchise, and in which the letter and spirit of election laws are honored in their breach. We insist on a minimum age and take the word of one's declarations as to residence, citizenship and not yet having been convicted of a felony.  (In fact, in present day New York City, a bill to allow non-citizens to vote in elections for New York City elected office has been sponsored by a majority of the City Council.) 

One supposes if such attitudes work for, say, residential mortgages, then there should be no problem with voting, right? Even worse, anyone who dares to insist on verification of these minimal requirements is targeted with the most vile of motives and character slanders.  It is as if the right to vote is so sacred that to even suggest compliance with the law is a prerequisite for voting is to risk ostracization and even prosecution for the violation of another's civil rights.  Yet such failures (and refusal) to verify the most basic qualifications actually erode and dilute the value of the vote and obscenely violate the voting rights of those responsible citizens who follow the letter of the law.

The Accepted Paradigm Rests on Flawed Assumptions; A Paradigm Shift In Attitudes Is Needed

Perhaps the solution -- the best from an outcomes perspective -- is a fundamental change in our entire concept of desired voting and political behavior. 

Instead of pushing for "more" political participation, as self-styled "good government" groups are wont to do as they extort donations from corporate benefactors terrified of being accused of being undemocratic or racist for refusing, might the solution be to have less participation?

After all, tons of money are already spent on elections and campaigns.  The one special election for an open U.S. Senate seat in New Jersey this past year cost an estimated $24 million ($12 million each for the party primary and general).  Campaigns raise and spend a fortune; it is estimated the 2012 presidential race generated $1 billion in spending. This excludes special spending through so-called "independent expenditures" or issue advocacy expenditures not considered electioneering.  It is hard to imagine that outreach could be improved.

In addition, it is hard to find people who actually want to vote, who care, and who cannot vote. Technological advances mean nearly everyone who wants to be connected is. Email and cell phones means increasingly-tech-savvy campaigns can contact their base supporters as well as average voters. And in a day where political campaigns dominate popular media (as the content of shows like Saturday Night Live will attest) and television ads increasingly saturate both the airwaves and social media ad space, can one really find many Americans without serious mental impairments or other infirmities who are seriously, genuinely unaware of major elections?

The central reality which politically correct people dare not say is that the majority of Americans just do not care. In a society where people commonly vote for the winner of game shows, reality shows and "talent" shows, spend hours a day on all sorts of social media, anecdotal evidence is very strong to suggest that the grand majority of people who are motivated are indeed voting. (Whether they are voting for the candidates preferred by the self-styled good government groups and elites is another matter entirely and one suspects the choice of the vote is really the issue to which these organizations object.)

So why the push for increased voting? Such efforts would seem to pull in the increasingly indifferent and -- since we are all allowed to make judgments -- the increasingly ill-informed and ignorant. The result is that the vote of the concerned, the educated and the true stakeholders (e.g., asset owners) is diluted (and greatly so) by the vote of the indifferent, irresponsible, uneducated and slovenly remainder.

The danger of seeking greater "participation" "by all means necessary" should be obvious shortly. An unmotivated segment of the populace, already demonstrating a reluctance to vote even when it is free, increasingly convenient and the subject of much content in the popular and social media, might be convinced to "vote" only through undesirable channels. They might have to be induced (or bribed) to vote with "goodies" that naturally would be paid by others, or even worse, they might be voting through the hands of others -- their votes would be stolen through fraud and cast by those opportunists seeking to game the system and rig election outcomes to achieve their political goals.  After all, indifferent and feckless voters would hardly be a likely constituency to report voter fraud, suppression or other illicit activities.  The dangers to democracy of such unrestrained abuses can be immense.

A Proposed Solution: Encourage Voting...By Making It Harder To Vote

The solution might be to move in the opposite direction, to move towards a system where the importance of voting to the maintenance of our democratic system would be emphasized by the implementation and even application of barriers to the vote.  As long as government is in the sordid practice of trying to modify behavior, and as long as many Americans accept as gospel the right of either The Government or The Elites to engage in behavioral modification or otherwise attempt to drive our actions, why not use these elitist impulses to fuel a move in the opposite direction? Why not make people treat voting as a privilege to be honored and treasured, an act which is to be prioritized at the expense of sacrificing other desires, and to compel people to subordinate their other private matters (such as the horrible capitalistic impulses to make money, make a living and actually support one's family) to more socially-useful, higher priorities like civic participation?  

If we are a Nanny State and most people are okay with that, then what would the objection be to similar manipulation when it comes to regulating the right to vote, right?

I propose the following. Such "barriers" would include:

** the requirement for picture identification for all voters to register to vote or to switch party enrollment, which requirement would be on par with existing requirements to obtain a driver's license or official government identification card.

** actual election day in-person voting with rare exceptions for physical infirmities; this would be on par with one's getting a flu shot or other vaccination.

** the automatic cancellation of party enrollment for failure to vote in at least one party primary over three consecutive years, and of voter registration for failure to vote in at least one primary or general or special election in any two-year period; this is on par with the requirement to get an in-person automobile inspection (in most states) every two years.

** the elimination of "open" primaries so that party primaries are restricted to party members; and

** to protect the integrity of party primaries, preserve the First Amendment constitutional right of association of party members and deter the practice of "party raiding" by outsiders not genuinely aligned with the principles of the targeted political party, the institution of deferred enrollment statutes to require changes in party enrollment are made before the end of the period for party primary candidates to take measures to qualify for the primary ballot (e.g., registration fees or petitioning through the gathering of signatures from party members); this is hardly onerous in light of the narrow "open enrollment" periods under the new Patient Protection and Affordable Care Act. 

Such barriers would be only a beginning. True radical political change might erect higher barriers such as the institution of poll taxes.  Yes, this would link the ability to pay a fee in order to vote, putting it on par with the corporate shareholder voting right: you must buy a share in order to vote at the annual meeting. The key would be the even-handed application to avoid de facto discriminatory practices, as one must be aware of the valid sensitivities of some historically-targeted groups.  

Historical Precedent; Using Equal Application To Ensure Fairness For All

This is not fundamentally different from the colonial era practice that limited voting rights to property owners.  That is because colonial-era authorities recognized that in a system of "one man, one vote, no questions asked," the general masses, largely regarded as unshaven, uneducated but most of all regarded as unprincipled, would be liable to vote en masse to seize and redistribute the property of the landowners and merchants. 

voting threshold requiring ownership would -- and did -- serve to restrict the franchise to those who had far more to lose from bad policy decisions than they might be suspected to gain from benefits of oligarchies, state-sanctioned crony capitalism (what in colonial days was mercantilism and in the 19th Century, pre-Sherman Act, was monopoly capitalism).

But there is an alternative to reaching back to practices from our history which have sordid, and deservedly negative, meanings for many Americans whose ancestors suffered from legal and societal discrimination. Today, we have corporate law governing corporate shareholder voting rights. That is, one share of common stock, one vote. As long as you buy a share, you have a vote and no one cares who you are, what is your skin color or religion, or even where you reside. In fact, the truest, purest form of democracy on the planet may be practiced nowhere else than in the boardrooms of and record rooms of stock transfer agents and proxy solicitation firms serving corporations whose shares trade on the stock exchanges within the United States.

In the corporate arena, the "poll tax" of buying a share is remarkably democratic and egalitarian; all shares vote equally (at least within their classes, subject to exclusions seen in the certificates of designation for classes of preferred stock or other derivatives that are available and disclosed to all).  Why not use it in our broader society? Such a practice would instill a respect for the franchise as something very important, something that has a value, and something that, yes, it has to be earned. It propels the standard that one had to have enough merit to earn his (or her) keep in order to have the right to vote to decide how to appropriate tax money collected from others. As for the valid fears that such measures could be misused for racially discriminatory objectives, the key to success would be a painstakingly even, fair application across the board of such barriers should quickly dispel fears of a return to the odious days of the early to mid-20th Century.  (In addition, it should be noted that poll taxes and other measures were often designed to prevent poor, non-landowning whites from voting and to restrict the franchise as much as possible to property-owning stakeholders.)

American corporate law is remarkably consistent and fair. Generally, one share of common stock has one vote. It's just that some people have more votes, because they have more shares. They have more votes, because it is recognized that owners with more shares have more at stake; while they have more to gain that recognition is never divorced from the reality that the owners have just as much to lose.

American corporate law also recognizes and rewards the entrepreneurialism and risk/reward calculus of our capital classes. Voting rights are recognized as a form of currency with its own value, hence the rise of supervoting stock and the creation of different classes of securities issued by a company with different sets of rights. The issuance of such instruments as "Class Z Participating Preferred Stock" illustrates how corporations recognize and reflect either the investors' demand for certain voting rights or their willingness to relinquish or subordinate those rights in exchange for a monetary return or other term that has a greater value.

Above all else, corporate law and capital structures respect and respond to their constituents. Investors to whom voting rights matter most get to hold shares with voting rights. Investors who care even more about voting can buy supervoting shares (if issued). Investors who could care less about their vote can buy nonvoting shares which have other features that offset (or compensate for) the loss of the voting right. In short, this is a brilliant legal framework that respects and responds to the desires of the stakeholders whose monies are at risk.

So why aren't we allowing people to sell their votes? If a vote has more value to the purchaser and little enough value to the original holder so that he or she is willing to sell it, why not allow that? This is a fair trade with willing and satisfied participants on both sides of the transaction.

But the welfare-dependency state and its related-by-birth political establishment DO recognize the value of the stakeholder in our politics. The difference is just that they define the stakeholder differently. In their world view stakeholders are measured not by wealth but by power (yes, a different form of currency).  

Now, there are groups whose interests are so implicated by political and civic discourse that their voices need to be given the proverbial seat at the table. An example is the subset of our younger generations who are subject to military service in the event of a draft and who, even today, are required to register with the Selective Service upon turning 18 years of age. A new voting regime can create an exclusion for men and women between the ages of, say, 18-35 who are subject to military service. Such regulatory ingenuity should not be a difficult task to achieve for the regulatory state with its legions of bureaucrats and lawyers.

This change may seem radical at first, but it is a "back to the future" approach with substantial precedent in American corporate law. In short, this proposed new voting paradigm elevates and enhances the role of the stakeholder in American public life.

Eric Dixon is a New York corporate lawyer who has represented political candidates, parties and media organizations in various election law compliance, opposition research and civil litigation since 1994. 

Sunday, June 1, 2014

Prediction: Rangers Win Stanley Cup in Six Games

This 20-year corporate lawyer, 40-year veteran hockey fan and former Islander season ticket holder predicts the New York Rangers will beat the Los Angeles Kings in six games to win their first Stanley Cup in 20 years.

There are two primary reasons and a third significant reason. One is the Rangers have the best world class player playing at his world class best. Henrik Lundqvist can win this series singlehandedly, because he is that good and he is at the top of his game. He is a future Hall of Famer.

The second reason is fatigue. Hockey playoffs represent a war of attrition. The Kings have gone the maximum seven games in each of their three prior series. This may catch up with them at some point.  The Rangers, while playing 20 games, had their easiest series most recently against Montreal plus an extra three days of rest. Relatively speaking, this presents an advantage. 

There is a third reason, which falls into the intangible category. The Rangers seem to have a sense of "this must be our year," because their franchise player is at his peak and because several high-salaried forwards are candidates for contract buyouts this summer. There is an excellent chance some prominent players will be bought out by the Rangers this summer, no matter the outcome of this series. 

The proof a goalie can singlehandedly win you a series and a Stanley Cup championship is evident from two historical examples of Hall of Fame goalies shutting down offensive juggernauts to sweep a favored opponent.

Example one is from 1983, when the offensive machine of Wayne Gretzky and the Edmonton Oilers was favored (and had home ice advantage) over the then-three time but fading New York Islanders. However, the Islanders had Bill Smith.  Watch Game One of this absolutely surprising four-game sweep for one of the all-time goaltending clinics you will ever see (and Smith wasn't even a butterfly goalie). 

Example two is from 1985, when an even more heavily favored Detroit Red Wings ran into the New Jersey Devils and Martin Brodeur. 

Now the Rangers are not favored by any stretch. In fact, the Kings' 18 prime skaters are superior to the Rangers. Appraising the skaters, the best one player is the Kings' still young defenseman Drew Doughty. He is superior to any Rangers' defenseman, and the Kings have depth to match or surpass the Rangers at every position except goal.

While the Kings can dress Marian Gaborik, Dustin Brown, Jeff Carter, Mike Richards, Tyler Toffoli, Anze Kopitar and others for two-way play, the Rangers are plagued by some underachieving forwards and a curious underutilization of the world-class speed of Carl Hagelin.  The Kings have an advantage among the forwards. Their defensive depth also trumps New York; the Kings have Doughty but the remainder of their defensive corps is more than serviceable.  The Rangers have three prime top defensemen (although Marc Staal's eye injury still impedes him and may prevent his return to world-class status), but the overall "top six" corps is just slightly below that of the Kings.

However, the goaltender can make the difference. The Kings' Jonathan Quick has not been the equal of Lundqvist in these playoffs. Quick has the talent, but has not shown the propensity, to steal games this spring. Lundqvist already has done so. This one singular edge can cancel every other advantage.  Again, I rely on the precedents of 1983 and 1995. 

I stand by the prediction of a six-game Rangers victory, but strongly caution that this prediction is heavily premised on a Lundqvist dominant performance. Should the goaltending be merely equal between the clubs, the prediction of a six game series would hold but the favored team would become Los Angeles on account of the Kings' roster depth.




Friday, May 30, 2014

Clippers' Sale Price: What Are You Paying For?

Reportedly, former Microsoft CEO Steve Ballmer has bid $2 billion to buy the Los Angeles Clippers. This is the team owned by Donald T. Sterling, the octagenarian recently banned for life from the NBA after his reported companion (reportedly named V. Stiviano) recorded someone sounding like (but not proven to be) Sterling saying something about wishing she did not bring her darker-skinned friends to Clippers games.

Note all my hedging. That is because none of the underlying facts have been proven or admitted. Everything is "reported." The reporting -- that is the fact. It's important to know the difference.

Two billion for the Clippers? What would the Lakers get?  

The Los Angeles Dodgers recently sold for about $2 billion. But the Dodgers are a much bigger enterprise. Is this a reasonable price or sheer madness.

For comparison to other major market NBA franchise purchases look to how Russian oligarch Mikhail Prokorov paid $300 million for the New Jersey Nets in 2009, which he then moved to the new Barclays Center in downtown Brooklyn.

It seems like someone is overpaying.  Hopefully the positive publicity from rescuing a team from a disgraced owner will be adequate compensation for the grossly inflated price that is being reported. 

Apparently the best way to get an obscene price on your asset for sale is to make a comment likely to be considered irredeemably racist. In the business takeover world, this used to be called "greenmail." 

If that was the idea, then: Well played, Mr. Sterling. 

Wednesday, May 28, 2014

Social Rejection As Excuse For Murder? The World Gone Mad

The recent murder rampage by California college student Elliot Rodger who decided to destroy what he perceived he couldn't have brings to light an old 2010 commentary about the Tyler Clementi suicide.

Clementi, you may recall, was the Rutgers University freshman who jumped off the George Washington Bridge in the wake of his humiliation from his romantic encounter with another man being captured on the webcam of Clementi's roommate and subsequently distributed.  Clementi, who was presumed but never proven to be gay (quick note: my point is not his sexuality -- an irrelevant issue -- but the unseemly preoccupation with establishing his sexual identity for purposes of group politics by others), apparently responded to his roommate's discomfort (taken as rejection) by committing suicide. 

From a different corner of the blogosphere: Here's one take on the therapy culture's supposed role in pushing Elliot Rodger to his end.

An interim point I will make: The theme of wanting to destroy what one cannot have (or achieve) is a dangerous one and deserves the highest scorn. The theme is destructive in its essence. Related emotions of envy and jealousy are percolating under the surface.  These emotions appear to have become more prevalent -- or at a minimum, more openly displayed and tolerated -- in today's social media dominated culture and these are troubling trends.


Friday, May 23, 2014

New Required Recording Of Interrogations Leaves Loopholes For Abuse

Following years of protests, the Justice Department announced yesterday (May 22, 2014) that starting July 2014 it will now require that interrogations be recorded of suspects taken into custody in certain instances. 

The change in policy is progress towards actual justice, and supports the inference that recording interviews can only promote the cause of justice by reducing the potential for abuse, inaccuracies or harmful errors caused by future reliance upon the potentially faulty notetaking of federal agents in question and answer sessions of suspects.

Despite the progress, this revised policy, however, leaves in place the potential for abuse identified by Eric Dixon in July 2011.  That concern centered around the fear that prosecutors could merely refuse to interview someone, whom they have not yet arrested and may never arrest or indict, when they were afraid that the interview would exonerate or exculpate that person. In such instances, refusing to interview a target, witness or subject of an investigation would preserve the prosecutors' plausible deniability and allow .

In plain English, it means that prosecutors can still engage in pressure and other questionable investigative tactics against some pretty innocent people as long as they never arrest them or interview them. Once arrested, 

In legal circles, this is called "willful blindness" and sometimes is used to show the criminal intent or state of mind of the accused which is a necessary element for proving a crime. Wouldn't prosecutors' refusal to interview witnesses similarly show their state of mind in consciously avoiding actions which would tend to uncover or exonerate their targets?


Thursday, May 22, 2014

Why You Must Talk About Politics, Religion, Other Uncomfortable Topics

Thirty seconds of psychobabble here. It is said that one should never discuss politics or religion in polite company. I disagree totally. Those issues go to the heart of one's values. There is no better way to judge the genuineness of your relationships and the character of the people than to discuss these core issues. If you still feel uncomfortable discussing those issues, maybe the real issue is that you need new friends.

This is not to say that people with whom you disagree cannot or should not be your friends. Of course they can. The issue is that of respect. That is the core element of any successful relationship whether it be personal, professional or otherwise.  Do people respect you as a person even if you disagree?  The reaction they have tells it all.

When people impute the worst character traits to you in response to disagreeing with you, do not take that as admonishment. Take it as a blessing, the blessing of the revelation of their character. Such people are not friends. You have no relationship with them. You have just discovered you are in a transaction with them, a one-way street where your interaction with them and acceptance by them centers around -- no, it requires -- your unconditional agreement with them on the issues and values they hold dear. For these people, it is about them.  You do not matter to them and you have just found this out.  You have just discovered they are frauds. You have just discovered they have been engaging in a huge deception, a deception as big on a personal scale as the huge financial frauds.  Your discovery is not to be dreaded but should be welcomed.

Wednesday, May 21, 2014

Dinesh D'Souza's Campaign Finance Crime

Conservative commentator Dinesh D'Souza admitted in Manhattan federal court Tuesday to committing campaign finance fraud by funneling campaign contributions through straw donors to the campaign of an unsuccessful Republican Senate candidate (Wendy Long, from New York) in 2012.

D'Souza's actions were a clear evasion and violation of the campaign finance laws limiting individual contributions to a candidate. As such, he broke the law.

Is campaign finance fraud prosecuted? You bet it is. Just recently, associates of now-former New York City Comptroller John Liu and Congressman Michael Grimm were successfully prosecuted by the Justice Department for the same type of straw donor violation. (Liu himself has never been charged with wrongdoing, while Grimm was recently charged with unrelated federal crimes stemming from an investigation that may have originated from the probe into his campaign finance activities.)

Because D'Souza is an outspoken conservative, some people immediately cried that the investigation and prosecution of D'Souza was partisan, political and unwarranted.

Nothing could be further from the truth.

D'Souza broke the law that everyone else obeys. Even if you choose to believe politics played a role in his investigation and prosecution, and by extension that his was a trumped-up charge, his politics are neither relevant nor an excuse.

One problem. D'Souza admitted to a felony. Anyone persisting in holding he is a victim of "the system" faces an embarrassing quandary. Either he's an admitted felon, or he committed perjury in open court. (As to the latter, others get away with lying to judges all the time -- I caught one of them -- but others' success at breaking the law does not entitle anyone else to break it.) So D'Souza's either an admitted felon or a prospective repeat felon. 

The partisans defending his actions are shredding their own credibility.

Eric Dixon is a New York corporate lawyer who handles election law and investigative matters in both New York and New Jersey.