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Thursday, December 29, 2016

Transgender Boy Scouts And The Right Of Association

A developing controversy, about an alleged transgender "boy" kicked out by a New Jersey Cub Scout pack, has serious, serious implications for the basic core constitutional right of privacy and the related rights of association most Americans take for granted.

On one level, my cynicism tells me this emerging discrimination claim -- a lawsuit is where this is headed, for sure, count on it -- may just be one big scam.

The objectives are unclear (that's by design) and there could be several. This could be designed to pressure the Boy Scouts of America, perhaps the most renowned boys' organization in the nation for generations, into "progressive change." (To support that theory, check out this petition drive to force the Boy Scouts to change its policy.)  Or drive it out of existence altogether. Or extract a high penalty, maybe civil fines or a settlement to pay off the family. Or all of the above -- and maybe the greater the damage, the better (as that is the point of all this, I suspect).

On the basic level, Monday's Gannett-owned Record of Hackensack reported on an eight year old Secaucus, NJ child, biologically female but identifying as male (so the story goes) and who was allegedly just kicked out of a Secaucus, NJ Cub Scout group because of objections from other parents. The Record's story shockingly identified both child and parent as eight year old "Joey" Maldonado and the mother as Kristie Maldonado.

The story's identification of the principals alarmed me. Naming family members in sensitive stories is, to me, a practice which is unnecessary and of no news value to the audience. Sometimes, I feel it is done as an overtly innocuous but secretly vindictive act to shame or pressure the person named. Here, it is clear the parties wanted to be named; this means the mother wanted to "out" her own child. That decision is reckless, if not depraved, for it creates the risk of damage to an eight year old child. It also indicates the child is just a pawn in this adult powerplay. 

UPDATE 12/29/16: As if on cue, the morning after this article was published, both mother and child appeared live in studio on CNN. The video is embedded in this article

Now, the story makes no mention of gender reassignment surgery or hormonal treatment. Those absences support the inference that the child was born female and is still anatomically female.

The worst thing about the Record's salacious, click-bait-pursuing story, is that it names the child by the "male" name, Joey.  The child is exposed publicly. But as my ongoing investigation reveals, the mother hasn't been shy about revealing details about her child, not in social media and not in the conventional media. Quite the opposite. In fact, the child's identity has been publicized widely, almost as if the intent were to cause even greater harm. To the child. To her child. 

The mother claims her "son" started identifying as male several years ago. Yet social media tells a different tale. On the mother's Facebook page an August 5, 2015 post shows a photo of the child, who looks just like the same child pictured in the Record story. That post refers to the family members starting with "Jodi," then "Kristie" and "Jorge." 

(And if the page has been taken down, an archived version of the page is available through at this link.)
There's more evidence that the mother was parading around her child in the press. In May 2015, the same woman and her child were quoted in a different local publication. That story referred to the child as a seven year old named "Jodi" Maldonado.

It is pretty clear that "Joey" is really "Jodi," and this seems to be quite the sudden transformation, no? So what's motivating this change?

Maybe the mother is trying to set up a big lawsuit, a big payday. Because she was just recently on the other end of a lawsuit, as a defendant in an automobile accident personal injury case which settled before trial. The case was titled Leyva v. Morris, NJ-HUD-L-Civ. 5857-13. And when did the case settle? Mid 2015. (Settlement details are confidential.)

Just about the same time it seems the compliant or gullible news media organization wants you to believe this child started identifying as a

And perhaps the same time that a perhaps-financially-strapped family needed money and could have fallen prey to political activists with cash to burn and scruples to abandon. 

As for the Cub Scouts, what about them? Maybe they're the perfect politically correct target, being all-male and traditional values and such, and better yet, one with deep pockets. A juicy target, a "get" is what the Boy Scouts are. 

But the larger constitutional issues revolve around attacks on a private organization. It is possible the Boy Scouts may be forced, under threat of either ruinous litigation or even state regulatory or prosecutorial action, to abandon any membership criteria. 

But then, you have the issue of who can join, and who can select members. 

When every organization is open to all, when there are no standards, when everyone can be a member, then in reality, no one is a member.

I am afraid that the larger, hidden agenda here is an assault on the right of association, the right of groups to privately associate, and thus an implicit attack on every cultural institution. The message: No institution is safe from assault, no group may enjoy a right to associate as it wishes.

The case of this one child in New Jersey is merely the sympathy-inducing deception, to distract observers from recognizing the deeper principles at risk. 

Eric Dixon is a New York City based corporate and investigative lawyer. 

Tuesday, December 13, 2016

NJ Attorney General Tries To Control Newspaper

A five year old in Trenton, NJ brought heroin and crack cocaine to his preschool on two occasions earlier this year, prompting his placement in foster care.

But when newspaper reporters from The Trentonian got their hands on the court complaint, which in family court matters is normally sealed, New Jersey's Governor Chris Christie sprang to action.

The State Attorney General, appointed by Christie, got a temporary injunction preventing the newspaper from publishing more articles on the story, and offered to agree not to oppose the newspaper's argument against a permanent injunction.

But there's a catch: The Attorney General's Office gets to approve the next article! And if they don't like it, they said they would seek a permanent injunction.

This case, set to be heard Wednesday down in Trenton at the Mercer County Courthouse, shows state government is willing to use its power to restrict press freedom. After Bridgegate, this is just the latest abuse of power.

When a right is conditioned on the permission, the judgment or the abusable discretion of the government, your right no longer exists. It becomes a license, to be granted by and withheld by the State for any reason or no reason.

Many in Hudson County just celebrated the passing of the Cuban Maximum Leader, the despot Fidel Castro. Yet this Christie Administration move on the press evokes the playbook of the totalitarian regimes that once comprised the Soviet Evil Empire.

Even worse, Christie is simultaneously pursuing a change in state law for the benefit of one person - himself. That's because he wants to write and profit from a book deal (assuming people would actually pay to read it), while remaining nominally in office for the last year of his term and collecting a full salary for writing his book on our dime.

Is this Chris Christie's First Amendment? Where he gets to change the law (with the Legislature's help) to benefit himself, while using his power to restrict press freedoms essential for the public's right to know?

A county court hearing on the injunction is scheduled for Wednesday. But this hearing should not even be necessary.

The First Amendment is clear that the people are to be free from any abridgment of the press, and our Supreme Court has reaffirmed this right. Freedom of the press is, in fact, not just a constitutional right, but a "core" constitutional right.

There are over 40,000 lawyers living and working in New Jersey (many others live there but practice in New York or Pennsylvania). Where are the principled men and women in the Attorney General's Office who would and should resign in protest, rather than violate the spirit, or letter, of our Bill of Rights?

Why aren't Christie appointees throughout our judicial system doing the same?

Chris Christie is a lame duck governor who still wields the power of our State Executive Branch. If Bridgegate wasn't enough of a warning, this case of legal intimidation of the press is a warning to us to beware of a man who is no longer accountable to voters and who just might think he can get away with Fidel Castro style repression.

Saturday, December 3, 2016

Can IRS Use Coinbase Order To Harass Bitcoin Owners?

The federal government might have a new tool to discourage Bitcoin investment and acceptance by retail merchants.

That's because a federal judge recently authorized an Internal Revenue Service summons on the digital currency exchange and wallet provider Coinbase for its transaction history for the three years prior to December 31, 2015.

This means that the granular information of those transactions, all investment purchases and sales as well as each merchant transaction, will be accessible to the IRS.

The summons itself does not change any tax liability or responsibility of American taxpayers, because digital currencies have been ruled to be currency since an early 2014 agency ruling.

But without Coinbase issuing detailed records of transactions to its customers, the granular information to the IRS means the agency may obtain the aggregate sale proceeds to customers and force the customers to rebut the agency position that those gross proceed amounts are not income. Unfortunately, that means customers and merchants would be compelled to go through the trouble of documenting (i.e., proving) their purchase price (their "basis" for tax purposes) in the digital assets, lest the IRS assume a zero basis and that the entire sale price is taxable gain! This is patently unfair.

Imagine a supermarket (to take a low-margin industry as an example) buying milk wholesale for $2.50 per gallon, selling it at retail for $3.29, but being taxed as if the entire sale price were profit?  Well, if you're a bitcoin investor or merchant who takes bitcoin as payment, that could be the unstated, de facto policy of the IRS. And that would be a hidden, unofficial, unspoken way for some government officials to discourage the use of digital currencies.

Yet all is not lost. Any smart merchant or investor should keep meticulous records. All customers will need their records of the purchases. This will establish the basis of the taxpayer.

Now I will explain why that is not necessarily bad. Indeed, with the long period of Bitcoin's price decline from its $1200-plus peak in late 2013 to its trough below $200 in late 2014, many sales in the covered three year period (Jan. 1, 2013 to Dec. 31, 2015) may have been at a loss, where taxpayers bought at a higher price than the sale. Bitcoin still is several hundred dollars below its peak. Many Coinbase users may have taxable losses on Bitcoin, and can use $3,000 of losses to offset other income, and losses over that amount to offset any capital gains.

The uncertainty about the IRS implementation of its enforcement powers, and whether Coinbase will issue the tax statements customary for securities broker dealers or mutual funds, means that taxpayers may have significant tax reporting burdens for which they are unprepared.

If Coinbase starts -- or is required -- to issue tax statements to customers like other financial institutions, Coinbase will need to be prepared for a new level of compliance and the resulting costs. Those costs naturally get passed down to customers. You could see annual account charges or higher transaction fees, and plenty of business moving to extraterritorial (outside the United States) exchanges.

Taxpayers with Coinbase accounts face a documentation problem and should strongly consider hiring a legal or tax professional knowledgeable in digital currency to help establish the evidence needed to prove their tax basis in Bitcoin and other digital assets.

Eric Dixon is a New York lawyer, blockchain enterpreneur and all-around fixer. Reach him at