South Florida Legal Guide 2014 Financial Edition

FINANCIAL EDITION 2014

ADDRESSING

Trust, Estate Planning and Wealth Management Issues »

CROSS-BORDER DISPUTES

»

SIGNIFICANT TRANSACTIONS

»

PROFESSIONAL TEAMS DELIVER COMPREHENSIVE FINANCIAL ADVISORY AND WEALTH MANAGEMENT SERVICES

»

METHODS OF PROOF

»

COLLECTING A JUDGMENT AGAINST A FOREIGN SOVEREIGN NATION

»

STRUCTURING INBOUND INVESTMENTS IN THE U.S.

»

AND MORE

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PUBLISHER JACOB SAFDEYE jacob@sflegalguide.com EDITOR IN CHIEF RICHARD WESTLUND editor@sflegalguide.com CREATIVE DIRECTOR SUSEL REYNALDO creative@sflegalguide.com GUEST CONTRIBUTORS JENNIFER CORREA-RIERA THOMAS M. DAVID DIOGO FIGUEIROA STANLEY I. FOODMAN ANDREW C. HALL STEPHEN C. LANDE JOHN E. LEIGHTON GABRIEL L. VALDES STEPHEN H. WAGNER DAVID R. YATES SOUTH FLORIDA LEGAL GUIDE Volume 15, Number 2, 2014 Mailing address PO Box 630428, Miami, FL 33163. All rights reserved. All titles registered and may not be used without permission. Reproduction in whole or in part of any text, photograph or illustration without written permission of the publisher is strictly prohibited. The South Florida Legal Guide makes no guarantee regarding the accuracy of information presented, results reported, or safety of products or activities described herein. The publisher notifies readers that the hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask the attorney to send you free written information about qualifications and experience.

TO ORDER COPIES OR REPRINTS CONTACT: info@sflegalguide.com or call: (786) 879.7638 www.sflegalguide.com

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SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

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36 STRUCTURING INBOUND

4 EDITOR’S NOTE

INVESTMENTS IN THE U.S.

6 PUBLISHER’S NOTE

38 PROVIDING FINANCING FOR

7 ROUNDTABLE

FOREIGN TRADE

13 LEADING WEALTH MANAGEMENT TEAMS 22 INTERNATIONAL LITIGATION 26 SIGNIFICANT TRANSACTIONS 32 RECOGNIZED “METHODS OF PROOF” 34 COLLECTING A JUDGMENT AGAINST A FOREIGN SOVEREIGN NATION

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40

38

40 INVESTMENT-IMMIGRATION

OPPORTUNITIES CARRY TAX AND TRANSACTIONAL LEGAL ISSUES

42 DRIVING WHILE DISTRACTED (DWD) 44 GIFTS OF LIFE INSURANCE 46 PROFESSIONAL PROFILES

26 SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

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FACING THE FUTURE IN TODAY’S HECTIC WORLD, it’s hard for South Florida professionals to keep up with all their daily activities: attending client meetings, answering emails, voice messages and texts, preparing documents, monitoring staffers’ assignments and more. On the personal side, it can be a challenge to carve out time for family, friends and personal activities, as well as that badly needed downtime on weekends.

But amid all that hustle and bustle, we all need to set aside some quiet time and think about our financial plans for the future. In that regard, there is lasting wisdom in the words of Benjamin Franklin: “In this world, nothing can be certain except death and taxes.”

That’s a fitting theme for South Florida Legal Guide’s 2014 Financial Edition, which looks at some of the most important long-term issues facing South Florida professionals and their clients. In this issue, we profile four of South Florida’s leading financial advisory and wealth management teams, and how they bring their expertise to bear on behalf of affluent individuals, couples and families.

Our roundtable in the Financial Edition focuses on trends in trust and estate planning and wealth management in our region’s unique market. Our panelists have plenty of insights into this field, which has changed significantly in the past few years.

Elsewhere in this issue, you can also read about major commercial and business transactions, and about interesting international litigation matters that have been handled recently by our Top Lawyers.

Our Financial Edition also includes articles contributed by leading professionals that relate to timely issues in law, forensics, finance and business, as well as in-depth Profiles of several of our top professionals.

As South Florida Legal Guide celebrates our 15th anniversary year with the publishing of the 2015 Edition this coming January, we would like to thank our readers, contributors and advertisers for your ongoing support.

Richard Westlund Editor

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SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

A

PROFESSIONAL

Civil Litigation

Domestic Relations Intellectual Property Litigation Securities Litigation Wrongful Death

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Complex Commercial Litigation Personal Injury Professional Malpractice Real Estate Litigation Appeals

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Before you decide, ask us to send you free information about our qualifications and experience.

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IT’S ABOUT WEALTH AND IT’S ABOUT TRUST THE SOUTH FLORIDA LEGAL GUIDE’S 2014 Financial Edition is all about WEALTH and all about TRUST. It showcases how three key professions come together to produce results for their clients, improve their firms’ financial performance and contribute to the greater good of the South Florida community.

When we launched our Financial Edition three years ago, our goal was to stand at the crossroads where our top attorneys and law firms met with our top CPAs and forensic specialists, as well as leading South Florida bankers and wealth managers. We realized that lawyers who practice in corporate law, international transactions, M&A work, family law, personal injury matters and real estate – to name just a few sectors – rely on CPAs and other experts to “follow the money,” understand a balance sheet, identify financial inconsistencies, and provide key testimony to the court.

In addition, our top attorneys also rely on bankers and wealth managers to finance their deals, distribute the proceeds, invest the settlement funds or jury awards of their clients. They also need bankers to finance their own firms’ day-today operations, working capital and growth plans.

The Financial Edition seeks to showcase these interactive relationships and how, at the end of the day, the client benefits from the work of a good team of professionals from different disciplines coming together. At the South Florida Legal Guide, we view this a vital important mission for our professional community, and a philosophy that we try to follow every day.

So about Wealth and Trust...

We are focused on creating WEALTH by finding the top legal, accounting and financial professionals in the tri-county region. In our publications, we go well beyond a basic listing, and talk about their services, their clients and their community involvement. This WEALTH of information adds value to those professionals who seek services and referrals from within the three sectors.

As for TRUST, all of us at the South Florida Legal Guide, strive to earn that every day. We build trust by delivering on what we promise. We focus on selling our marketing services and not our listings. We earn it by staying true to our original vision of delivering excellent quality editorial about the excellent professionals in our region.

As we celebrate our 15th anniversary with the publication of our 2015 edition this coming January, we hope that many more of you will join those our longtime supporters. To those who have already signed up, our sincere appreciation. Be assured that we will continue to focus on creating WEALTH and making sure we earn your TRUST. Jacob Safdeye Publisher

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A CHANGING LANDSCAPE ADDRESSING TRUST, ESTATE PLANNING AND WEALTH MANAGEMENT ISSUES

Fredric Hoffman, Nancy Watkin, Robert Judd, Stanley Foodman, Jerome Wolf, Orlando Roche and Richard Westlund

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aging population, a revised tax structure and an improved economic picture are changing the landscape for trust and estate planning, and wealth management services. To address these issues, South Florida Legal Guide held a roundtable discussion on “Trends in Wealth Management, Trust and Estate Planning” with leading professionals on September 16. Sabadell United Bank hosted this special event for our Financial Edition. Editor Richard Westlund moderated the 90-minute discussion, which featured comments from six participants: • Stanley I. Foodman, CEO, Foodman CPAs & Advisors • Fredric Hoffman, shareholder, Cohen, Chase, Hoffman & Schimmel • Robert Judd, shareholder, Hackleman, Olive & Judd, P.A. • Orlando Roche, regional president, Sabadell Bank & Trust Miami-Dade County • Nancy K. Watkin, member of Berger Singerman • Jerome Wolf, partner, Duane Morris

Q. What trends are you seeing in South Florida and the nation that will affect demand for wealth management, trust and estate planning services in the next few years?

Judd: In South Florida, we see a migration of the senior community northward. I make regular trips from Fort Lauderdale to Vero Beach and Jupiter these days. Also, South Florida has a higher percentage of seniors than other parts of the country. As the Baby Boomers age and retire, the demand for accounting, investment and legal trust and estate services will increase.

Another trend that I see in Fort Lauderdale is a dramatic increase in the number of same-sex couples relocating to Florida, including those who have married in other jurisdictions. While waiting for Florida to get on board with that national movement, they need to look at their statutory rights and make plans to provide as much protection as possible through legal documents.

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Jerome Wolf

Wolf: One of the unusual aspects of our community is that with the large number of retirees we have many second marriages. That usually makes the estate planning dynamic more interesting because you are usually dealing with a second spouse and children from the first family. As a result, there is a high level of litigation, and you have to be very careful in preparing plans and documents.

Another issue is that Florida is basically a no-tax state. Therefore, we are often dealing with the double domicile issue. That’s why the New York Tax Commission’s representatives ride up and down I-95 looking for New York license plates.

Hoffman: All these points are right on target.

In addition, we see a lot of second- and thirdgeneration Miami residents buying substantial homes in states like Colorado, Massachusetts and California. They want to spend several months of the year in those homes, while maintaining their Florida residency.

In South Florida, we also see a tremendous amount of financial abuse of the elderly. That may be because many retirees don’t have family members living nearby. Finally, we see a lot of trust modifications in our practice. There is a large movement of wealth to the younger generations, whose expectations are very different than their parents. Those situations call for a far higher level of professional advice than most people are used to getting.

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Foodman: Elder abuse is a large component of my forensic practice, as I am called in to follow the money in these cases. Many times it is family members who are abusing the elderly.

That’s one aspect of the graying of America.

I also see a lot of inward-bound people with substantial assets. They work with an immigration or real estate lawyer to acquire a big piece of property without getting any tax advice at all. As a result, they end with a structure that cannot later be unwound very easily. If the owner passes away and is still a non-resident alien (NRA), none of the estate issues are considered. The family is usually shocked to learn about the federal estate taxes.

We see a lot of that because we do a lot of work internationally.

Another trend is that the generation of Baby Boomers has not saved at the same rate as our fathers did. In addition, our children have a different set of expectations, wanting to have it all now. That’s creating a lot of stresses for estate planners because many people in South Florida are income wealthy, but not asset wealthy, Roche: Even though our private banking clients have significant wealth, they need to address a wide range of issues. For instance, people are living longer, which means they need more money to maintain their lifestyle and cover future medical expenses. Also, with interest rates so low now, it’s difficult to create a portfolio with a significant cash flow. As people get closer to retirement, they tend to go from a more aggressive equity position to a

SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

greater emphasis on fixed income. Because the stock market is basically a mechanism of supply and demand, we all have to be careful and watch for a potential correction there.

From a trust point of view, grantors are living longer so there is more importance in lifetime documents, healthcare surrogates and living wills, especially in the gay community.

Because many residents don’t have family members close by, fiduciary services are becoming increasingly important.

On the wealth side, Miami has always had strong international ties, but today it is really a global city. Our economy benefits from the wealth and intellectual capital coming here, including an greater inflow from Europe, Asia and the Middle East. I like to say that Miami is one third international, one third domestic and one third that is somewhere in between. These wealthy families need a good international banking platform with professionals who understand their culture.

Q. The national economy has improved since the recession and people are feeling better about their financial positions. How has that affected your practice?

Judd: I have observed an increase in philanthropic planning, including the creation of private foundations, charitable trusts and donor advised funds. To add to that, the gay and lesbian community in Fort Lauderdale created a foundation called Our Fund and serious dollars are flowing into causes perceived as LGBT friendly.

Wolf: We are at a watershed time in the industry. Historically, estate tax rates have been very high – 70 percent and then 55 percent, and planning strategies have focused on minimizing estate taxes. Now, with estate taxes at 40 percent and an income tax rate of 38.6 percent for high earners, you have to look carefully at both aspects. That has resulted in a shift in how we look at estate planning for our clients.

Another change is that estate planning was usually aimed at one creditor – the Internal Revenue Service. But wealthy people recognize that they have other creditors, and asset protection is one of their growing needs. For instance, in Boca Raton, a child who turns 16 gets a car. Because the child is a minor, the father buys the car. Then when the child

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Watkin: The elderly population is growing more rapidly than other demographic groups.

The U.S. Census Bureau has estimated there will be 86.7 million Americans age 65 or over by 2050. So there will be far more Boomers with estate planning on their minds.

However, I have found that the bulk of my estate practice now falls into the $10 to $20 million range. I have found that it takes more time to counsel clients today. They come for tax advice because they don’t want to give anything away. The dynamics of our field are different than they were before. Also, when you layer in the international component – advising people who are part time U.S. residents – you get a level of complexity that you don’t see in other metro areas.

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has an accident one night, the father finds himself on the hook, because wealthy people don’t have fender-benders. So, many people with assets in the $10 million range are more concerned about protection from creditors than minimizing estate taxes.

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Hoffman: Our practice includes many doctors and professional corporations, and we have been helping them with asset protection strategies for many years. But we have also seen a change in recent years as other wealthy individuals are trying to avoid being a litigation target.

Another trend is that we used to do a lot of estate planning for families under $3 million in net worth, which is the vast majority of people. We are not seeing them anymore, because they use the Internet to shop for price without understanding the benefits of working with an estate planning attorney.

For example, one couple paid $150 for a will that failed to recognize that Florida has a homestead law. As a result, everything they did in the will doesn’t work. I think these lowcost documents will proliferate in the next few years, though, and result in a lot more litigation. As we all know, family members will fight over almost anything, regardless of the size of the estate.

Watkin: With the changing tax laws, I am finding more clients who are redoing their estate plans. In some cases, they no longer have taxable estates, and there may no longer be a reason to put their assets in a trust structure.

Other clients need to revisit their plans after a change in their personal situations, particularly when they involve blended families. For instance, does it make sense for a child from another marriage to control a trust with the current spouse as beneficiary?

Another issue is who should be the trustee?

Is it someone who is able to handle that role?

I still see a pushback from clients in regard to corporate trustees because of issues relating to cost and control. But the biggest wealth preservation issue I see is when parents don’t like the son- or daughter-in law. They want to care for their child or grandchild, but don’t want the spouse to have access to those assets if there is a divorce or another issue arises.

Finally, we are talking with more clients about prenuptial and postnuptial planning. It’s

particularly important for same-sex couples in Florida. These are some of the ways our practice is changing.

private equities, and other assets, as well as lines of credit for the business, and value onestop service.

Foodman: Everyone looks at accounting services as a commodity, so we have developed a niche in serving the international sector. Our referral business has grown dramatically because so many wealthy international people are fleeing economic or political instability. The U.S. is still considered the most stable haven in the world, and many clients want to start a business or make investments here in South Florida.

While all the estate planning issues should come up right from the start, all too often our

Q. Let’s look at the need for education.

Clients don’t understand what they need in terms of estate planning services or appreciate the help a professional provides.

How do you address that issue?

Stanley Foodman

Hoffman: That’s what I came here to learn!

That’s a great question, because it is an extraordinarily difficult task. Last week, we got a referral for a client who was going to inherit $2.3 million from her father, who had a second wife. He had an irrevocable trust agreement

Fredric Hoffman

international clients don’t realize what’s involved with our U.S. system. So, I reach out to tax attorneys who do international tax and estate planning and can help them with their plans.

Roche: In private banking and wealth management, clients are looking for greater simplicity and transparency in the investment platform. In our world, passive investments can play a big role because there is a lower cost for the client. We also try to find them the right actively managed accounts.

In Miami, there is a great deal of younger wealth from successful entrepreneurs and professionals. They are investing in real estate,

prepared in another state that did not take into account Florida’s elective share rules. She wanted to get a second opinion from us after her father’s lawyer in Melbourne said she would have to give up 30 percent of the estate. We looked at the documents, and told her that she didn’t have to give up anything. At that point, she asked if should retain us on an hourly basis so she could call from time to time if she had other questions.

The issue of fees seems to drive other clients, too. We were called by a business owner who wanted to liquidate a $2.5 million company.

Another attorney offered a lower fee, but was not qualified to give the owner tax advice,

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Wolf: We usually get paid from the client’s personal checkbook, so we are sensitive to fees. We often do fixed-fee work, but in those cases we rely on our partners, including financial advisors, trust officers and accountants, to help educate the client and develop the financial profile. Those clients know why they are talking to us and understand the value of our services.

Hoffman: We have started to quote clients a fixed fee for their documents, but an hourly rate to get to the point where we know what we’re drafting. That reassures the client and protects us in case it requires many hours of initial work. I send those clients an engagement letter and a memorandum that outlines the documents we will provide, and have been successful with this approach.

who downloaded and printed out a will from the Internet but never filled in the residual clause. We concluded that having statutory forms would do more harm than good.

Q. Please comment on the importance of bringing together a collaborative team of professionals who bring different perspectives to the table.

Foodman: We strongly believe in a collaborative approach, and bring in attorneys, insurance agents, bankers and wealth planners, depending on the engagement. Nobody knows everything, and the client benefits from a team approach.

However, this is not always an easy task.

Everyone at some point in life has been angry at an attorney, a CPA, a stockbroker or an insurance agent. It’s amazing how difficult it can be to create a team and educate the clients that you’re doing this for their benefit – especially when clients start counting every penny.

for these clients. That’s also very helpful with estate planning, because by the time they reach out to an attorney, much of the research and valuation work has already been done. Plus the clients have a better understanding of your services, making it easier for you to draft the legal documents and give your legal opinions.

Foodman: Orlando makes some great points.

Recently, we were called by a probate lawyer who asked us to prepare a return for the client’s $12 million estate. He sent me the detailed inventory and after looking it over, I told him that he would need to hire an art appraiser, a real estate appraiser, and real estate market analyst because the residential property in the estate was a teardown. The attorney had never handled an estate of this size and had to go back to the heirs and explain why there needed to be a significant increase in the fees for the return. I also recommended that the attorney recommend engaging a tax attorney, because that was not one of his practice areas.

Q. In your experience, do attorneys and accountants have their own estate planning documents in place?

Watkin: We quote an hourly fee for the planning and a fixed fee for the components.

We have also learned to add language to the retainer agreement outlining that our fees are based on the “agreed-upon planning”, in case they decide later on to change direction and ask us to work on a new plan.

Judd: I have found that accountants in particular are very diligent about putting plans in place. Attorneys are also generally good with their planning, although sometimes they will come in on a Friday before leaving town for a week and want to put something in place immediately.

Foodman: My engagement letters are very detailed, and lay out what documents we are preparing and the time we expect to spend on the documents. In many cases, clients like a fixed-fee for the initial work, and go over to hourly as we continue to work together.

Q. How often should estate planning documents be updated?

Orlando Roche

Wolf: I am active in the Real Property, Probate & Trust Law Section of The Florida Bar. A few years ago, the Supreme Court of Florida asked us to look into whether or not it made sense to create statutory forms for wills and living trusts. We debated the topic for a year and decided the answer was no.

If you have a form, someone will forget to check a box or fill in an important answer, as evidenced by a major case involving a person

Roche: It is super important to create a team of professionals for your clients. Wealth management, for instance, covers a big umbrella of services. There is often a need for attorneys, real estate experts, antique and art dealers to get involved. We make it a point to get to know the other professionals well and foster ongoing communication. In many ways, it’s like creating an unofficial family office

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Judd: Generally, people should review their plans whenever there is a significant change in the asset mix or a change in their lives. That might be a marriage, or the birth of a child or grandchild. If you are an attorney advising a client, though, you need to consider your representation agreement.

Most attorneys want to avoid the continuing liability of reaching out to all clients and asking them to get in touch whenever there’s a major change. Therefore, the representation agreement usually will include language that puts the burden of updating on the client.

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which was an important consideration in the transaction. We also have clients worth $150 million on up who don’t understand that they need an institutional trustee for a generationskipping trust. So in all these kinds of situations, we spend a lot of time talking to clients about the benefit of using a qualified and experienced attorney.

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Wolf: The issue of when your representation ends is a hot topic today in estate planning legal circles. If you have an engagement letter from a client, do you have a duty to notify two years later when a change in the tax law occurs? In other words, how long do you need to continue to advise them?

Hoffman: One thing for sure – clients think representation continues far longer than the lawyer does. We suggest that they see us every two years, but we also let them know that in most cases our representation ends 30 days after they signed their documents. After a year or more goes by, we don’t know if they are still our clients or not. In fact, if they are not our clients, sending a letter might be construed as solicitation.

Foodman: As CPAs, we see our accounting clients at least once a year. The AICPA (American Institute of Certified Public Accountants) recommends that you have a new engagement letter every time a client gives you a new shoebox full of documents.

We also send clients an annual organizer that includes a list of questions related to estate planning, such as assets acquired, changes in ownership and offshore structures. However, it’s safe to say that if we haven’t heard from someone for two years, they have terminated our representation. Then, when they call us ask for a copy of last year’s return, we send a thank-you note, which states that our representation has ended.

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Q. For many business owners, the sale of a company provides significant funds for retirement and estate planning. Why should the owner bring in tax, accounting and estate planning professionals right from the start?

want to do something else and often have no interest in maintaining a family business.

So that requires a different approach to maximizing the value of business if the founder is the heart and soul of the company.

For instance, we are working with clients on ideas for ESOPs (employee stock option plans) or other ways to keep the company in operation and allow the owner to keep working, either full- or part-time well into the typical retirement years. That’s just one of the possible strategies to capitalize on the value of the business and pass on that value in a way that meet’s the owner’s goals.

Wolf: Every summer, I teach a course on business succession planning at the Florida Trust School (a Florida Bankers Association program). In my experience, most trust officers and bankers don’t understand the importance of looking at the estate planning issues related to a business sale. So, it’s up to us as attorneys to raise these issues. Many owners think they will live forever, and the son will be as bright as they are and want to inherit the business. Since that’s not the case, succession planning should get far more attention than it does now.

Watkin: That’s a good point, because what really differentiates an experienced attorneys from someone who will prepare a will for $750 is that we bring a 360-degree vision to the engagement. For example, it

Nancy Watkin

can make a big difference who is appointed trustee – it’s much more than just filling in a name on a form.

Roche: As trust officers, we deal with the personal side of estate plans. In many cases, it may be best for the children to sell the business because they lack the desire or skills to run the company, and a sale will result in a high valuation.

Foodman: Owners come to us when they’re getting ready to sell a business. We regularly refer clients to our colleagues in the legal profession who can bring their skills to bear on the succession planning process.

Hoffman: In many cases, the family needs a psychologist more than a lawyer. The family dynamics can make it hard to reach the point where you can start preparing the documents.

Q. Any final words of advice?

Judd: Early in my career a mentor advised me not to give investment advice to any estate planning clients. I have followed that advice, because clients often ask questions about the performance of their assets. Because lawyers are trained to have an answer for any question, it’s unnatural for us to tell them to speak to their fiduciary or investment advisor. But that’s the right approach for both attorneys and their clients.

Robert Judd

Watkin: That is very important for a successful result. I try to work with clients at an early stage of their business planning and determine what they want to happen.

Do they plan to sell to the highest bidder or do they want to pass the business along to someone in the family. If so, are there family members who are interested and have the skills and financial wherewithal to keep the business going?

We are finding that in many cases the kids SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

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MEET the PARTICIPANTS:

FREDRIC HOFFMAN Fredric Hoffman is a shareholder at Cohen, Chase, Hoffman & Schimmel, P.A. in

lawyer, Hoffman’s practice includes federal estate and gift taxation, federal income tax, tax planning, estate administration, estate planning, trust administration and business transactions. Hoffman was admitted to The Florida Bar in 1975 and has published several legal papers, lectured at a 12

New York University Conference on Partnerships and S Corporations, given presentations at Florida Bar Continuing Legal Education seminars and served as an adjunct professor, Tax and Estate Planning Program, University of Miami School of Law. ROBERT JUDD Robert Judd is a shareholder at Hackleman, Olive & Judd, P.A., in Fort Lauderdale. His practice encompasses estate and healthcare planning, the administration of complex estates and trusts, and probate, trust, guardianship,

tion. Originally from upstate New York, Judd has been a resident of Fort Lauderdale since 1985. He is active in the community and serves on the Boards of the Broward Performing Arts Foundation, the Florida Council on Arts and Culture and the Josephine S. Leiser Foundation.

ORLANDO ROCHE Orlando Roche is the regional president of Sabadell Bank & Trust Miami-Dade County.

He is responsible for oversee-

SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

ing private banking, wealth

services within the region.

Roche has more than 25 years of experience in private wealth management. An active member of the community, Roche is a board member of Feeding South Florida, the Florida International University Foundation, the University of Miami Business School Advisory Board, and the University of Miami Citizens Board.

He is also a member of the Young Presidents’ Organization (YPO), Belen Jesuit Prep Alumni Association, and a trustee of the Greater Miami Chamber of Commerce and the Coral Gables Chamber of Commerce.

NANCY K. WATKIN Nancy K. Watkin is a member of Berger Singerman’s Business, Finance & Tax Team and the Wealth Preservation and Tax Planning Group in Miami. She focuses her practice in the areas of wealth transfer planning, business succession planning, charitable gift planning, and personal tax planning for individuals and families.

Watkin regularly represents high net worth individuals in connection with minimizing taxes, wealth preservation and the integration of income tax and estate tax planning strategies. Her practice in

in the administration of trusts and estates, as well as postmortem tax planning.

JEROME L. WOLF Jerome L. Wolf is a partner at Duane Morris in Boca

trusts and estates lawyer, he has more than 30 years of experience and practices in the areas of estate, tax, asset protection and business succession planning for high net worth families. He provides sophisticated transfer and generation-skipping tax strategies to successful individuals and advises closely held corporations, partnerships and other business entities on succession and asset protection planning structures. Wolf is a Fellow of The American College of Trust and Estate Counsel, and speaks and writes extensively on estate and related planning topics.

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STANLEY I. FOODMAN Stanley I. Foodman is CEO of Foodman CPAs & Advisors and a recognized forensic accountant and litigation support practitioner. Specializing in complex domestic and international tax matters, he has served as an expert witness and forensic accountant for some of the nation’s most challenging economic crime cases. He and his team of accountants also assist clients with a full range of accounting matters including compliance, voluntary disclosure, corporate and individual taxation, family law litigation, estate and trust tax and wealth planning.

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Wescott Financial Advisory Group: Taking a Holistic Approach affluent families, entrepreneurs, professionals and executives, Wescott Financial Advisory Group delivers highly personalized services. “We take a holistic approach to serving our clients that goes beyond investment management,” says Scott Poulin, managing director, client development in the firm’s Miami office. “Being able to offer a combination of financial planning, wealth management and trust company services is a powerful trifecta for our clients.”

Wescott is a fee-only investment advisory and wealth management firm with $2.1 billion in assets under management with an average of about $4.2 million per client. “As a fee-only firm, we are not compensated by any products or services, allowing us to be objective in advising our clients,” says Poulin.

The firm’s investment philosophy is based on a tax sensitive and opportunistic multi-manager approach that includes both passive and actively managed funds. “This approach allows Wescott to control risk while creating portfolios with a combination of complementary styles, diversifications and enhanced returns,” Poulin says.

Founded in 1987 by CEO Grant Rawdin, who had a tax and business practice at the national law firm Duane Morris LLP, Wescott is ranked in the top 25 of Barron’s “Top 100 Independent Financial Advisors.” In addition, its Investment Research Group was named to Financial Advisor magazine’s “All-Star Research Manager Team.”

Rawdin says, “We are passionate about our business and the industry in which we operate. We have a long tradition of excellence to which we remain firmly committed.”

Today, Wescott has over 30 professionals in offices in Philadelphia, San Francisco, Miami and Boca Raton, of which eight staffers are based between the two South Florida locations. “Our founder recognized the potential here when he opened our offices 16 years ago,” says Joseph Nader, managing director of the Miami office and senior financial advisor. “Many firms come down I-95 and pack up and go home after a year or so. But we put down roots here and have steadily built our team.”

Strong Credentials The Wescott professionals have an extensive list of designations and varied professional backgrounds.

The team includes certified financial planners (CFPs), attorneys, and professionals with insurance licenses, tax certifications and other designations.

“Our senior advisors have 20-plus years of experience along with their professional training,” says Nader, who worked in private wealth management and Latin American finance prior to joining Wescott. Fluent in Spanish, he served high-net-worth individuals at internationally known private banks and as CIO/CFO at a large family office for one of Miami’s most prominent Latin American

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families as well as a large, local trust company.

Poulin has been working with affluent clients in the South Florida market since 1987. He launched a large advisory trust company in 1997, and grew it to $1.3 billion in assets under management, and also worked for a leading private bank before joining Wescott five years ago. He now focuses on meeting with prospective clients and implementing the firm’s wealth management strategies and services.

Another key member of the team is Richard Gotterer, managing director and senior financial advisor, who was chief investment officer and senior vice president at Gibraltar Private Bank & Trust before joining Wescott.

He is frequently quoted in the Wall Street Journal and other financial publications as an expert on fixed income markets.

“One reason Wescott is consistently ranked as one of the top wealth advisory firms in the nation is due to the breadth of knowledge of our South Florida team,” says Poulin.

A Diverse Clientele In South Florida, Wescott services a diverse clientele of high-net-worth individuals, families, trusts, foundations, pension plans and institutions. “Some individual clients have inherited wealth, while others have earned or created it through their own efforts,” Nader says. “In many cases, we take a multigenerational approach, working with the matriarch and patriarch of the family, as well as their children and grandchildren to identify the issues in managing and preserving that wealth while leaving a lasting legacy.”

Nader adds that Wescott serves a number of clients and families from Latin America. “We find that our team’s familiarity with other cultures, languages and business practices is very conducive to servicing international clients,” he adds. “As a boutique financial advisory and management practice, we stay in close contact and communicate frequently with international clients.”

In Boca Raton, Wescott’s client base consists primarily of U.S. residents, including executives, entrepreneurs and retirees from a wide range of professional backgrounds.

“I have noticed that our Boca clients are often interested in new investment products,” Nader says. “But in both markets, our clients appreciate Wescott’s long-term approach to investment management. We’re not trying to hit big home runs, but produce lots of singles and doubles through the years.”

Poulin notes that Wescott also has a strong appeal to successful entrepreneurs. “Compared with the major institutions, we are like David vs. Goliath, and that’s a role to which they can relate,” he says.

“Many entrepreneurs contact us after going through a full or partial liquidity event, as they make plans for

Working with Attorneys As appropriate for a financial advisory firm founded by an attorney, Wescott’s team works closely with South Florida attorneys, CPAs and other professionals to support their clients. For example, if a Wescott client wants to develop an estate plan, Nader will refer the work to an attorney with the background and experience to meet that client’s

needs. Likewise, if an international client needs help with immigration documents, the firm will outsource those services.

In addition, Wescott’s client base includes a significant number of South Florida attorneys and accountants with high incomes. “We want those professionals to experience the same high level of service that their clients receive,” says Poulin.

For instance, Wescott can help structure cash balance pension plans that allow professionals to make much larger retirement contributions than can be done with 401(k) plans. “Another benefit is that funds in these cash balance plans are protected from creditors,” he says. ‘If you make a significant income and don’t have a cash balance pension plan, you may want to revisit your options.”

Looking ahead, Nader says Wescott will continue to cultivate relationships with attorneys, accountants and bankers as it develops its presence in Florida. “Our firm is in growth mode, and we are always looking for talented professionals,” he says. “We expect Wescott to continue to be a national leader in providing sophisticated wealth management services to our Florida clientele.”

Scott Poulin, Joseph Nader, Grant Rawdin, Catherine Seeber and Richard Gotterer

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those proceeds. We’ve also seen an increase in referrals from private equity firms and commercial bankers who are involved in these types of transactions.

Poulin adds that Wescott offers “the best of both worlds:” a high level of client service along with a sophisticated investment platform.

“Our robust technology allows clients to see and understand all their investments – not just those managed by Wescott. That’s a powerful tool for family offices and other types of clients.”

Poulin also points to the firm’s commitment to service, including responding quickly when clients have questions or want immediate advice on a financial issue.

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The Starner Group: Offering Diverse Perspectives to Clients hroughout her life, Margaret C. Starner has been a staunch advocate of financial planning for men, women and families. She also recognizes the value of being able to bring diverse perspectives to bear on a client’s financial situation.

“One of the ways we provide value is to create custom portfolios and specialized strategies for each client,” says Starner, CFP®, senior vice president, financial planning and managing director at The Starner Group of Raymond James & Associates in Coral Gables.

Widely recognized as a pioneer in the financial planning industry, Starner has built a dynamic wealth management practice with approximately $600 million in assets under management. “Today, our financial practice serves a wide variety of clients, including many lawyers and other professionals,” she says. “We primarily cater to high net worth (HNW) families who have excess cash flow. If you have a strong cash flow, it’s easier to plan for the future and get out of any immediate trouble.”

Starner’s team includes two other partners – Bruce Cacho-Negrete, CFP®, vice president, financial planning, who joined the group in 2007, and attorney Scott Weingarden, JD, CFP®, CIMA®, vice president, investments, who has worked with Starner since 1997. Other members of the group include Josh Espinosa, investment portfolio specialist, and three other client service and support staffers.

“What is unique about our team is that all three partners work with every client,” says Cacho-Negrete. “We do not divide things up. That’s a benefit to our clients because they get three different perspectives.”

For example, Cacho-Negrete has a background in management consulting, and typically leads the financial planning team for a client. That may include looking at the client’s goals, tolerance for risk, current assets, mortgages, insurance policies, and retirement plans. He is also responsible for product analysis and market research.

Another unusual aspect of the South Florida team is that Cacho-Negrete divides his time between the firm’s Coral Gables and Los Angles offices. “We are a bicoastal practice, which allows us to serve clients who move elsewhere in the country or have children who move away from South Florida. We have built a great professional network and can help our clients in almost any location.”

As the Starner Group’s investment manager, Weingarden looks carefully at how to construct a client’s portfolio based on goals and risk tolerances. “One of the changes we’ve seen in recent years is that clients who were growth oriented before 2008 are now less eager to take risks,” he says. “They are willing to miss some of the upside potential in order to avoid being caught in that kind of downturn again. As a result, we have restructured a number of portfolios to be more conservative.”

However, the group’s clients are also grappling with the

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difficulty in generating suitable returns in a low interest rate environment. “Income is harder to come by today than it was a decade ago,” Weingarden says. “You can’t just go out and buy high-quality bonds that deliver 6 to 7 percent yields.”

To address that issue, Weingarden talks with clients about alternative investments such as real estate investment trusts (REITs), master limited partnerships (MLPs) and other types of real assets that can diversify a portfolio.

Because these types of assets respond to different market forces than stocks and bonds, they can help cushion a client’s portfolio in the event of a downturn, while creating opportunities to boost income and potential appreciation of value, he says.

A lifelong interest Starner has always been interested in financial planning, long before it became a frequent topic of social conversations. She grew up in Mississippi where her parents had a small family business, and majored in economics at Stanford University.

After her husband Roger took a job with National Airlines, the couple moved to Miami, where Starner became active with the League of Women Voters. “I met many smart women who had no idea about how to manage money other than balancing their checkbooks,” she says.

That experience rekindled Starner’s focus on financial planning, and she began offering a series of courses called “Everything you wanted to know about money but were afraid to ask.”

Within a year, Starner had built a base of clients including professional women and corporate executives.

“Back in 1981, Raymond James was the only major firm interested in financial planning, so I joined the firm and have been with them ever since then,” she says.

Today, Raymond James is one of the nation’s leading independent financial services companies with business units that serve a variety of clients, from individuals and small business owners to municipalities and major corporations.

The firm has more than 6,200 financial advisors, more than 2.5 million client accounts, and approximately $479 billion in total client assets with 2,500 locations throughout the United States, Canada and overseas.

Starner’s ability to connect with clients, identify their needs and develop appropriate strategies has enabled her to build a strong practice through the years. In 2001, Mutual Funds magazine recognized Starner as one of the “100 Great Financial Planners” in the United States and in 2005, she was featured in Financial Advisor magazine, which identified her as a “trailblazer” in the financial planning industry. Barron’s has named Starner as one of America’s Top 100 Women Advisors (2007-2014) and one of America’s top 1000 Advisors (2009-2013).

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Reflecting on her career, Starner says she still works with many of her clients from the 1980s, as well as their children and grandchildren.

However, the most pressing financial issues have changed since then.

“The mid 1980s was the heyday of tax shelters,” she recalls. “Then, the tax law changed in 1986. However many people in South Florida had become mired in these financial pits and didn’t know how to get out. We helped them move away from money-losing tax shelters to assets that would provide income instead.”

Now, many of the Starner Group’s clients in the 45- to 65-year-old age range are focused on accumulating assets they will need for retirement, Starner says. For clients who are ready to retire, the typical key issues revolve around using those assets to generate a flow of income, as well

as capitalizing on the sale of a business or professional practice.

Older clients who have moved into retirement are often most concerned about protecting their assets, maintaining a flow of income, and planning their estates. In any case, Starner says the group tailors its financial planning services around the clients’ goals.

“We also collaborate closely with a client’s attorneys, accountants and other advisors,” she adds. “We strive to be great business colleagues and provide our expertise to help the other professionals.”

Finally, Starner says her team is always available to answer a client’s questions or provide advice on a pressing issue. “We take pride in our accessibility,” she says. “That’s one of the hallmarks of our group’s whole-hearted commitment to client service.”

Bruce Cacho-Negrete, Margaret Starner and Scott Weingarden

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The Sylvia Team: An Integrated Approach to Wealth Management draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its leading universal bank in Switzerland, complemented by its Global Asset Management business and its Investment Bank, with a focus on capital efficiency and businesses that offer a superior structural growth and profitability outlook.

UBS Financial Services has about 7,000 advisors across the United States, serving clients who have an average $143 million in invested assets per advisor.

In Florida, one of the top UBS teams is led by Kurt Frederick Sylvia, managing director - wealth management, UBS Financial Services in Palm Beach.

“We offer an integrated approach to wealth management,” says Sylvia, whose eight-member team focuses on ultra high net worth families with assets of $10 million or more. “The needs of our clients are different and more comprehensive than those of other affluent families.”

In terms of investment management services, the Sylvia team focuses on developing custom-tailored asset allocation strategies utilizing an array of different products, including equities, fixed income, structured products, and exchange-traded funds. But that’s just the starting point.

Through UBS Sylvia and his team also provide gold custody services, and provide financing solutions for clients seeking to purchase new yachts, private jets or multi-million dollar paintings and sculptures. Drawing on the global resources of UBS, Sylvia also helps clients with their private banking requirements, trust and estate planning services, tax management and philanthropic strategies.

“Through UBS, we offer clients access to research performed solely for private investors, as well as thirdparty partnerships with South Florida professionals and customized global solutions,” says Sylvia. “We bring it all together for our clients.”

An experienced team Sylvia is one of the nation’s top wealth managers at UBS with more than 20 years of experience in serving the affluent market. In 2014, he was named one of the “Top 400 Financial Advisors in the U.S.” by Financial Times and one of the “Top 1200 Financial Advisors in the U.S “by Barron’s magazine – the latest in a long string of accolades.

A graduate of Providence College with a bachelor’s degree in finance, Sylvia is a resident of Jupiter with his wife and two children. He is a founding member of the 100 Friends of the First Tee Palm Beaches, and is also active in the Jupiter Medical Center Foundation, American Cancer Society and The Nantucket Cottage Hospital.

His professional team at UBS includes Francis Patrick

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Connolly, director; Timothy Scott Smith, vice president – wealth management, a financial advisor responsible for financial planning, assistance with portfolio management and client services; and Nathan Donald Krueger, CFP, vice president – wealth management, a certified financial planner and portfolio manager.

“Our team has the range of skills to act as a family office for wealthy clients, bringing together various financial disciplines and delivering highly personalized service,” Sylvia says. “We can also create different accounts for individuals within the family office structure.”

In addition, the Sylvia team offers its clients access to UBS global investment portfolios, which are multicurrency, multi-asset class, unified accounts managed by investment professionals around the world. “Our clients have the ability to hold positions in multiple markets in native currency and non-dollar assets, and seamlessly execute trades and currency plays in over 37 countries,” says Sylvia.

Helping wealthy clients As team leader, Sylvia stays in close touch with clients, listens carefully to their needs and brings in professionals with the expertise to provide the right solutions. For example, Sylvia last year assisted a South Florida family in selling a business by referring them to UBS’ global investment bank.

“UBS’ investment bank sourced the investors, and worked with the family to achieve their goals,” he says.

“When the sale closed, our advance planning group worked closely with family members to ensure effective integration of tax and philanthropic planning, as well as asset management services. We also helped in defining the long-term goals for this multi-generational family.

The Sylvia team helped another wealthy client establish a philanthropic foundation to leave a lasting legacy. First, Sylvia worked with the client to define the goals of the foundation and its mission statement. “Then, we assisted them in putting some indicators in place to ensure the gifting responsibility is handled in an effective way,” he says. “Accountability is an increasingly important aspect in the non-profit world.”

Because the Palm Beach team does not provide tax or legal advice, outside professionals with appropriate knowledge and experience are brought in to handle those client needs, according to Sylvia. “Our advance planning professionals also work closely with a client’s legal, accounting and tax advisors to be sure everyone is on the same page.”

Take family trusts, for example. “It’s very important to set investment objectives and determine the acceptable level of risk for each trust,” says Sylvia. A multigenerational trust, for instance, might focus on steady growth as well

WEALTH MANAGEMENT Tyler Hillson, Terri Smith, Nathan Krueger, Patrick Connolly, Amato Zarro, Kurt Sylvia, Pat Bradley, Tim Smith

as preserving capital with a time horizon measured in decades. On the other hand, a trust designed to maintain an individual or a couple’s health and lifestyle might focus on providing income, while protecting personal assets. Other types of trusts can be designed to protect the interests of children or grandchildren with special needs.

Looking at recent trends, Sylvia says some ultra high net worth clients take a straightforward approach to investment management, creating portfolios based on blue chip stocks and municipal bonds that provide tax-free revenue. However, other clients are concerned about increasing volatility within the fixed-income market, including corporate bonds and other securities.

“Historically, bonds are considered to be conservative assets that provide protection against the swings of the equity markets,” he says, adding that there appears to be a greater correlation between fixed-income and equity assets than in the past. “Clients are looking for tools and strategies to help them maintain an effective risk mandate for their portfolios,” he adds. “As a result, many clients are beginning to consider investments in alternative asset classes with a lower correlation to stocks and bonds. In any case, our role is to understand their personal goals and tolerance for risk, and help them develop appropriate strategies in our everchanging world.”

As a firm providing wealth management services to clients, we offer both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website at ubs.com/workingwithus.

Accolades are independently determined and awarded by their respective publication. For more information on a particular rating, visit their corresponding website. Neither UBS Financial Services Inc. nor its employees pay a fee in exchange for these ratings. Accolades can be based on a variety of criteria including length of service, compliance records, client satisfaction, assets under management, revenue, type of clientele and more.

Neither UBS Financial Services Inc. nor any of its employees provide tax or legal advice. You should consult with your personal tax or legal advisor regarding your personal circumstances.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

UBS Financial Services Inc., 440 Royal Palm Way, Palm Beach, FL 33480, is a subsidiary of UBS AG. Member FINRA/SIPC.

SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

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The BMR Group of Merrill Lynch: Treating Clients Like Family

not unusual for the partners at The BMR Group of Merrill Lynch to host a movie night, a book club meeting or educational seminar for their clients in Palm Beach County. “We host a variety of activities to help our clients with the issues they face in their lives, not just money management,” says Diane Bain, senior vice president-wealth management. “We recently had an Apple product expert bring in the latest products, and we’ve hosted a speaker on identity theft, along with a mobile shredding truck to help our clients do some ‘spring cleaning’ of their documents.”

Through the years, The BMR Group has built a loyal clientele of affluent clients, primarily in northern Palm Beach County. “Our wealth management business has grown largely by word of mouth, and we get a steady stream of referrals from clients and their professional advisors,” says Scott Mazur, senior vice president-wealth management.

Based in Palm Beach Gardens, The BMR Group of Merrill Lynch is led by three partners – Bain, Mazur and James Rooney, senior vice president-wealth management – who have been together for more than 15 years.

“Jim Rooney and I formed the team in 1994,” says Bain. “At that time, we were one of the pioneers in terms of financial advisory teams. Mazur joined the group in 1998. Another early partner was Beverly McGahee, who was part of the Merrill Lynch group from 1995 until she retired in 2000.

Today, The BMR Group includes Richard Fischer, analyst and business manager, who has been with Merrill Lynch for 33 years – four years longer than Bain. The BMR Group includes Paul Abbott, Ellen Cajal Nickey Rand, and an intern Sydney Cajal.

“We work with a client’s attorneys, CPAs or other professionals”, Mazur says, “that, and having a large team is a significant benefit to clients. No one person is a specialist in everything,” he says. “This way our group can respond quickly to the changing needs of our clients”.

Collectively, The BMR Group members have more than 100 years of financial industry experience at Merrill Lynch, which is the largest brokerage in the world, with more than 13,500 financial advisors and more than $2 trillion in client assets. Bain adds, “It’s very rare for a group of professionals to have such extensive experience and familiarity with one company.”

Getting off to a good start In general, The BMR Group’s clients include business owners, executives, professionals and retirees from

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around the country, as well as the Palm Beach County area. “We work with many families – mom, dad, kids and grandparents – on multigenerational wealth issues,” Mazur says.

Some of those clients date back twenty years to the group’s founding. “When you become a client, we become part of the extended family,” says Bain. “It gives us a lot of joy to be invited to a wedding or the birth of a grandchild.

But there’s also sadness when a client goes into hospice or passes away. We’re present in person or in spirit for all the different events of life.”

With each new wealth management engagement, Bain and Mazur place an emphasis on getting the relationship off to a good start. As part of the initial planning process, Bain and Mazur will ask each spouse or other principal family member to complete an individual form that includes their personal goals and tolerance for investment risks. “We have them do the forms separately so that we can identify any differences between the views of the husband and wife,” she says. “Sometimes the most important financial issues are not discussed until they come into our office.”

Bain adds that The BMR Group members also facilitate far-ranging client discussions that cover topics like anticipated major expenses, legacy planning and providing long-term financial support for family members with special needs. “We continue to stay in close touch with our clients as their goals and situations change with time,” she says.

One of the most important considerations in preparing a wealth management strategy is determining the client’s willingness to tolerate sudden downturns in the financial markets. “It’s very important to spend that time talking about that issue early in the relationship, because when the markets become volatile, emotions come into play,” Bain says. “There is no better gauge of a client’s risk tolerance than the volatility of the market. You can put your responses down on paper, but until you ride out the market cycle, you really don’t know for sure.”

Having a financial plan in place before those downturns occur can help clients stay focused on the long term and make better investment decisions, says Mazur. Another key for making it through stressful times is understanding and managing a client’s cash flow requirements. A client who doesn’t have to sell stocks, bonds or other assets at a low point in the market cycle is less likely to be swept away by the short-term turbulence, he says.

Whether the markets are going up or down, The BMR

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Group partners keep in regular contact with their clients, talking about current trends, challenges and opportunities. During the devastating Wall Street crash of 2008, Bain made it a point to call as many of her clients as possible on a daily basis. “As I was speaking to one client, her husband picked up the phone and told me he was impressed with how frequently we had stayed in touch with her,” she

recently with a man in his 80s who wanted to restructure his portfolio to convey his assets from one generation to another.

“You would think that as people get older, they would become more conservative, but that’s not always the case,” he adds.

“Sometimes the parents are more aggressive than their children.”

In any case, The BMR Group members also seek to educate

Nickey Rand, Paul Abbott, Ellen Cajal, Richard Fischer, Diane Bain and Scott Mazur

says. “He told me that he had not heard from his advisor once during the downturn. That was not uncommon at that time, probably because many people don’t like to be the bearers of bad news.”

Along with managing risks and seeking a positive return on their investments, The BMR Group clients are concerned with other issues like maintaining a lifelong stream of income and managing evergrowing healthcare costs. “No one wants to be a burden on their children,” Bain says. “At the same time, they don’t want to see their investment portfolios eroded by the need for residential care.”

Estate planning is another theme for many clients. Mazur met

clients’ children and grandchildren about being financially responsible. “Merrill Lynch offers a series of financial boot camps and we make sure our clients are aware of them,” Bain says. “We are also active supporters of Junior Achievement, which teaches young people about the principles and practices of successful businesses.”

Summing up the team’s approach, Bain says, “We help clients set clear objectives and implement strategies that are flexible enough to adapt to the changes that occur in everyone’s life.”

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LITIGATION SOUTH FLORIDA ATTORNEYS TAKE ON COMPLEX CROSS-BORDER DISPUTES With its strategic location, appealing climate and multitude of cultures, South Florida is a natural choice for international business and investment. And when international disputes arise, the region’s experienced litigators swing into action to represent their clients’ interests. Here are several recent examples.

‘QUARTERBACKING’ AN INTERNATIONAL LEGAL STRUGGLE IN THE LATE 1990s, the deaths of Walter Bronner Patrias, a wealthy ex-Colombian who lived in Monaco with his German wife, Anna Gravert Bronner, touched off a legal battle over their estates that spanned three continents.

In 1995, both spouses executed handwritten wills in Monaco designating each other a their sole beneficiary. Walter Bronner’s will provided that if he survived Anna, his property should go to various charities. Anna Bronner’s will provided that if she survived Walter, her property would go to a different charity. Later, Walter met with his longtime friend Harry Joseph, a Miami Beach resident, and others, and discussed the possibility of creating a trust to benefit various charitable institutions in Israel funded by approximately $250 million in assets held in the Monavest Corporation, a Panamanian company created by the Bronners.

After her husband passed away in 1996, Anna Bronner executed a new will and created the Walanpatrias Foundation in Liechtenstein to support several designated charities.Before she died in 1999, Anna had transferred most of her fortune to the foundation. In 1999 her will was processed in Monaco and the Walanpatrias Foundation was vested with the small remainder of her estate.

Two years later, ancillary estates for both Walter and Anna Bronner were filed in Florida, where the couple owned a small amount of property. At that point, one of the charities included in Walter’s 1995 will filed suit to be named the sole beneficiary of both estates.

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That began a complex multijurisdictional legal battle in Europe, Panama and the United States, according to Charles Kline, partner, White & Case in Miami, who represented the Walanpatrias Foundation for seven years, beginning in 2007.

“We argued that you couldn’t take the money out of the foundation to the disadvantage of the other beneficiaries,” said Kline, who focuses his practice on complex commercial and international litigation, and also conducts arbitrations as a panelist.“Ultimately, we tried every case and won every case, finally resolving the disputes in every jurisdiction.”

Reflecting on the case, Kline said that U.S. attorneys are well qualified to act as “quarterbacks” for an international litigation team. “In the civil law countries of Europe and South America, the lawyers tend to explain the law and how a judge is likely to rule, and ask their clients for instructions,” he says. “Here, we take a much more proactive approach to litigation.”

If an aspect of the litigation involves a U.S. forum, then U.S. discovery rules and legal theories come into play, added Kline.“Nowhere in the world is the litigation process as robust as it is in the U.S.,” he said.

“When we became involved in Florida, the client asked us to manage the case in all the jurisdictions. We sat down with the local lawyers, reviewed strategies and made them consistent. That really changed the tide of the litigation.”

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ASSERTING COMMERCIAL RIGHTS FOR MANY DECADES, Nelson J. Mezerhane was a successful entrepreneur in the Venezuelan financial and real estate sectors. He founded the Banco Federal, C.A., the newspaper Diario El Globo and Globovisión Tele, C.A., a network television channel. However, he ran afoul of then-President Hugo Chavez by maintaining the editorial independence of his media outlets, providing a counterpoint to the state-run networks.

After the Venezuelan government seized his assets, Mezerhane filed a 17-count complaint in U.S. district court against several Venezuelan entities and individuals, alleging he was the victim of political persecution. However, the Venezuelan defendants filed a motion to dismiss the U.S. proceedings based on the doctrine of foreign sovereign immunity.

Last September, the trial court granted the motion to dismiss, and Pedro J. Martinez-Fraga, a partner with Bryan Cave LLP in Miami stepped into the case to

handle the appeal. In May, he filed an action against the Republic of Venezuela under the expropriation exception of the Foreign Sovereign Immunities Act (FSIA), and the case is now pending before the federal 11th Circuit Court of Appeal.

“Win or lose, this will be the most seminal cornerstone case on the FSIA in the last 20 years,” said Martinez-Fraga. “It will set a precedent on whether a breach of a human rights convention constitutes a breach of international law within the meaning of FSIA.” The $1 billion case, which pits Martinez-Fraga and his team against five defense firms for Venezuela, will be heard in early 2015.

In his brief, Martinez-Fraga said Venezuela violated eight articles of the American Convention on Human Rights to which it is a party, including a provision for just compensation when property is expropriated for public utility. “The district court erred in omitting to consider that Venezuela violated the American Convention as a

result of the undisputed takings of interest in property underlying this case,” said the brief. “Under customary international law Mezerhane qualified as both a refugee and a stateless person when his property was taken and therefore cannot be considered a national of Venezuela for purposes of the domestic takings rule.” It added that the Peace, Friendship, Navigation and Commerce Treaty between Venezuela and the United States entitles Mezerhane to bring this action.

Renowned scholar Joseph Weiler, professor at New York University, former director of the Harvard Law School Graduate Institute and currently president of the European University in Florence, Italy, has filed an expert opinion in support of Mezerhane’s position.

“This case has vast public importance,” added Martinez-Fraga, who recently co-authored a book on investor-state arbitrations with Ryan Reetz, the firm’s office managing partner. “I would not be surprised if this matter ultimately winds up in the U.S. Supreme Court.”

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ENFORCING ARBITRATION AWARDS WHILE ARBITRATION IS often the preferred method for resolving international commercial disputes, a litigator with experience with international awards will likely be needed when it comes time to enforce an arbitrator’s award.

“There is more and more complexity about the enforcement of international arbitration awards in the courts,” said Daniel González, partner at Hogan Lovells in Miami, co-leader of the firm’s international arbitration practice, and member of the firm’s Global Board. “One of the key issues is a lack of definition as to whether recoverable awards will or will not be recognized by U.S. courts.”

Under the Federal Arbitration Act (FAA), which governs the enforcement of international arbitral awards in the United States, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) says that a federal judge “may” under certain circumstances enforce or decline to enforce an award. “That gives great latitude to the judge and raises the issue of consistency,” said González, who spoke on the issue at the International Council for Commercial Arbitration’s 2014 convention in Miami.

“In this context, consistency refers to the standards and rules that are applied when enforcing an arbitral award, not to consistently enforcing or refusing to enforce an international arbitral award,” he added. For example, the standards and rules associated with service of process are inconsistent among the various state 24

and federal jurisdictions in the U.S., González said. Once the prevailing party appears before the judge, there are additional inconsistencies from jurisdiction to jurisdiction.

“Enforceability of awards has an impact on whether the parties will see the U.S. as a favorable seat for arbitration,” he said. “This is one of the hottest topics at the intersection of arbitration and litigation.”

For example, González and his firm, who have represented many parties in both enforcing and seeking annulment of international arbitration awards, says that after more than a decade of resettling with the issue, courts continue to struggle when asked to decide how much deference to give a foreign court’s decision to annul an arbitration award. As demonstrated in Chromalloy, TermoRio, Americatel, PEMEX, and Castillo Bozo, several of which cases González and his firm have been involved with, courts have taken polar opposite views on the effect of an award that is nullified in the country where the award was issued.

As González concluded, “The result of these inconsistencies is significant because it raises uncertainty about the possible enforcement of an arbitral award. Although arbitral decisions are typically entitled to judicial deference and can only be set aside in very specific circumstances, these inconsistencies cause confusion among courts and litigants with respect to certain grounds that are utilized or relied upon by parties seeking to enforce and/ or vacate arbitral awards.”

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ENFORCEABILITY OF AWARDS HAS AN IMPACT ON WHETHER THE PARTIES WILL SEE THE U.S. AS A FAVORABLE SEAT FOR ARBITRATION,” HE SAID. “THIS IS ONE OF THE HOTTEST TOPICS AT THE INTERSECTION OF ARBITRATION AND LITIGATION.

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PROTECTING AN INHERITANCE HARRY PAYTON BELIEVES that might does not make right – inside or outside the courtroom. Last year, he took on the case of an adult non-resident who was being defrauded of her inheritance by her wealthy foreign-born mother. Because the case is still in the courts, Payton did not disclose the names of the parties.

“My client’s father was an industrialist who left a large fortune to his wife, and created significant trusts for his daughter,” said Payton, who is dual board certified in civil trial and business litigation and is the founder of Payton & Associates in Miami. “When the daughter learned that her mother was stealing her money from the trusts, she filed suit in three countries in Europe to recover hundreds of millions of dollars in assets.”

Among the daughter’s assets from the financial estate were two residences in South Florida. “The mother had beguiled her daughter to transfer ownership so that if something happened to my client, the mother would have them to look after her grandchildren,” Payton said. “But after the daughter filed suit in Europe, the mother decided to retaliate against my client.”

Prior to signing away her ownership rights for the two residences, the daughter had purchased furniture locally using funds from a company the daughter controlled and sent the furnishings to Central America, where she maintained another residence, according to Payton. “The mother then sued her daughter for civil theft, alleging that she stole corporate money and used it for her own

welfare,” he added.

From a legal perspective, one of the interesting aspects of the U.S. case is that it involves different parties than the European litigation, but shares a substantial identity of issues, said Payton. That raised the question of the proper forum for the U.S. case – an issue Payton raised in Miami-Dade County Circuit Court last December.

Although Judge Victoria Sigler denied his motion to dismiss the case on the basis of forum non conveniens, she did grant his request to stay the U.S. case until the European proceedings are concluded. As Payton said, “We believe that when the multi-million dollar inheritance cases are resolved, the issues related to the two South Florida residences will also be settled.”

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B BIG IG G DEA DEALS DE EALS ALS LS TOP LAWYERS HELP CLIENTS WITH A WIDE RANGE OF SIGNIFICANT TRANSACTIONS South Florida Legal Guide’s Top Attorneys Handle Important Financial Transactions for Their Clients.

Here are Some Recent Examples.

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ASSERTING COMMERCIAL RIGHTS A FAST-GROWING publicly traded banking company in the New York metropolitan market is making a geographic leap to Florida following a recent $312 million merger and acquisition (M&A) deal.

Michael Mitrione, practice leader, Securities & Corporate Governance, Gunster in West Palm Beach, represented 1st United Bancorp, Inc. and its subsidiary 1st United Bank in the merger with Valley National Bancorp. “This deal will change Florida’s banking landscape,” said Mitrione, who has more than two decades of experience in corporate transactions. “It shows the importance of the Florida market for financial institutions and it continues the trend of consolidation at a time when the regulatory and technology costs of running a banking franchise continue to increase.”

Last May the two boards announced the merger agreement, which is expected to close

in the fourth quarter of 2014. The combined company will have approximately $18.1 billion in assets, $12.9 billion in loans, $12.7 billion in deposits, and 225 branches covering northern and central New Jersey, New York (including Manhattan, Brooklyn, Queens and Long Island), and southeast and central Florida.

“Valley has always employed a highly focused geographic growth strategy based on creating long- term shareholder value; however, we ultimately welcomed this tremendous opportunity to expand into one of the premiere growth markets of the United States,” said Gerald H. Lipkin, chairman, president and CEO, in the announcement.

Under CEO Rudy Schupp, 1st United grew to become the seventh largest publicly-held bank headquartered in Florida by deposits, with a strong emphasis on the middle market commercial corporate. “Valley’s substantial

resources, similar culture, additional commercial and consumer product lines, and shared growth aspirations, combined with our team of Florida bankers, will make a tremendous contribution to Valley’s future results,” said Schupp at the time.

Schupp added that 1st United has a 21 branch network covering southeast Florida, the Treasure Coast, central Florida and central Gulf Coast regions. Its executive and operations center in West Palm Beach will become Valley’s Florida regional office.

Reflecting on an overall upturn in corporate transactions in the past few years, Mitrione said he has already handled ten M&A deals in 2014. “This one stands out for several reasons besides its size,” he said. “Valley National is a premier banking company that had a strong desired to enter the Florida market. I believe we will see a continuation of that trend.”

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STRUCTURING A COMPLEX PROJECT

ONE OF THE MOST complex real estate deals in Miami Beach’s recent history would not have been possible without the efforts of a Bilzin Sumberg team led managing partner John C. Sumberg. The $900 million redevelopment project – which contains almost 2 million square feet of building space including a hotel, two residential condominium towers, a commercial condominium, and related uses – is expected to be completed later this year.

Sumberg and partners Carter McDowell, 28

Jon Chassen, Mitch Widom and Melissa Pallett-Vasquez, represent an entity comprised of Starwood Capital, the LeFrak Organization and Invesco Ltd. in the purchase and renovation of South Beach’s largest oceanfront luxury resort property - including the former Gansevoort Hotel South, now known as the 1 Hotel and Homes South Beach, and the development and sale of 156 residential condominium units.

“We assisted the client in extensive due diligence to price the acquisition and

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succeed over other competing bidders,” said Sumberg. The acquisition involved extended contract negotiations with both the seller and with the lender having a mortgage on the property, requiring the modification and extension of the mortgage debt. The property consisted of a hotel, 259 residential condominium units and a commercial condominium and adjacent undeveloped property on the west side of Collins Avenue.

“This deal was incredibly complex, due to the building’s size and scope of ownership, with nearly two million square feet owned by four major entities along with a shared facility space,” said Sumberg. “The acquisition required close coordination of multiple disciplines beginning with the due diligence and analysis for the client. The legal team drew on its real estate and land use experience to advise on the permitted uses and ability to reposition the property and obtain needed governmental approvals and permits for the project.

Because the acquisition was from a mezzanine lender that had foreclosed its mezzanine loan, there were multiple bidders for the property and the deal had to be put together within weeks, even though the seller did not have complete documentation on the project. “This put enormous pressure on the legal team to do quick, efficient and thorough due diligence on all aspects of the project,” Sumberg said.

Sumberg’s team was also involved in the resolution of outstanding litigation, including a contentious settlement with an existing condominium association, which shares the structure on the property, over certain rights and obligations of the master association.

The settlement permitted the Bilzin Sumberg client to invest more than $150 million in improvements to transform the Perry Hotel into the luxury, eco-friendly 1 Hotel & Homes brand being launched by Barry Sternlicht, CEO of Starwood Capital and founder of the W Hotel brand.

With the lawsuits resolved and the retail lease areas recaptured, the buyer was able to proceed with its renovation and redevelopment of the property, according to Sumberg. “Our team has continued to handle all the zoning and permitting issues for the project, which is well under way,” he added. “The 1 Hotel & Homes South Beach is expected to open later this year, and our client is selling large oceanfront condominium units in the north tower.”

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CLOSING AN INTERNATIONAL BANKING TRANSACTION AS HEAD OF THE Latin America Practice Group at Hunton & Williams LLP in Miami, Fernando Alonso has handled a number of complex international transactions. But last year, his legal team had to resort to litigation to achieve a successful closing on an Ecuadorian banking company.

“This was a very unusual deal,” said Alonso, who represented Promerica Financial Corporation, a Panama-based holding company that owns controlling interest in eight banks in Central America, the Caribbean, the U.S., and Ecuador. The Hunton & Williams team included partner David R. Yates in Atlanta, and associate Sarah Klee in Miami.

“Our client wanted to increase its presence in Ecuador and we entered into negotiations to buy Banco de la Producción SA, Ecuador’s third-largest publicly traded lender,” Alonso said. “They signed a letter of intent that included several elements that would be binding. But just before the final document signing, they called us to say that a shareholder had changed his mind and didn’t want to sell after all. That’s very unusual since there are major due diligence costs

associated with a banking sale.”

Alonso’s client decided to press for a closing and filed suit in New York against the Ecuadorian banking company. “We wanted to enforce the letter of intent,” he said. “It put pressure on the seller, who eventually decided to go ahead with the transaction. At that point, we renegotiated the price, reworked the provisions and this time we got to the closing.”

The agreement was signed on October 14, 2013. “This was a visionary investment for Promerica’s portfolio and significantly expands its footprint in Ecuador,” says Alonso. “Banco de la Producción is a financially sound and well-run bank.”

After successfully navigating the regulatory approval process in Ecuador, the parties finalized the transaction on March 12, 2014.

The total transaction value was confidential.

“In all my years of practice, I never before had to sue someone to get them to the table,” said Alonso. “However, this complex crossborder transaction is a good indicator of the kinds of deals that South Florida attorneys are handling today.”

CREATING A REIT WHEN THE GEO Group sought to revise its corporate structure, Stephen Roddenberry led an Akerman team that turned the Boca Raton correctional company into a real estate investment trust (REIT). “We were counsel to the company on its conversion,” said Roddenberry, a partner in the Miami office.

“Historically, REITs were passive real estate holding companies, but their structure provides benefits for income tax purposes.”

GEO owns or leases more than 70 facilities, totaling approximately 47,000 beds, which represent approximately 70 percent of GEO’s worldwide facility portfolio. In order to achieve REIT status, GEO reorganized its operations into separate legal wholly owned operating business units through a taxable REIT subsidiary (TRS).

Through the TRS structure, a small portion of GEO’s businesses, which are non-real estate related, such as GEO’s managed-only contracts, international operations, electronic monitoring services, and other non-residential facilities, are now part of wholly-owned taxable subsidiaries of the REIT, while most of GEO’s business segments, which are real estate related and involve company-owned and company-leased facilities, are part of the REIT. Because REIT rules substantially restrict the ability of REITs to directly or indirectly operate or manage health care facilities, GEO was required to divest all health care facility

management contracts under its former wholly owned subsidiary, GEO Care.

In a message to employees, President George Foley called the restructuring “a historic milestone” that enabled The GEO Group to become the first fully integrated equity REIT in the correctional and detention industry. On January 18, 2013, the change was validated when the Internal Revenue Service said GEO Group qualified to operate as a REIT under its reorganized corporate structure.

GEO Group’s shareholders received a special dividend of $350 million, or $5.68 per share, on December 31, 2012, in connection with the change. “We have increased our annual dividends from $0.80 per share to $2.00 per share starting in the first quarter of 2013, which is indicative of our long-term commitment to return value to our shareholders while we continue to pursue quality growth opportunities,” he added.

Since the GEO restructuring, other Akerman clients are considering similar conversions,

says Roddenberry, who focuses his practice on corporate compliance and governance issues, public and private securities transactions, mergers and acquisitions, and private equity investments. “We are seeing more use of this tax structure,” he said. “The capital markets so favor dividend stocks that prices typically respond positively to the conversion.”

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FINANCING RESEARCH PROJECTS THREE YEARS AGO, the Florida Legislature authorized $10 million to help the non-profit Institute for the Commercialization of Public Research create job-producing spin-off companies. However, the legislature didn’t set any standards for spending the money, according to Jonathan Cole, partner, Edwards Wildman in West Palm Beach. “We worked with the institute staff to develop guidelines and parameters for investment of those funds,” he said.

One of the issues was that the legislation didn’t allow the institute to take an equity position in those spin-offs, although the state’s universities do take equity when they license their intellectual property.

“We designed a program with long-term, low-interest unsecured loans and developed a set of rules,” Cole said. “The start-ups could pay us back in five years or when the company was sold.”

Last year, the Legislature appropriated another $5 million for the program and amended the law so the institute could provide equity capital. The result was the Florida Technology Seed Capital Fund, which provides from $300,000 to $500,000 provided the grant is matched by private funds. Since its launch,

the program has provided more than $12 million in public capital, which has been more than matched by $40 million in outside funding, said Cole. “This blend of public and private capital is helping to support our economy,” he adds.

For example, the technology seed fund has supported the commercialization of biotechnology research projects from the University of Miami, University of Florida and Florida State University, including a 3D technology that allows a tablet or smartphone to map the inside of a room. “Another technology is a pill capsule with an RFID [radiofrequency identifier] that confirms that you took the medication,” Cole said. “A reader on the wrist picks up that signal and uploads it to the web.”

One part of the program Cole and his team drafted for the institute was the creation of an advisory board with experienced investment professionals who review the proposals and make recommendations for funding. Cole is one of the more than 20 advisors serving on the board. As he said, “This is a way to apply my 40 years of experience in working with entrepreneurs, venture capital providers and emerging technology companies to help the state’s economy.”

SELLING AN ONLINE COMPANY BACK IN 2002, Valerie and Paul Holstein registered a web domain and began operating CableOrganizer.com from their home garage. They soon found a niche selling wires, cables, sleeves, trays, raceways and related products. Through the years, the Fort Lauderdale company developed a worldwide base of more than 250,000 customers, including aerospace and Fortune 500 companies, with millions of dollars in annual sales.

When the owners decided to sell, they turned to Michael G. Platner, chairman, Corporate Practice Group at Lewis Brisbois Bisgaard & Smith LLP in Fort Lauderdale, for assistance. “We helped them hire investment bankers to find and solicit buyers,” said Platner, who works with clients to develop and execute legal strategies for businesses from early stage through maturity and sale or merger. “We also recommended they consider a private equity firm that we recommended.”

Last year, Platner and his team were able to close the deal with the private equity firm in a favorable transaction for both buyer and seller. The names of the parties and the terms of the

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transaction were confidential. “The owners were able to retire and are now traveling the world,” he said. “In addition, they retained an interest of more than 20 percent of the company, so they have a good upside position for the future.”

After the sale, the private equity firm brought in a “world-class CEO with experience in growing both public and private companies, adds Platner. “The company has already made another acquisition and the prospects look very positive for the future.”

Platner says the firm played a major role in putting the transaction together.

“Our role was unusually complete,” he says. “We helped them prepare to sell the company, found suitable investment bankers and the private equity firm. We also handled the negotiations and closed the deal with the lenders as well as the buyers.”

As he says, “This was a great story about how an entrepreneurial family created a company from scratch in South Florida, achieved worldwide success with a vertical product line and sold it to a buyer that will continue to grow the company in the future.”

OUR

ANNIVERSARY

CELEBRATING

SOUTH FLORIDA LEGAL GUIDE WILL COMMEMORATE 15 YEARS OF SERVING OUR REGION’S PROFESSIONAL COMMUNITY WITH OUR 2015 EDITION BEING PUBLISHED IN JANUARY. FOR THE PAST 15 YEARS, WE HAVE BEEN PRESENTING THE TOP LAWYERS, TOP LAW FIRMS AND TOP UP & COMERS IN THE SOUTH FLORIDA REGION AS SELECTED IN OUR PEER-NOMINATED EDITORIAL PROCESS. WE WILL ALSO CELEBRATE 10 YEARS OF PRESENTING THE TOP CPAS AND FINANCIAL PROFESSIONALS WHO PLAY A MAJOR SUPPORTING ROLE IN LEGAL MATTERS.

We invite you to consider the varied marketing opportunities available for this special

15th Anniversary Edition.

For more information, contact us at: info@sflegalguide.com

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RECOGNIZED “METHODS OF PROOF”

By Stanley I. Foodman

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ur firm provides litigation support and trial consulting services for a variety of economic crime, civil and commercial matters. In a significant number of those matters, we have relied on one or more of the seven “Methods of Proof ” (MPs) commonly used by IRS agents during criminal investigations. They are the Specific Items, Net Worth, Expenditures, Bank Deposits, Cash, Percentage Markup, and Unit and Volume methods.

Over my forensic accounting career I have employed and testified to all of the MPs, while assisting trial counsel with defending economic crime allegations and during commercial and civil litigation as a plaintiff or defendant/respondent expert. It has not mattered whether the engagements were in the federal court or state court. All of the MPs are recognized and acceptable in the court systems of the U.S. as well as a number of foreign jurisdictions.

This article concentrates on a brief description of four engagements and the results of using the MPs. Some years ago, an individual was indicted by the U.S. attorney in the Southern District of Florida for laundering the proceeds of narcotics trafficking through the “cash purchase” of winning lottery tickets. The U.S. Attorney’s Office relied on the testimony of

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cooperating witnesses and a list of assets owned by the defendant to paint a picture of criminal behavior. Fortunately, the defendant had retained his banking and other records we required for our financial evaluation for several years before, throughout and after the specified period of alleged money laundering. Using the specific items, net worth, expenditures and, bank deposits MPs, my staff and I prepared a detailed analysis of the financial history and financial condition of the defendant for several years before, throughout and after the specified period of alleged money laundering. We demonstrated that all of the defendant’s sources of funds were from legitimate sources, all of his expenditures were for legitimate purposes, and all of his increases in net worth were the result of legitimate transactions. The jury acquitted the defendant of all charges in short order.

Two years ago, I was retained, through counsel, to assist a victim company in a state civil case involving an employee embezzlement of more than $1 million. The embezzlers included the victim’s comptroller, a customer and the employee of a prominent national bank. It was accomplished through diverting the victim’s sales receipts through a bank account with a name that was similar to the name of the victim company, the “sales of inventory” to the coconspirator customer at a zero price and the active assistance of the

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co-conspirator bank employee in creating and using the diversionary bank account. The victim company brought suit against all three parties for recovery. By using the specific items, bank deposits, disbursements and the net worth MPs, we were able to quantify and support the victim’s embezzlement loss. That led to the bank settling with the victim for an amount close to the amount of the victim’s loss plus reimbursing the victim for legal and professional fees incurred during the litigation.

After Hurricane Wilma, an attorney retained our firm on behalf of certain condominium association unit owners to evaluate disbursements of hurricane damage insurance reimbursement that were approved by members of the board of directors of the condominium association. A lawsuit filed by condominium owners alleged that certain board members made repairs and improvements to their units in excess of what was required to restore their condominium units to their pre-Hurricane Wilma condition.

Because of deficiencies in the books and records of the association, its required financial statement audits were not done for several years prior to Hurricane Wilma and audited financial statements were not issued; eliminating a potential base line starting point for our work. Our work included reconstructing the association’s accounting books and records, assessing the disposition of insurance reimbursement funds received by the association, and reviewing in detail the association’s disbursements for the reconstruction and repair of the units of certain board members. In doing our work, we relied on the bank deposits, disbursements and specified items MPs. We used the association’s bank account records and documents, disbursements records and invoices in its files, as well as records in the possession of the targeted association board members. The result of our work was a settlement involving the targeted association board members, and the association’s officers and directors’ errors and omissions insurance carrier that resulted in the association being reimbursed for the inappropriate expenses

and improvements relating to the targeted board members.

In 2011 our firm was retained to provide forensic accounting support to the defense team in one of the most publicized Miami murder trials of the decade. The defendant, a former FBI agent, was charged with firstdegree murder, conspiracy to commit firstdegree murder and second-degree murder with a firearm. In charging the defendant with conspiracy to commit first-degree murder, the prosecution team relied on the testimony of notorious convicted murderers whose sentences were reduced in exchange for their testimony against the defendant.

The prosecution team also relied on the defendant’s financial records for one year immediately before and several years after the charging period in the indictment using the services of an IRS criminal investigation agent for its analysis and presentation of findings.

The IRS agent inaccurately used the net worth MP to present the financial side of the prosecution’s case by performing an analysis

of the one-year in the charging period that produced a negative net worth when viewed in the vacuum of that year. Had the agent used the net worth MP as required by the Internal Revenue Agent’s Manual, the year chosen would have demonstrated a beginning net worth of more than several hundred thousand dollars and the ending net worth for that year, although somewhat reduced, would have remained at several hundred thousand dollars.

The net worth MP is not accurate unless it covers several years because analyzing a single year in a vacuum can produce skewed results. We used the same records and produced a net worth analysis for all of the years covered in the government’s charging period. As a result of our objective net worth MP analysis, the jury ignored the prosecution’s cooperating witness testimony regarding financial bribes paid to the defendant as well as the inaccurate presentation and related testimony of the IRS agent, and acquitted the defendant of the charges of first-degree murder and conspiracy to commit first-degree murder that rested on the prosecution’s assertion that the defendant had received bribes for ignoring the murder activities of the cooperating witnesses.

In the absence of a smoking gun, using the “Methods of Proof ” during a forensic accounting engagement has proven to be the most effective approach to achieving a positive result for parties that we represent.

Stanley I. Foodman is CEO of Foodman CPAs & Advisors and a recognized forensic accountant and litigation support practitioner.

Specializing in complex domestic and international tax matters, Foodman has served as an expert witness and forensic accountant for some of the nation’s most challenging, highprofile economic crime cases. Foodman and his team of accountants also assist clients with a full range of accounting matters including compliance, voluntary disclosure, corporate and individual taxation, family law litigation, estate and trust tax and wealth planning. Consistently ranked as one of the top accounting firms in South Florida, Foodman CPAs & Advisors assists clients locally, nationally and internationally. www.foodmanpa.com

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COLLECTING A JUDGMENT AGAINST A FOREIGN SOVEREIGN NATION

By Andrew C. Hall

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he King cannot be sued without his consent. These famous words are no longer absolute. If this phrase were first coming into existence today, the more appropriate phrase would be, â&#x20AC;&#x153;another King cannot be sued without the consent of the King in whose nation the tribunal sits.â&#x20AC;?

Until 1976, the issue of sovereign immunity of a sovereign nation, or its agencies or instrumentalities, was left to the exclusive decision of the U.S. State Department. The rationale was that in disputes between nations, or between the citizens of one nation and another foreign nation, the matter should be left to a resolution employing diplomatic means and was inappropriate for resolution by the judiciary. After concluding that the United States was providing sovereign immunity routinely when most nations were not, Congress passed the Foreign Sovereign Immunities Act (FSIA) in 1976 that controls all questions in this area. Under the FSIA, a foreign nation may be sued in the courts of the United States when a claim has accrued in the United States or has caused harm here, and involved any of the following: commercial activity; was in admiralty as part

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of commercial activity; tortious misconduct; the enforcement of an award in international arbitration; or, was brought by an American victim of terrorism.

Let us assume that you have filed a claim and recovered a judgment against a foreign nation. What do you do to collect? First, if the dispute involves commercial activity, the judgment may be executed against all property of the foreign nation used for the commercial activity in the United States. Typically, property falling in this category would include all property purchased by the foreign nation for export, not involving defense procurements, and would include food, fuels, machinery and deposits in American banks. The property expressly excluded from execution would be property of a foreign central bank or monetary authority held for its own account and military property.

The question remains how to proceed on collection. The most difficult part is identifying what property is available for execution.

Foreign governments are not likely to comply with the standard discovery tools normally available. I recommend two places as the

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starting point. Most foreign nations rely upon the international banking system.

Therefore, discovery directed towards large banks coupled with appropriate restraining orders can be effective. Alternatively, the securing of a large contract by a public company is widely publicized. Those assets, once purchased, or funds deposited for purchase are available for execution. Once the execution process begins, the actual procedure is governed by the state law for execution of the forum, regardless of whether the judgment is state or federal. Therefore, traditional writs as well as supplementary proceedings are available.

Victims of terrorism have some advantages and some disadvantages involving the execution process. The advantages are that the separateness of government-owned corporations may be ignored in favor of this category of judgment but not any other.

Similarly, once a foreign state is designated a state sponsor of terrorism, all assets in the United States owned by that nation are frozen and controlled by the Office of the Foreign Assets Control. Even so, the process is timeconsuming and can take years to collect. It requires diligence and perseverance almost on a daily basis.

One area that has been particularly helpful to clients of mine who were victims of state sponsored terrorism is airplanes. In the early 1970s Libya purchased five large cargo airplanes from Lockheed. The planes were assembled and delivered to Lockheed in Marietta, Georgia, for the installation of avionics. Shortly thereafter, Libya was declared to be a state sponsor of terrorism, its assets were frozen. These five airplanes remained in Georgia rotting away for the next 30 years. When Libya was about to come off the list of state sponsors of terrorism, we obtained a judgment in favor of two Americans who were tortured in Libya.

When Libya came off the list, it removed all cash previously frozen in US banks and boldly claimed that there were no assets available for execution. While Libya forgot its airplanes, we did not. U.S. marshals seized the airplanes in the Lockheed facility in Marietta. The threat of auctioning these aircrafts for scrap metal value was sufficient for Libya to offer an amount sufficient to satisfy the judgment.

But not all stories have happy endings. Last year we learned that Cuba was providing its

presidential aircraft to the President of Venezuela for a trip from Venezuela to China and then to meetings at the United Nations during the week of September 23, 2013.

While that airplane was owned by Cuba and being used by Venezuela, it did not qualify as property ancillary to the diplomatic missions of either nation. As a result, we requested the U.S. District Court in New York to issue a Writ of Attachment and it did. The U.S. Marshals Office, after verifying our right to execute through the Department of Justice and State Department, confirmed that it would attach the airplane as long as we had a hangar at JFK, security personnel and a ground pilot available. We made arrangements for all the above. But as the airplane was few hours from JFK there was a leak and Venezuelan president learned about

our efforts. While en route over Canada he announced that he was cancelling his trip to the United States because the United States could not â&#x20AC;&#x153;protect him or assure his safety.â&#x20AC;? The State Department issued its own declaration stating that the cancellation was to avoid execution on this Cuban aircraft by victims of terrorism who had a judgment against Cuba. While I would have preferred to have executed on the airplane, it still made a great story.

Andrew C. Hall is the founder and managing partner of Hall, Lamb and Hall, P.A., a Miami-based law firm specializing in complex corporate, business, and securities litigation. Hall can be reached at 2665 S. Bayshore Dr., PH 1 Miami, FL 33133 or (305) 374-5030 www.hlhlawfirm.com

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STRUCTURING INBOUND INVESTMENTS IN THE U.S.

By Gabriel L. Valdes and David R. Yates

A

s of late, reference to foreign direct investment is routinely couched in the context of the developing world. Yet, according to annual data released by the United Nations Conference on Trade and Development, the United States has for many years led, and continues to lead, the world in foreign direct investment inflows. In short, investors from around the world continue to look to the U.S. as a destination offering minimal political risk, a skilled and educated workforce, a reliable infrastructure, and a transparent legal and business

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environment. While this may be surprising to many people, our economy remains an attractive destination.

Reaping the benefits of investment in the U.S., however, requires careful planning and structuring from a legal perspective, whether the investment is pursuant to a stock or asset acquisition, a merger, joint venture or establishment of new operations. While the key considerations vary substantially depending on the context of a given investment, there are a number of recurring concerns of importance to foreign investors.

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Branch or Subsidiary Foreign companies seeking to establish U.S. business operations generally have a choice to make between forming a subsidiary corporation or a branch.

A corporation is a legal entity separate from its shareholders and pays its own income taxes. The shareholder’s liability for the taxes, debts or obligations of the corporation is typically limited to the investment made by the shareholder in the corporation’s shares, provided that the subsidiary respects corporate formalities and is adequately capitalized. A subsidiary corporation pays taxes on its worldwide income on a net-basis and is subject to graduated tax rates that rise to a maximum of 35%. The two primary repatriation methods used by foreign shareholders and their U.S. subsidiary corporations are dividends and interest. Generally, a U.S. corporation may be capitalized with equity or debt by its foreign parent and repatriate funds by declaring dividends or interest, respectively, in each case subject to a withholding tax of 30%. The capitalization/ repatriation decision is often dictated by the presence of a bilateral tax treaty with the foreign parent’s home country.

A branch is a business venture undertaken in the U.S. directly by a foreign parent. A branch can be established in one of two ways: (1) operation through a limited liability company (that is taxed as a partnership or disregarded for tax purposes if held by a single member), or (2) direct operation by the foreign parent. Under the latter structure, a foreign parent can directly enter into business activities and private contracts in the U.S. without forming an entity but the foreign parent will not be shielded from the liabilities that the branch incurs in its course of business. In such a case, the foreign parent will be required to file a corporate income tax return with the Internal Revenue Service and with the corresponding department of revenue of each state in which the foreign parent does business. A branch – whether or not operating as an entity – that generates “effectively connected income” is subject to tax on a net-basis at graduated tax rates, like a corporation. Likewise, whenever there is a decrease in the net U.S. assets of a branch, the branch is deemed to have made a payment equivalent to a dividend to the

foreign parent and a “branch profits tax” is imposed on such decrease in assets at a rate of 30%.

All else equal, corporations offer a few distinct advantages over U.S. branches, such as shielding shareholders from liability arising from corporate actions, providing administrative ease from a tax and immigration perspective, and providing for more control over how and when funds come in and out of the company. On the other hand, U.S. branches permit the use of losses for the foreign parent if it is expected that the U.S. operation is depreciable-asset heavy and will generate substantial losses upon startup that could be beneficial to offset income elsewhere. Essentially, the branch/subsidiary decision comes down to finding an optimal balance of legal protections and financial (including tax) efficiency.

State of Incorporation If a foreign investor opts to form a corporation in lieu of a branch, the choice of which state in which to incorporate should be made in light of a number of economic and legal considerations. Many companies simply incorporate in their home state because of the administrative ease of doing so. Others choose to incorporate in states like Nevada or Wyoming, which offer some combination of no corporate income or franchise tax, nominal annual fees, minimal reporting and disclosure requirements, and stockholder privacy. A significant number of companies choose Delaware because it has an established body of corporate law (which allows for greater certainty and facilitates long-term planning) and a reputation of having a flexible and management-friendly body of law. From a tax perspective, there is no material advantage to be gained by incorporating in any particular state if the foreign parent’s business will be interstate in nature because the subsidiary will be subject to state and local taxation wherever it has an economic presence.

Avoiding the Estate Tax Trap For individual foreign investors, a critical trap to be wary of is the estate tax. The U.S. imposes a tax of 40% on the estates of nonresident aliens. In general, the estate of a nonresident alien decedent is taxed on that

portion of the alien’s gross estate located in the U.S., including, without limitation, items such as real and personal property, or stock of a U.S. corporation. In order to avoid the estate tax trap, individual foreign investors often make their investments here through a foreign corporation or “blocker corporation.” This structure allows the property to escape taxation because it is cut off by a foreign corporation, the “blocker,” and ownership interests in foreign corporations are not U.S. property for U.S. estate tax purposes.

Gabriel L. Valdes is an associate in the Miami office of Hunton & Williams.

His practice focuses on general corporate representation including cross-border finance, and mergers and acquisitions.

David R. Yates is a partner in the Atlanta office of Hunton & Williams.

His practice focuses on international and domestic public and private mergers and acquisitions, divestitures, investments and strategic transactions.

Gabriel Valdes

David Yates

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PROVIDING FINANCING FOR FOREIGN TRADE

By Diogo Figueiroa

M

iami is internationally recognized as the gateway to the Americas. For decades, South Florida-based banks have been supporting international trade transactions between the U.S. and foreign countries, playing an important role in promoting and developing the region.

With its central geographic location, infrastructure, airports and ports, proximity to Latin American and Caribbean countries, friendly business environment and multinational culture, Miami is distinctively positioned to benefit from the anticipated growth in trade activity. Given that Miami has a lot going in its favor from a business standpoint, it’s surprising that the vast majority of Florida banks do not finance any international trade activity, and, instead, limit their customer relationships to only the domestic side of their businesses.

The small representation of trade finance providers in Florida becomes even more surprising in a region that depends and relies so much on trade. The tourism, real estate and wealth management industries foster some of the most significant businesses in South

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Florida and each of them has experienced an unprecedented influx of foreign funds; these funds supported the recovery from the financial crisis of 2007 and 2008. We can look at some of the following key facts to understand that international trade is one of the key drivers of the Florida economy: • Over the last decade, Florida’s trade has nearly doubled, surpassing $158 billion in 2013.

• International trade, along with employment by foreign-owned companies, is estimated to support more than one million jobs in the state.

• Exports of 60,000 Florida companies accounted for 20 percent of all U.S. exporters in 2011.

• Latin America and the Caribbean combined represent more than 60 percent of Florida’s trade business.

Florida has also benefitted from free trade agreements (FTAs) with neighboring territories in the Caribbean and Latin America.

The U.S. has multilateral FTAs in effect with 20 countries, such as

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the North American Free Trade Agreement (NAFTA) and the Dominican Republic– Central America–U.S. FTA (known as CAFTA-DR). Some FTAs are bilateral, such as the recently announced U.S.-Colombia agreement; other important FTAs are currently under negotiation, and will develop in the coming years.

The strategic importance of international trade to the overall U.S. economy is crystal clear. In 2010, the National Export Initiative strategy was announced, with the goal of doubling U.S. exports from 2010 to 2014 as well as supporting 2 million domestic jobs.

One of the tools the government utilizes to increase U.S. exports, particularly of small- and medium-sized companies, is the Export-Import Bank of the United States (ExIm Bank), the country’s official export credit agency. Its mission is to support the export of U.S. goods and services to international markets. The Ex-Im Bank enables U.S. companies to turn export opportunities into real sales that help maintain and create American jobs, contributing to a stronger national economy.

The limited number of trade finance banks in Miami impacts Florida-based companies that are import/export-related. Small- and medium-sized businesses are especially limited in their international capabilities, creating a very interesting opportunity for banks with an expertise and interest in the trade finance arena. I joined Sabadell Bank’s trade finance team to pursue this very opportunity. We have also recently expanded our trade finance team significantly to serve this important business segment and to have the capacity to grow with our clients.

Over the years Sabadell has been setting up a corporate and investment banking group and culture unique to Miami. We have different teams that complement each other in providing customers with a variety of financing options, and a range of services that include trade finance solutions, structured and project finance loans and syndications, supply chain and international factoring, working capital, and cash management services.

Our trade finance team brings several years of combined experience; we have structured hundreds of Ex-Im Bank-backed transactions and are one of the most experienced trade finance teams in the region with hundreds of million dollars funded, particularly in Latin America-related transactions.

Our team often encounters questions and doubts posed by customers about how companies deal with international clients, the lack of knowledge of foreign trade regulations and trade law jurisdiction. These customers are concerned about the inability to access existing trade finance tools to promote trade transactions and mitigate intrinsic risks, and these concerns usually revolve around the same topics: • How can I ensure that I will receive agreed-upon payment for the products I am exporting?

• How can I ensure that I will receive the correct products, of the expected quality and quantity, within the timeframe requested in my purchase order?

While these concerns might apply to all domestic transactions, the international element adds a series of new risks, uncertainties and concerns that are not present when dealing within the country.

For many decades, banks have been developing tools to facilitate international transactions, primarily with the purpose of mitigating risks to both exporter and importer, with the letter of credit being the most traditionally known.

Although this is still a very important tool worldwide, there are several other riskmitigating and financing products available to exporters and importers that enhance trade transactions, including the Ex-Im Bank, export-promoting credit agencies in several countries, trade credit insurance, international factoring and forfeiting.

With increased globalization and the need to compete effectively on an international playing field, companies will have to invest in new opportunities and markets. To take advantage, companies must realize that challenges associated with international transactions are quite different from domestic ones. As a result, it’s wise to partner with an experienced trade finance bank ensuring that the expectations of all parties involved in an international trade transaction are met. By letting banks handle the risk mitigation and financing side of transactions, companies can focus on targeting new markets, customers and opportunities to increase sales.

In Miami we believe that this is the decade of Latin America. We at Sabadell are proud to support our international trade customers and excited to be part of this growth.

Diogo Figueiroa is the SVP and Head of Trade Finance at Sabadell United Bank. He manages the Bank’s Trade Finance Team and is responsible for the overall development of the Bank’s line of business in the USA and in Latin America. Figueiroa and his team have originated and structured export finance transactions for companies in most Latin American and Caribbean countries and have contributed to the business increase in the region. He has extensive knowledge of Eximbank, export credit agencies and private insurance backed credits including medium term loans, revolving lines of credit and factoring facilities. Figueiroa’s team is recognized as one of the most experienced trade finance teams in Miami with hundreds of million dollars of trade finance transactions, particularly in Latin America.

Prior to joining Sabadell he was the Head of Trade Finance at Espirito Santo Bank in Miami and worked in the international division of Banco Espirito Santo in Lisbon, Portugal. He has been a member of FIBA’s trade committee. Figueiroa holds a Masters in Business Administration with a specialization in finance, a business administration degree and a management executive course at INSEAD, France. He is a native Portuguese speaker, and also fluent in English and Spanish.

He is Portuguese and has been living in Miami since 2007.

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MIAMI’S NEW EB-5 REGIONAL CENTER INVESTMENT-IMMIGRATION OPPORTUNITIES CARRY TAX AND TRANSACTIONAL LEGAL ISSUES

By Thomas M. David, Jennifer Correa-Riera, and Stephen H. Wagner

O

n August 7, 2014, Miami Mayor Tomás Regalado announced that the City of Miami had been approved by U.S. Citizenship and Immigration Services (USCIS) to be a “Regional Center” for the agency’s EB-5 Immigrant Investor Program.

The EB-5 Program allows foreigners to invest $1,000,000 (or $500,000 in certain high-unemployment or rural areas) in new commercial enterprises in the U.S. that create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years. In return, investors (and their family members) can obtain conditional status to immigrate to the United States. If the jobs actually are created within two years, the investors obtain permanent status and can become U.S. citizens.

To promote the EB-5 Program in South Florida, the City of Miami has established the Regional Center (and its Office of International Business Development) to match up local Miami-Dade, Broward, and Palm Beach County businesses seeking to grow with foreign investors seeking

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an investment opportunity and an immigrant visa to the United States.

Yet while foreign investors participating in the EB-5 Program have obvious immigration law issues, this same program is fraught with notso-obvious tax, transactional, and other business and legal issues for both U.S. businesses and foreign investors.

Important Transactional Issues In order to qualify to receive EB-5 investments, businesses must submit a proposal to the Regional Center describing, among other things, the company’s overall business plan, its specific plan for using the investment, and its marketing plan to attract investors. Given the complexity of the application process, the City of Miami has recommended that businesses have an attorney to guide them. This legal guidance is critical because of the complicated financial structure of the investment as well as the due diligence process that will occur.

It is forecast that all foreign investor dollars will be escrowed in

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separate accounts until they are deployed by the U.S. business recipients. The Miami Regional Center is also contemplating using special neighborhood lending associations to oversee the investment process. These mechanisms, along with the investment proposals being created by the U.S. businesses, are being carefully scrutinized by the Regional Center, USCIS, and the U.S. Securities and Exchange Commission, which are looking to prevent investor scams. Moreover, each U.S. business applying for EB-5 funding will be reviewed (investigated) to ensure the legitimacy of the company and its investment proposal. Because of this heightened scrutiny, many U.S. businesses taking part in the program elect to set up special corporate entities to serve as the investment platform.

Given these considerations, it is imperative that local businesses seeking investment under this initiative have in place a comprehensive plan to meet the legal, regulatory, and transactional requirements of the EB-5 Program. … And Critical Tax Issues, Too While foreign investors utilizing the EB-5 Program as a pathway to economic growth and U.S. citizenship may not face as many transactional issues, they will face an abundance of U.S. tax issues that may not be immediately apparent.

After making their required investment and entering the United States under conditional status, an EB-5 investor becomes a “U.S. person” for income tax purposes. This means the investor now is responsible for full U.S. tax compliance and is subject to U.S. taxation on his or her total individual worldwide income.

Because EB-5 investors tend to be well-heeled and have income in their native country and elsewhere, these tax consequences can be significant, making effective tax planning all the more important.

Furthermore, these newly minted U.S. income tax residents invariably have foreign bank accounts and investments. Each such foreign bank account holding more than $10,000 or more than $10,000 in the aggregate must be reported on FinCEN Form 114, “Report of Foreign Bank and Financial Accounts” – the so-called FBAR reporting requirement. Furthermore, the IRS may require the EB-5 investor to file Form 8938, “Specified Foreign Financial Assets,” which reports financial assets above a certain

threshold. Participation in the EB-5 Program may also subject investors to U.S. estate and gift tax requirements on their worldwide assets.

If the EB-5 investor fails to consider these tax issues and make required filings, higher taxes and onerous penalties may result. Therefore, individuals using the EB-5 Program for investment and immigration purposes must have comprehensive tax advice from a well-qualified tax attorney.

U.S. Consequences for Foreign Activities Once EB-5 investors have successfully immigrated to the United States, they must now also consider how U.S. law – in particular, U.S. criminal law – may apply to any business activities they still have in their native country.

In Pasquantino v. U.S., 125 S.Ct. 1766 (2005), the U.S. Supreme Court determined that a foreign government’s right to collect tax is a “property right” within the meaning of 18 U.S.C. § 1343, the U.S. wire fraud statute.

The court further determined that the revenue rule does not bar the U.S. government from using the federal wire fraud statute to prosecute those who attempt to defraud a foreign government of that government’s tax revenues when using an instrumentality of the U.S. to effectuate the non-payment of that country’s tax.

In other words, under the Pasquantino decision, a U.S. federal court may prosecute foreign investors who do not fully and accurately disclose their income and assets to their home government, provided that they used U.S.-based telephones, computers, wire transfers, etc.

In a “reverse Pasquantino” situation, foreign governments may also prosecute an EB-5 investor for failing to disclose his or her income and assets under the law of the investor’s native country. Reverse Pasquantino considerations must be given strong consideration as a result of the Foreign Account Tax Compliance Act (FATCA) and the trend toward foreign governments seeking reporting of U.S. bank accounts held by their citizens.

As demonstrated above, EB-5 investors and U.S. businesses have numerous considerations when taking part in this lucrative program. Corporate, transactional, tax, estate, and criminal law considerations abound. Each of these issues requires the guidance, planning, and execution that

effective legal counsel can bring.

Thomas M. David is Of Counsel to Fuerst Ittleman David & Joseph focusing on real estate, government relations, and non-profit law issues. His email address is tdavid@fuerstlaw.com.

Jennifer Correa-Riera is an experienced tax, tax litigation, and anti-money laundering associate with Fuerst Ittleman David & Joseph.

Her email address is jcorrea@fuerstlaw.com.

Stephen H. Wagner is a senior associate with Fuerst Ittleman David & Joseph specializing in international law as well as corporate and transactional matters. His email address is swagner@fuerstlaw.com.

All of the professionals at Fuerst Ittleman David & Joseph can be reached at 1001 Brickell Bay Drive, Miami, Florida 33131, or by telephone at 305-350-5690.

Thomas David

Jennifer Correa-Riera

Stephen Wagner

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DRIVING WHILE DISTRACTED (DWD): HAVE WE MADE ANY PROGRESS AND HOW DO WE STOP THIS HAZARDOUS BEHAVIOR?

By John Elliott Leighton

D

riving while distracted (DWD) has become an epidemic in this country. In 2012, more than 400,000 people were injured in car crashes involving a distracted driver.

This represents a 9% increase from the approximately 387,000 people injured during 2011. The number of deaths have skyrocketed as well.

Distracted driving – and in particular texting while driving – has been a popular subject in the media. Everyone is seemingly against it.

Everyone recognizes that it is dangerous. Yet the problem only seems to be growing.

Believe it or not, Florida was among the last major states to

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adopt a texting ban, and only did so in 2013. Yet Florida’s law is a “secondary offense” law. That means someone texting while they are driving can only be cited if they are seen committing another offense.

And it is still legal to make phone calls while driving, regardless of speed or conditions.

Because this has become an overwhelming problem in such a short time, it has been studied carefully: 78% of teens and young adults admit to reading a text message while driving (71% admit to composing one while driving). Overall, 171.3 billion text messages are sent in this country each month.

At any given moment during daylight hours, more than 660,000

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vehicles are being driven by someone using a handheld cell phone. Texting is the most serious common alarming distraction because it involves manual, visual, and cognitive attention simultaneously. Sending or reading a text takes your eyes off the road for 5 seconds.

At 55 mph, that is the equivalent of driving the length of an entire football field…blindfolded.

By anyone’s estimation it is incredibly dangerous and puts everyone at risk.

What about hands-free cell phones?

The research done to date suggests that the cognitive distraction of having a hands-free phone conversation causes drivers to miss the important visual and audio cues that would ordinarily help them avoid a crash or other hazard. Studies have shown that using a cell phone while driving, whether handheld or hands-free, delays a driver’s reactions as much as having a blood alcohol concentration at the legal limit of .08 percent.

So what can the government do? Because passenger car driving falls under the jurisdiction of the individual states, the U.S. Department of Transportation is unable to regulate cell phone use or texting use in cars.

Banning texting while driving by the 39 states that have done so has not significantly altered behavior. In fact, research conducted by the Highway Loss Data Institute found no reduction in car crashes after texting bans took effect. They actually saw a slight increase.

Perhaps the ban has caused some drivers to text more covertly which further distracted them from their driving.

The traffic and criminal laws do not seem to be working to substantially change behavior that has catastrophic consequences.

So how do we change behavior where the technology allows for – and often encourages – such dangerous distractions?

One solution may be the imposition of punitive damages in civil cases. If the behavior of a distracted driver is akin to that of a drunk driver (and studies show that some distracted drivers are actually more impaired in their driving), then the imposition of punitive damages might be very appropriate.

A review of the purpose of punitive damages is in order. The concept of such damages is not to compensate a victim who is injured through the negligence of another.

That is the purpose of compensatory damages.

Instead, punitive damages are intended to punish and deter a party for engaging in behavior that society considers unacceptable.

It took many years and a great deal of common law development before drunk driving gave rise to a claim for punitive damages. Over time, legislatures and courts recognized that the voluntary intoxication combined with driving a deadly instrumentality like a car or truck was tantamount to an intentional act. The conduct has been universally recognized as being so grossly negligent such that the imposition of punitive damages is appropriate both as a means to punish the wrongdoer and deter others from committing such acts.

If a driver texting or using a cell phone is as impaired as a drunk driver, as some studies have concluded, it stands to reason that the knowing and voluntary act of texting while driving should also give rise to punitive damages. In many jurisdictions punitive damages are available to victims of drunk driving. The victims of voluntarily distracted drivers, where provable, should be similarly

afforded the same remedy.

Under established Florida law, evidence of voluntary intoxication gives rise to a claim for punitive damages even absent an independent showing of carelessness or abnormal driving.

See Ingram v. Pettit, 340 So.2d 922 (Fla. 1976).

Because other means have been unsuccessful, it may only be through the civil justice system that true behavioral change will occur with regard to DWD. The Florida Legislature needs to amend Fla. Stat. 768.736 to include DWD in addition to intoxication as a basis for punitive damages and elimination of limits. Punitive damages may be one of the few legal tools available to help change behavior on the road.

John Elliott Leighton is a board certified personal injury trial lawyer with offices in Miami and Orlando, Florida. He can be reached at Leighton Law, P.A., www.Leightonlaw.com and 888-395-0001.

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ADVISING YOUR CLIENTS ON PHILANTHROPY: GIFTS OF LIFE INSURANCE

By Stephen C. Lande, Director The Foundation of the Greater Miami Jewish Federation

L

ife insurance is an important charitable gift planning tool for many charities. Insurance allows the donor to make a present rather than future gift, and a gift that is often much larger than might otherwise be possible. Insurance gifts

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are generally very affordable, especially for younger donors. If the gift is irrevocable and the charity is both the owner and the beneficiary of the policy, the donor is entitled to a charitable income tax deduction for all premiums paid.

Donors take comfort in knowing that their

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charitable legacy is in place and is removed as a consideration in their estate planning process.

There was a time in the early 1990s when the IRS called into question the matter of charities having an insurable interest in the lives of their donors. The owner of any life insurance policy must have an insurable interest in the life of the insured to be entitled to purchase such a policy. In the end, the question was resolved by the individual states adopting legislation to that effect. Florida’s statute provides in pertinent part, “… [a] charitable organization that meets the requirements of s. 501(c)(3) of the Internal Revenue Code of 1986, as amended, may own or purchase life insurance on an insured who consents to the ownership or purchase of that insurance.” F.S. 627.404(2)(b)(7).

There are a number of ways for your client to make a charitable contribution of life insurance. They can: • Name a charity as the beneficiary or a partial beneficiary of a policy he/ she already owns. This method is easy, inexpensive and offers flexibility, but since the donor still owns the policy, premiums are not tax deductible.

• Apply for a new insurance policy naming the charity as the owner and beneficiary.

The application process is the same as for any new insurance policy, and the charity joins in the application. Other than term life insurance, most insurance products will work just fine.

• Contribute a policy he/she already owns.

Sometimes your clients own life insurance policies that are no longer needed for the purpose they were original purchased.

These policies can usually be contributed to charity. The donor receives a charitable income tax deduction for what is essentially the lesser of cost basis or fair market value for paid-up policies, and the cash value of the policy with some minor adjustments for policies with an ongoing premium obligation. This would be a gift of a noncash asset, so an appraisal will be required. These are easily secured. It should be noted that gifts of insurance policies with loans against them are problematic.

Some additional considerations:

Charities are pleased to work with any agent representing any quality insurance company. Most charities are reluctant to favor any individual agent or underwriter over the others because its donors are doing business with them all.

Good insurance agents see the charitable contributions of life insurance as an opportunity for them to provide additional services and products to their clients who are philanthropically inclined.

Although premium payments for polices owned by charities may be made directly to the insurance company and still be deductible, the donors of those policies generally prefer to contribute the premium payments to the charities and receive a tax letter from the charities. This opens up the possibility of contributing appreciated assets, as well as cash, to cover the premiums.

Human nature being what is it, donors can tire of making periodic premium payments or circumstances can otherwise change. Many charities encourage their donors to contribute policies with accelerated premium payments or that otherwise won’t require premium payments forever.

Charities need to avoid certain types of life insurance arrangements (e.g., stranger

owned life insurance) that are inappropriate and could ultimately result in IRS penalties and jeopardize their tax-exempt status.

The Foundation of the Greater Miami Jewish Federation has adopted a program designed to actively promote the use of insurance as a charitable gift planning tool. In summary, if the donor is willing to contribute a policy that meets certain specified criteria, The Foundation will subvent a significant portion of the premium.

For more information about gifts of life insurance at The Foundation of the Greater Miami Jewish Federation, please contact Foundation Director Steve Lande at slande@gmjf.org or 786-866-8623, or consult JewishMiami.org.

Steve Lande is director of The Foundation of the Greater Miami Jewish Federation and serves as Federation’s Authorized House Counsel. Prior to joining the Greater Miami Jewish Federation, he directed the Jewish Federation of Greater Pittsburgh’s endowment program for 18 years. A native of Iowa, Lande earned a law degree from Drake University and practiced law in Des Moines before joining the professional staff of the Pittsburgh Jewish Federation. He is also admitted to the practice of law in Pennsylvania.

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JOSE MIGUEL ARIGITA

THOMAS M. DAVID

SABADELL UNITED BANK 1111 BRICKELL AVE., 30TH FLOOR MIAMI, FL 33131 305-351-4387 JARIGITA@SABADELLBANK.COM WWW.SABADELLBANK.COM

FUERST ITTLEMAN DAVID & JOSEPH, PL 1001 BRICKELL BAY DRIVE, 32ND FLOOR MIAMI, FL 33131 305-350-5690 TDAVID@FUERSTLAW.COM WWW.FUERSTLAW.COM

VP SUPPLY CHAIN FINANCE

Jose Miguel Arigita is the VP Supply Chain Finance at Sabadell. He is responsible for the overall development of the bank’s supply chain finance line of business. Arigita has more than 13 years establishing, maintaining and developing relationships with corporate banking customers throughout North and South America, the Caribbean and Europe. He has extensive knowledge in Supply Chain by helping to creatively structure the following products: Factoring, Reverse Factoring, and Supply Chain Finance.

Thomas M. David concentrates his practice in the areas of real estate law, specializing in land use, zoning, foreclosure defense and general litigation; government relations law, including administrative and lobbying; and, non-profit law. In his practice, David applies his 25+ years of public and private sector experience to represent businesses and individuals that are seeking to resolve problems caused by local, state or federal government regulations. Able to handle myriad legal issues within a single matter, he can effectively negotiate positive outcomes for his clients as deftly as he can draft supporting contracts and agreements, and when necessary, represent the client in state or federal court to secure the desired result. Prior to entering private practice, David worked as chief of staff for the Miami-Dade County Manager and in a number of private and public sector entities. He serves on the boards of The Beacon Council, the Builders Association of South Florida, the MiamiDade Public Schools Site Selection, Planning and Construction Committee, and the Rural Neighborhoods foundation (which provides housing to farmworkers).

STANLEY I. FOODMAN

ROBERTO GATICA

FOODMAN CPAS & ADVISORS 1201 BRICKELL AVE., SUITE 610 MIAMI, FL 33131 305-365-1111 STANLEY@FOODMANPA.COM WWW.FOODMANPA.COM

BANCO SABADELL MIAMI BRANCH 1111 BRICKELL AVE., 30TH FLOOR MIAMI, FL 33131 305-808-6151 ROBERTO.GATICA@SABADELLBANK.COM WWW.SABADELLBANK.COM

TAXATION, LITIGATION SUPPORT

Stanley Foodman, CEO of Foodman, CPAs & Advisors, is a recognized forensic accountant and litigation support practitioner, specializing in complex domestic and international tax matters and economic crime. He is bilingual (English/Spanish) and provides hands-on expert assistance to clients on matters including corporate and personal taxation, compliance, voluntary disclosure, estate and trust tax and wealth planning. He has served as an expert witness and forensic accountant for some of the nation’s most high-profile economic crime cases. Foodman is a former auxiliary special agent for the Florida Department of Law Enforcement with specialization in economic crime — money laundering, bank fraud, public corruption and discovery of hidden assets. He is also a former consultant to the Miami office of the U.S. Attorney for civil RICO money laundering recoveries. Foodman received the 2010 Key Partners Award from the South Florida Business Journal. A frequent speaker on tax matters, he has also been named one of the “Top CPAs in South Florida” by South Florida Legal Guide every year from 2007-2014.

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SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

HEAD LATAM DESK

Roberto Gatica is the VP and Head of Latam Desk at Sabadell.

He is responsible for the overall development of the bank’s corporate line of business in Latin America. Gatica has more than 20 years originating and structuring transactions for companies in most of latin american. He has extensive knowledge in bilateral Term Loans, revolving lines of credit along with factoring and forfaiting facilities. Prior to joining Sabadell Gatica was the director of corporate and institutional banking at Banco de Credito e Inveriones in Miami. He has been a member of FIBA’s trade committee and honored by the Chilean government with the medal of honor Bernardo O’higgins. Gatica holds a bachelors degree in finance, has several specializations in trade finance, international business and an executive advanced program from Kellogg School Of Management. He is a native Spanish speaker, fluent in English and Portuguese. Gatica was born in Mexico City and has been living in Miami since 2003.

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ADAM S. HALL

ANDREW C. HALL

BUSINESS LITIGATION

BUSINESS LITIGATION

HALL, LAMB AND HALL, P.A. 2665 S. BAYSHORE DR., PH 1 MIAMI, FL 33133 305-374-5030 ADAMHALL@HLHLAWFIRM.COM WWW.HLHLAWFIRM.COM

HALL, LAMB AND HALL, P.A. 2665 S. BAYSHORE DR., PH 1 MIAMI, FL 33133 305-374-5030 ANDYHALL@HLHLAWFIRM.COM WWW.HLHLAWFIRM.COM

Adam S. Hall handles matters involving complex corporate and business litigation. In addition to commercial litigation, Hall focuses his practice on cases involving disputes between businesses, professional malpractice, securities, real estate, and probate disputes.

Recognized for his relentless advocacy on behalf of clients, he has litigated cases involving broker-dealer disputes, will contests, breach of fiduciary relationships, construction disputes, and malpractice disputes involving law firms or accounting firms. Beyond his legal work, Hall is actively involved in the South Florida community.

Hall currently serves on the Greater Miami Jewish Federation South Dade Branch Board of Directors. Hall has also served on the board of directors for the United Way of Miami-Dade County and has been a member of the executive committee for the United Way’s Young Leader division, including service as its chairman. Hall also maintains strong ties to the University of Florida, where he earned his law and bachelor’s degrees with honors. He is currently a member of the University’s Levin College of Law Alumni Council and serves on the alumni advisory board for Florida Blue Key, of which he was previously a member.

ERIC T. HALSEY

TORT LITIGATION, WRONGFUL DEATH

LEIGHTON LAW, P.A. 1401 BRICKELL AVE., SUITE 900 MIAMI, FL 33131 121 S. ORANGE AVE., SUITE 1150 ORLANDO, FL 32801 888-395-0001

Eric T. Halsey is a trial attorney whose practice focuses on tort litigation, including wrongful death, medical malpractice, slip and fall, cruise line negligence, landowner negligence, negligent security, birth injuries, and motor vehicle accidents. Before joining Leighton Law to represent victims, he worked as a trial lawyer for a highly regarded South Florida law firm defending health care providers in medical malpractice cases. Halsey has been named a “Rising Star” in Florida Super Lawyers from 2009 through 2014. He is an active member of the Florida Bar, the Florida Justice Association, the American Association for Justice, the Dade County Bar Association, and the University of Miami Greater Miami Alumni Club. He has successfully litigated and tried complex medical malpractice, trucking and negligent security cases throughout Florida. Recently he tried a case with John Leighton and won a $7.4 million verdict for a client who was seriously injured in a trucking crash. Halsey earned his law degree from the University of Miami School of Law, where he was a member of the Moot Court Board. He has been admitted to the Florida Bar and to the U.S. District Court, Southern District of Florida since 2006.

Attorney Andrew C. Hall has tried cases arising from some of the nation’s most significant historical events. From the Watergate trials in the 1970s to the Ohio savings and loan crisis in the late 80s, to the 2000 terrorist attack on the USS Cole, Hall’s trial skills are recognized as among the top echelon of litigators in the nation. Recently, Hall secured a $2.8 billion judgment on behalf of a Cuban expatriate for damages stemming from the continued terror attacks launched against his family by the Cuban government. He has been recognized as one of “The Best Lawyers in America” by Best Lawyers for over 10 years. Additionally, he is regularly featured in Super Lawyers and Florida Trend’s Legal Elite as among the top commercial litigators in the state. He has been recognized as a “Most Effective Lawyer” by the Daily Business Review for the past three years. He is AV rated by Martindale Hubbell, the highest independent peer-based rating available to an individual lawyer.

ALLAN A. JOSEPH CIVIL LITIGATION

FUERST ITTLEMAN DAVID & JOSEPH, PL 1001 BRICKELL BAY DR., 32ND FLOOR MIAMI, FL 33131 305-350-5690 AJOSEPH@FUERSTLAW.COM WWW.FUERSTLAW.COM

Allan A. Joseph, founding member of Fuerst Ittleman David & Joseph, PL., approaches every case with a goal of aggressive resolution to the benefit of his clients. Recognizing that every dispute is unique, Joseph takes the time to familiarize himself with not only the factual and legal issues in a case, but the intricacies of the client’s business and personal needs, which affect the ultimate and desired results. During every phase of the dispute resolution process, the lines of communication between Joseph and his clients are open. This effective communication means that clients are intricately involved in formulating the legal strategy and are kept apprised of every development in the case.

Practicing since 1991, Joseph has focused on business-related disputes, including complex commercial litigation, business torts, alternative dispute resolution, and civil litigation involving the U.S. government. When not engaged in the practice of litigation, Joseph is involved in the community as a member of the Board of Directors for Family Central, Inc., an organization that serves children and families throughout South Florida. Joseph also volunteers his time to several other charitable organizations.

SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

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ADAM J. LAMB BUSINESS LITIGATION

CATHERINE “CATHY” MCGRAIL

HALL, LAMB AND HALL, P.A. 2665 S. BAYSHORE DR., PH 1 MIAMI, FL 33133 305-374-5030 ALAMB@HLHLAWFIRM.COM WWW.HLHLAWFIRM.COM

FOODMAN CPAS & ADVISORS, P.A. 1201 BRICKELL AVE., SUITE 601 MIAMI, FL 33131 305-365-1111 CATHY@FOODMANPA.COM WWW.FOODMANPA.COM

Adam J. Lamb is a partner at Hall, Lamb and Hall whose practice is focused on commercial litigation including shareholder and partnership disputes, intellectual property litigation, legal malpractice, and real estate litigation. Lamb has been recognized by a number of publications, including the South Florida Legal Guide, and has received the highest AV peer review rating by Martindale Hubbell. An active member of the legal community, he is a member of the American Bar Association, the Miami-Dade County Bar Association, the American Association for Justice, and the Greater Miami Chamber of Commerce. Lamb received his bachelor’s degree from the University of Pennsylvania and his juris doctorate from the University of Florida. Lamb is a member of The Florida Bar and is admitted to the U.S. District Court, Southern District of Florida.

Additionally, he has litigated various federal and state cases under pro hac vice status in New York, New Jersey, Michigan, and the District of Columbia.

ORLANDO ROCHE

REGIONAL PRESIDENT – MIAMI-DADE COUNTY SABADELL BANK & TRUST PRIVATE BANKING & WEALTH MANAGEMENT DIVISION OF SABADELL UNITED BANK, N.A. 1111 BRICKELL AVENUE, SUITE 2910 MIAMI, FL 33131 305-441-5310 ORLANDO.ROCHE@SABADELLUS.COM WWW.SABADELLTRUST.COM

Orlando Roche is the Regional President of Sabadell Bank & Trust Miami-Dade County. He is responsible for overseeing private banking, wealth management and fiduciary services within the region. Roche has more than 25 years of experience in private wealth management. Prior to joining Sabadell, Roche was a senior banking officer at Northern Trust, responsible for all private banking in Miami-Dade County. Prior to Northern Trust, Roche spent a number of years as the vice president of commercial banking and private banking at SunTrust Bank. An active member of his community, Roche is a board member of Feeding South Florida, the Florida International University Foundation, the University of Miami Business School Advisory Board, and the University of Miami Citizens Board. He is also a member of the Young Presidents’ Organization (YPO), Belen Jesuit Prep Alumni Association, and a trustee of the Greater Miami Chamber of Commerce and the Coral Gables Chamber of Commerce. Originally from Havana, Cuba, Roche was raised in Miami and is currently located in Sabadell’s Miami office. He earned a BBA from Florida International University with a major in finance and economics.

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SOUTH FLORIDA LEGAL GUIDE FINANCIAL EDITION 2014

MARKETING DIRECTOR

Catherine McGrail, the Marketing Director of Foodman CPA’s & Associates, is a seasoned executive with more than 25 years of experience in international banking. Over the years McGrail has held key management positions in marketing and sales with international banks and corporations in the United States, Europe and Latin America. While working for Bank of America and ABN AMRO, she headed regional sales and marketing teams, obtaining a unique specialization in international and cross border transactional banking and account structures. In the areas of international banking product and technologies, McGrail led product diversification strategies in Latin America for both BLADEX (Banco Latino Americano de Exportacion) and Alterna Technologies. Most recently, McGrail was the sales and marketing director for the Florida International Bankers Association (FIBA). McGrail is a graduate of I.E. (Instituto de Empresa) from Madrid, Spain and has an Executive M.B.A. She is a native speaker in English and Spanish and is also fluent in French.

PIERRE A. SALIBA

TAXATION, LITIGATION SUPPORT

FOODMAN CPAS & ADVISORS, P.A. 1201 BRICKELL AVE., SUITE 610 MIAMI, FL 33131 305-365-1111 PIERRE@.FOODMANPA.COM WWW.FOODMANPA.COM

Pierre A. Saliba provides international and domestic tax, forensic accounting, litigation support and advisory services to clients in a broad range of industries including healthcare (Medicare and Medicaid fraud and regulatory compliance), manufacturing and not-for-profit organizations. He assists clients with domestic and international corporate and personal taxation services, due diligence and evidence retrieval. He also works with clients on voluntary disclosure matters. As firm manager, Saliba also leads Foodman’s focus on client service.

He brings prior experience as a cost accountant, controller and production manager in the garment industry, both in the U.S. and internationally. Fluent in French, Creole and Spanish, he serves as president of the Haitian American Chamber of Commerce. Saliba is also an active member of other Miami civic and charitable organizations, devoting both time and resources to helping those in need.

“We turn complexity into an advantage” Regulatory Compliance Regulatory Compliance

For Attorneys and their Clients

Complex Commercial & Class Action Litigation

FATCA & Voluntary Disclosures

Complex Tax Compliance

Family Law Litigation Support

For Businesses And For You

At Foodman CPA’s and Advisors, the foundation of our business is our experience and commitment to client success. We bring diverse real world experience to every client challenge.

Economic Crime

Fluent in 6 languages, our team includes CPA’s, former Government Agents, Securities Fin-Op Principals, Bankers, Regulators, Financial Planners, Building Contractors, and former Family Law Mediators.

Our panoramic background provides clients with in-depth solutions.

Foood odma man CPAs & Adviisors 1201 Brickell Ave., Suite 610 | Colonnade Plaz azaa | Miami, FL 333131 az T. 305.365.1111 | F. 305.365.2244 | info fo@f fo @foo fo dmanpa..com