CAPA

6/11/2018

STAY OF ENFORCEMENT

• APPEAL - CCP 916-923

– Appeal Means Automatic Stay
UNLESS
– Money judgment without a bond posted

• BANKRUPTCY STAY

– Any collection or action against debtor or action
against debtor

– No need to take affirmative action to undo liens

COLLECTING THE JUDGMENT (Part 1) Payment Plans

- Payment Plans • TBA
- Attorney Fees
- Evaluating Your Debtor & Choosing Tools Judgment
Liens on Personal Property / UCC
- Abstract of Judgment

Attorney Fees, Interest Evaluating Your Debtor
& Costs & Choosing Tools

• Attorney Fees • Evaluate

– Contract or Statute – Who & Where is your Debtor
– Default? Default Schedule Allows for Attorney – How is your Debtor (Judgment Proof v Collectable)
– Costs to Enforce ($ and Emotional)
Fees on Enforcement – Future Relationship
– 1717 Dismissing Case Prior to Start of Trial – Reputation & General Deterrence
– Cross Complaint?

• Interest

– prejudgment
– post judgment: (always – CCP 685.010, CRC

3.1802)

• Installments each calculated separately UNLESS
Judgment states otherwise

2

Judgment Liens on Personal 6/11/2018
Property / UCC
Notice of Judgment & Abstract of
& Notice of Entry of Judgment Judgment (SAH)

• JL1 - 10 Days to Sign and File with Sacramento
• Notice of Entry – 473 timeperiod starts

running from that time

Enforcing Judgment (END OF SECTION)
Seminar
3
Lenden F. Webb
[email protected]

www.WBLawGroup.com
619-399-7700
559-431-4888

Enforcing Judgment 6/11/2018
Seminar -
COLLECTING THE JUDGMENT (Part 1)
PART 2
- Collection via Short Sales
Lenden F. Webb - Wage Garnishment
[email protected] - Writ of Execution
- Bank Levies
www.WBLawGroup.com - Exemptions
619-399-7700 - Debtors Examinations
559-431-4888 - Turnover Order
- Third Party Examinations
- Written Discovery
- Assignment Orders
- Third Party Claims / Creditor Suits
- Piercing the Trust Veil
- Sister-State Enforcement (LFW / SAH )

Collection via Short Sales Wage Garnishment

• How much money can be extracted from each • CCP 706.010
of the involved parties? • Up to 25% of Debtor’s Paycheck
• Sheriff Must Serve
• Recent Case Studies

Writ of Execution

• Only good for 6 months

4

Bank Levies 6/11/2018

• Levies in general (CCP 700.010 - 700.200) Exemptions
• Deposit accounts rules (CCP 700.140)
• Earnings/wages (CCP 704.070) • CCP 703.010 / 709.010
• Social security funds (CCP 704.080) • Natural persons only
• Prisoner’s monies (CCP 704.090) • Homested $75,000 per person
• Funds held in trust (CCP 704.100 - 704.130) • $175,000 if debtor or spouse is >65 or
• Safe-deposit box (CCP 700.150-700.160)
• Who can be levied? disabled
• When to levy? • Motor vehicles, Household furnishings,
• Pros and Cons • Financial aid, cemetery plots – mail serve

Debtor’s Examinations ( LFW opposition in 10 days or 15 if served by mail

• CCP 708.110 -708.150 Debtor’s Examination (Cont)
• When To Use? Court Reporter?
• Scope of Examination • Creates a 1-year lien (in case they file BK –
• Every 120 days you can do this 708.110(d))
• Must be Personally Served on debtor, NOT
• Mileage requirements (in county or 150 miles
their attorney ---10 days prior to hearing of courthouse) (or bring into new court)
• Add Subpoena Duces Tecum for documents
• Theory v Practice
• Non-Compliance: “Arrest & Punishment”

Turnover Order Turnover Orders (cont)

• 3 Types: • Objective: immediate possession of property
• Who to order
– Seizure Order CCP 699.030 – 699.090
– Debtor in person (CCP 708.205)
• sheriff takes LARGE property from private home – On writ of execution (CCP 699.040)
– Third party with interest or indebtedness (CCP
– Turnover Order CCP 699.040 - .090
708.205)
• Requires debtor to give SMALL property to sheriff – Sue third party to obtain possession (CCP 708.210

– Assignment Order CCP 708.510 – 560 - 708.290)

• Royalty payments, sales commissions, rent payments • When to order
• Oral vs written Order
• Assignment of future monies

5

Assignment Orders 6/11/2018

• Rents Third Party Examinations
• Commissions
• Wages due from federal government • Third Party defined (CCP 708.120)
• Royalties • Other "witnesses" (CCP 708.130, 708.150)
• Payments due from patent or copyright • How to Order
• CCP 704.110 & 708.510 • What to Order
• Scope of the Exam
• Noncompliance
• Follow Notice to Consumer Rules – Motion to

Quash

Third Party Examinations Written Discovery

• Declaration regarding their control of debtor’s • Written Interrogatories - CCP 708.010 - 020
property >$250 OR debt of over $250 to • Right to Inspect and Copy Documents – CCP
debtor - CCP 708.120
AND 708.030

• Application for Appearance and Examination – No other written discovery authorized

• Witnesses to examination (try it!) • Compare to Debtor Exam and Subpena Duces
Tecum

• 1% chance of use
• RFAs if used at all – to support

Third Party Claims / Creditor Suits Piercing the Trust Veil

• CCP 708.210 et seq. • Revocable v Irrevocable Distinction
• Uncommon - Typical Challenges • Probate Code 18000 – 18200
• Not subject to levy under a writ of execution

(CCP 699.720)

– Revocable trust (PC 18200 et seq)
– Irrevocable trust (PC 19300 et seq)

• Petition to apply unvested contingent
beneficiary’s interest to judgement (CCP
709.010 et seq)

6

(END OF SECTION) 6/11/2018

Enforcing Judgment
Seminar -
PART 3

Lenden F. Webb
[email protected]

www.WBLawGroup.com
619-399-7700
559-431-4888

COLLECTING THE JUDGMENT (Part 2) Overview of Uncommon Methods

• Overview of Uncommon Methods • Receivers (CCP 708.610 - 708.630)
• Fraudulent Conveyance • Tilltaps (CCP 700.030)
• Amending Judgment • Keepers (CCP 700.070)
• Lien in Pending Action • Charging Orders (CCP 708.310 - 708.320)
• Memorandum of Costs • No Knock Orders
• Renewal of Judgment • Vehicle Levy
• Satisfaction of Judgment • Real Property Liens / Sale

Fraudulent Conveyance Amending Judgment

• General (CC 3439 - 3449) • GENERAL RULE: Once a Judgment is entered
• Elements (CC 3439.04) the trial court loses the power to change it –
except may amend mistake in furtherance of
– Presumptively fraudulent if: justice (CCP 473(A))

• Hinder, delay or defraud creditors • Relief from Mistake, Inadvertence, Surprise,
• Transfer was for less than fair value Excusable Neglect (CCP 473(b))
• And either: undercapitalized or insolvency
• COMMON: Add alter ego of individual
• Remedy: associated with corporate defendant /
Successor entity, spouse
– Independent suit against debtor and transferee
– Transferee files undertaking

7

6/11/2018

Amending Judgment (cont) Lien in Pending Action (LFW)

POSSIBLE: sua sponte or by • File and serve on all parties, attach Judgment
motion correct clerical errors
(CCP 473(d) – (see sample next slide)
UNCOMMON: Name a joint
debtor who wasn’t served initially
by getting new summons via CCP
989

Lien in Pending Action Memo of Costs

• "Frontloading" prohibited
• Reasonable and necessary standard (CCP 685.040)
• Other costs not specified (CCP 685.080)
• Attorney fees by:

– Contract or statute (CCP 1021, 1032, 1033.5(a)(10) and (c)(5), CC 1717)
or local Default Schedule

– Noticed motion (CCP 685.040, 685.070, 685.080)

• Time limit to claim

– Within 2 years of incurring

– AND before debtor pays judgement in full

• Adds to amount of judgement, include in next Writ

CalCourtForms Status Case: Login Help
Desc: Doc1 EJ-195
✔ - + A 11 C T H MyForms Data Doc Send Print Reset Update Save
FOR COURT USE ONLY
ATTORNEY OR PARTY WITHOUT ATTORNEY (Name and Address) TELEPHONE NO.:

Renewal of Judgment ATTORNEY FOR (Name): CASE NUMBER:
NAME OF COURT:
• Ask Clerk to issue certified copy of “Renewal
Of Judgment” In Advance so you can record it STREET ADDRESS:
with a NEW abstract after renewed MAILING ADDRESS:
CITY AND ZIP CODE:
• General (CCP 683.020, 683.030)
• Expiration depends on nature of underlying BRANCH NAME:
PLAINTIFF:
judgment
• Updating amount owed DEFENDANT:

– Credits NOTICE OF RENEWAL OF JUDGMENT
– Costs and Attorney fees, Interest
TO JUDGMENT DEBTOR (name):
• Evidence in support
A
1. This renewal extends the period of enforceability of the judgment until 10 years from the date the application for renewal was filed.
2. If you object to this renewal, you may make a motion to vacate or modify the renewal with this court.
3. You must make this motion within 30 days after service of this notice on you.
4. A copy of the Application for and Renewal of Judgment is attached (Cal. Rules of Court, rule 3.1900).

Date: Clerk, by , Deputy

[SEAL]

Form Adopted for Mandatory Use See CCP 683.160 for information on m ethod of service Page 1 of 1
Judicial Council of California NOTICE OF RENEWAL OF JUDGMENT
EJ-195 [Rev. January 1, 2007] Code of Civil Procedure, § 683.160
www.courtinfo.ca.gov

www.CalCourtForms.com

8

6/11/2018

Satisfaction of
Judgment /
UCC

Secretary of State Lis
Pendens
• Information available:

– Statewide liens filed
– State Controller’s Office: Unclaimed Property Search

– Links to IRS, NAUPA, Federal Savings Bonds, HUD
• Judgment lien on personal property (CCP 697.510 -

697.670)
• Certain categories of property only (CCP 697.530)
• Form J-1: involuntary security interest
• Form UCC-1: voluntary security interest

9

6/11/2018

Enforcing Judgment
Seminar -
PART 3

Lenden F. Webb
[email protected]

www.WBLawGroup.com
619-399-7700
559-431-4888

(END OF SECTION)

10



Brent SimsE-Tech:

Electronic Surveillance/Social Media

Speaker: Brent Sims, Digistream

Learn how social media is being used to uncover fraud as well as enhance
the quality of other investigations. The session examines successful real-
life cases, fascinating trends in social media investigations, privacy and
legal issues, as well as preserving, authenticating and presenting the evi-
dence in court. The dynamic between social media monitoring and surveil-
lance will also be examined through a case study involving 16,000 days of
surveillance data. Attendees will come away with an understanding of the
investigative best practices required for a successful investigation, as well
as how to refer a file and ensure maximum success.

Brent Sims is the Managing Partner for DigiStream Los Angeles and has been with the
company since 2005. Prior to becoming Partner, he served as General Manager of Sales
and Operations for two years and Field Operations Manager for two years as well. Dur-
ing his time in both roles, his responsibilities ranged from overseeing a staff of nine field
investigators to managing the sales and operations of the company. A vital part of both
jobs was to ensure that each assignment received diligent investigation and their cli-
ents’ expectations were met on each assignment. Brent has completed over 9,000
hours of both AOE/COE investigations and field surveillance investigations; his hands-on
experience has enabled him to navigate and coach investigators through every possible
scenario while in the field. Prior to DigiStream, Brent attended California State Universi-
ty Sacramento where he received his Bachelor’s degree in Criminal Justice.

\

WHAT IS OSINT? WHAT IS SOCMINT?

According to the FBI, open-source intelligence “refers to a broad array of information and sources that
are generally available, including information obtained from media (newspapers, radio, television, etc.),
professional and academic records (papers, conferences, professional associations, etc.), and public data
(government reports, demographics, hearings, speeches, etc.).”1
According to AFIO’s The Intelligencer, open-source intelligence “is defined as the collection, processing,
analysis, production, classification, and dissemination of information derived from sources and by
means openly available to and legally accessible and employable by the public in response to official
national security requirements.”2

DEFINITION AND SCOPE OF “SOCIAL MEDIA INTELLIGENCE”

Social media intelligence (SOCMINT) is an intelligence discipline built upon tools and solutions for social
media monitoring. This methodology is able to apply intelligence tools to efficiently analyze a wealth of
information hidden in social networks to detect early signals of important events, get a picture of public
sentiment on target topics, monitor trends, identify influencers, and extract actionable intelligence to
assist decision support.3 Social media intelligence allows one to collect information from social media
sites using both intrusive and non-intrusive means from open and closed social networks.

CURSORY ONLINE SEARCH STRINGS

Begin with direct queries of top 4 social media sites Facebook, Instagram, Twitter, YouTube then move
to following Google/Yahoo/Bing searches:

• “John Smith” + New York, NY
• “Smith, John” + New York, NY
• “John Smith” + [known hobby/interest]
• “[email protected]”
• “unicorn20”
• inurl: unicorn20
• “510.555.1234

1 "Intelligence Branch." FBI. FBI, 03 May 2016. Web. 02 Dec. 2016., https://www.fbi.gov/about/leadership-and-structure/intelligence-branch
2 "Old Intelligencer." The Mathematical Intelligencer 6.4 (1984): 71-78. AFIO. Web.,
https://www.afio.com/publications/Schauer_Storger_Evo_of_OSINT_WINTERSPRING2013.pdf
3 "Social Media Intelligence SOCMINT 2016." SOCMINT. N.p., n.d. Web. 02 Dec. 2016., http://www.socmint.org/

COMMON ONLINE INVESTIGATIVE CHALLENGES

Identity Resolution
“And how did you verify that this account that hadn’t been used in years was Mr. Smith?”

• Full Name
• Geographic indicators (photos of residence)
• Email address
• Known handle
• Friends with confirmed relatives
• City of residence
• Self-reference
• Birthday
• Photographic

Chronological Resolution
“So you have no way of knowing that’s when it was posted or that’s when it was last accessed, correct?”
or “Can you tell me the date the photo was actually taken, not when it was uploaded online?”

• Captions and comment threads verifying capture date
• OSINT (Open Source Intelligence) methodology

• Race/event results
• League/team rosters and schedules (athletes)
• Performance venue schedules (Concerts, comedians)
• Event agendas (galas, conferences, etc.)
• Ask plaintiff/claimant to produce content on native device in native format to confirm capture
date

Preservation

• Electronic Vault (E-Vault)
• Bibliography (live URL, Identity Resolution metrics

Authentication / Metadata
The following are some key metadata fields for individual Facebook posts (such as a photo or status
update) that together provide important information to establish authenticity of online activity, if
properly collected and preserved:

Metadata Field Description
Uri Unified resource identifier of the subject item

fb_item_type Identifies item as Wallitem, Newsitem, Photo, etc.
parent_itemnum Parent item number-sub item are tracked to parent

thread_id Unique identifier of a message thread
recipients All recipients of a message listed by name
recipients_id All recipients of a message listed by user id
album_id Unique id number of a photo or video item

post_id Unique id number of a wall post
application Application used to post to Facebook (i.e, from an iPhone or social media client)

user_img URL where user profile image is located
user id Unique id of the poster/author of a Facebook item

account_id Unique id of a user’s account
user_name Display name of poster/author of a Facebook item
created_time When a post or message was created
updated_time When a post or message was revised/updated

To Name of user whom a wall post is directed to
to_id Unique id of user whom a wall post is directed to
Link URL of any included links
comments_num Number of comments to a post
picture_url URL where picture is located

Best Online Investigative Practices

• Background check (Criminal, Civil, Property)
• Content collection
• Identity resolution
• Preservation
• Analysis
• Authentication (Metadata)
• Account monitoring
• Testimony

Current OSINT Community: Recent Trends

LIVESTREAMING
(Facebook Live, Periscope): live video of an event or discussion (uploading in real-time). Mark
Zuckerberg announced this new feature for Facebook (for all users) in a 6 APRIL 2016 status update.

• People spend 3x more time watching a Facebook Live video on average compared to a video
that’s no longer live. This is because Facebook Live videos are more interesting in the moment
than after the fact4.

• Expected growth with increased video quality, mobile phone viewing capabilities, decline of
Traditional Television watching methods.

• Periscope is a live video streaming app for iOS and Android that was acquired in March 2015 by
Twitter and relaunched

4 "News Feed FYI: Taking into Account Live Video When Ranking Feed | Facebook Newsroom." Facebook Newsroom. N.p., n.d. Web. 02 Dec.
2016. http://newsroom.fb.com/news/2016/03/news-feed-fyi-taking-into-account-live-video-when-ranking-feed/

GEOTAGGING
electronic tag assigns a geographical location to a photograph or video, a posting on a social media
website, etc. based on latitude and longitude coordinates. Clicking on the geotag in Twitter and
Instagram shows you other posts that use that geotag.

• Location based SMS (text messages) introduced in 2007 - applications capable of displaying
locations on GoogleMaps.5

• Because of the requirement for wireless service providers in United States to supply more
precise location information for 911 calls by 11 SEP 2012 more and more cell phones have built-
in GPS chips.

• Later introduced to social media platforms, Facebook, Twitter, Instagram
• Study done by JiWire suggests that 62% of social media users include location tags in posts on

different platforms that included Facebook, Instagram, Twitter and Google+. The majority of
respondents (49%) use location tags to let their friends and family know where they’re shopping
and traveling. Facebook: 91% of respondents use the platform on the go and 88% tag their
locations at least monthly6.

“FRIENDING”: LEGALITY, PRACTICALITY, AND ETHICS7,8

US V GATSON & FACEBOOK RESPONSE
• Bergen County police department sent request to be friends without a warrant with Gatson on
his Instagram account, which included photos of items that Gatson had stolen. Gatson accepted
the request and law enforcement was able to view all content on the account. Conclusions
reached for this case included:
o “No search warrant is required for the consensual sharing of this type of information.”
o “Gatson’s motion to suppress the evidence obtained through the undercover account
will be denied.”
• In response, social media sites started “notifying account holders when their data is requested
by law enforcement.” Facebook also requires a “valid subpoena, court order or search warrant”
if law enforcement wants to search Facebook for records.

5 "A History of SMS Geotagging." GeoSMS. N.p., 17 Oct. 2010. Web. 02 Dec. 2016. https://geosms.wordpress.com/2010/10/18/a-history-of-
sms-geotagging/

6 Griwert, Katherine. "Rise of Geotagging Points to Need for Local Social Marketing." Brafton. N.p., 29 Aug. 2012. Web. 02 Dec. 2016.
http://www.brafton.com/news/rise-of-geotagging-points-to-need-for-local-social-marketing/
7 Muse, Seth. "Advertisement." Ethics of Using Social Media During Case Investigation and Discovery | ABA Section of Litigation. American Bar
Association, 13 June 2012. Web. 02 Dec. 2016. http://apps.americanbar.org/litigation/committees/pretrial/email/spring2012/spring2012-0612-
ethics-using-social-media-during-case-investigation-discovery.html

8 Lawyers, The National Trial. "LawyersandSettlements.com." Lawsuits, Legal News & Issues, Lawsuit Settlements, Class Action Lawsuits. N.p., 05
Feb. 2015. Web. 02 Dec. 2016. https://www.lawyersandsettlements.com/articles/internet-technology/fake-social-media-account-20433.html

STORED COMMUNICATIONS ACT9

• apply to the "reasonable expectation of privacy" in an online context. Users generally entrust
the security of online information to a third party, an ISP. In many cases, Fourth Amendment
doctrine has held that, in so doing, users relinquish any expectation of privacy. The Third-Party
Doctrine holds "that knowingly revealing information to a third party relinquishes Fourth
Amendment protection in that information.”

FEDERAL RULE OF EVIDENCE 902(11)(12)

• Federal Rule of Evidence 902(11) states, “The original or a copy of a domestic record that meets
the requirements of Rule 803(6)(A)-(C), as shown by a certification of the custodian or another
qualified person that complies with a federal statute or a rule prescribed by the Supreme Court.
Before the trial or hearing, the proponent must give an adverse party reasonable written notice
of the intent to offer the record — and must make the record and certification available for
inspection — so that the party has a fair opportunity to challenge them.”

• Federal Rule of Evidence 902(12) states, “In a civil case, the original or a copy of a foreign record
that meets the requirements of Rule 902(11), modified as follows: the certification, rather than
complying with a federal statute or Supreme Court rule, must be signed in a manner that, if
falsely made, would subject the maker to a criminal penalty in the country where the
certification is signed. The proponent must also meet the notice requirements of Rule 902(11).”

Federal Rule of Evidence 902(11)(12) state you do not need an investigator who conducted an online
investigation to physically testify in court as affidavits detailing the mechanisms of the investigation are
considered legitimate substitutes to witnesses. Rule 803(6)(A)-(C) essentially designates a regularly
conducted business activity, i.e. an investigation, being documented by the individual who engaged in
said activity as a qualified witness and the featured rules permit that documentation to be presented in
lieu of a person.

ABA FORMAL OPINION 466

Released 24 APRIL 2014, Formal Opinion 466 states, “There is a strong public interest in identifying
jurors who might be tainted by improper bias or prejudice. There is a related and equally strong public
policy in preventing jurors from being approached ex parte by the parties to the case or their agents.
Lawyers need to know where the line should be drawn between properly investigating jurors and
improperly communicating with them."

“Passive review of a juror’s website or ESM, that is available without making an access request, and of
which the juror is unaware, does not violate Rule 3.5(b). In the world outside of the Internet, a lawyer or
another, acting on the lawyer’s behalf, would not be engaging in an improper ex parte contact with a
prospective juror by driving down the street where the prospective juror lives to observe the environs in
order to glean publicly available information that could inform the lawyer’s jury-selection decisions. The
mere act of observing that which is open to the public would not constitute a communicative act that
violates Rule 3.5(b)."

9 "18 U.S. Code Chapter 121 - STORED WIRE AND ELECTRONIC COMMUNICATIONS AND TRANSACTIONAL RECORDS ACCESS." LII / Legal
Information Institute. N.p., n.d. Web. 02 Dec. 2016. https://www.law.cornell.edu/uscode/text/18/part-I/chapter-121

SAMPLE DEFENDANTS’ SOCIAL MEDIA INTERROGATORIES TO PLAINTIFF

Please identify all of your internet social media and networking websites and/or
applications, which you have used and/or maintained an account in the last six (6) years.
Internet social media websites include, but are not limited to, Facebook, LinkedIn, Twitter,
Instagram, Foursquare, YouTube, Pinterest, Google+, Tumblr, Flicker, Skype, FaceTime, etc.

1. For each internet social media website account, please provide your username and
password, or alternatively, under Rule 1.34(c), please provide a copy of all non-privileged
content/data shared on the account(s) in the last six (6) years. In the event you contend there is
a privilege to assert, please provide a privilege log.

2. Please identify any and all photograph, still image, and video sharing websites that you have
used and/or maintain(ed) an account in the last six (6) years. “Internet photo, still image, or
video sharing website” is defined as websites in which a user can upload/post/ view still or video
image content, which is hosted for and shared public use, which includes but is not limited to
YouTube, Shutterfly, Tumblr, Photobucket, Vine, Instagram, etc.

3. For internet photo, still image and video sharing website accounts, please provide your
username and password, or alternatively, under Rule 1.340(c), please provide a copy of all non-
privileged content/data shared on the account in the last six (6) years. In the event you contend
there is a privilege to assert, please provide a privilege log.

4. Please identify any and all blog or internet message boards, chat rooms, and public forums that
you have participated in or a member of within the last six (6) years. “Internet
message board or public forum” includes but is not limited to any internet website or service in
which users post messages or content in a public-forum.

5. For each blog or internet message board, chat room, and public forum, please provide your
username and password, or alternatively, under Rule 1.340(c), please provide a copy of all non-
privileged content/data shared on the account in the last six (6) years. In the event you contend
there is a privilege to assert, please provide a privilege log.

6. Please provide the name of any email account(s), which you have used and/or maintained in the
last 6 years.

7. For any account identified in answer to Nos. 1 – 7, please describe in detail any and all
content that you have deleted or erased on or after (insert date), including but not limited
to photographs, videos, posts, tweets, and name/username change.

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Marc Schechter, Esq.Corporate Law:

ERISA 101: Fiduciary Investment Basics & Compliance.

Speakers: Marc Schechter, Esq. & Kristine Custodio, ACP

This presentation will cover the basics of fiduciary investment and com-
pliance under ERISA.

Marc Schechter specializes in the areas of employee benefits, ERISA, and
business matters. In addition to handling a wide range of business trans-
actional matters, he has extensive experience designing, drafting and im-
plementing all types of qualified and nonqualified employee benefit pro-
grams for his clients, with special emphasis on ESOP transactions.

Mr. Schechter earned a Bachelor of Arts degree in 1980 from Rowan Uni-
versity. He received a juris doctor degree, magna cum laude, from Cali-
fornia Western School of Law in 1984 and graduated second in his class.
Mr. Schechter received the Scriba Regis Award for authoring the best
Law Review article; the Miller Tax Award for earning the highest grade-
point average in tax courses; and the Highest Academic Achievement Award in the subjects of federal in-
come tax and estate and gift tax. He was active with the Law Review as a staff writer from 1982-83 and as
Head Notes and Comments Editor from 1983-84.

Mr. Schechter lectures on employee benefit law topics for a wide range of organizations. He has written
articles on Employee Benefit topics for a wide range of periodicals. He has also taught the ERISA/
Employee Benefits course as adjunct professor at California Western School of Law.

Mr. Schechter has received an AV® Peer Review rating from the Martindale Hubbell International Law Di-
rectory.

Mr. Schechter has been named by San Diego Super Lawyers magazine as one of the top attorneys in San
Diego for 2008, 2009, 2015, 2016, 2017 and 2018. Only five percent of the lawyers in San Diego are
named by Super Lawyers.

Kristine M. Custidio, ACP Kristine M. Custodio, ACP is a Senior Para-
legal/Business Development Director for
Butterfield Schechter LLP specializing in
ERISA/employee benefits law, business law
and civil litigation, where she supports
partner Marc S. Schechter in all phases of
pretrial litigation and research, employee
benefit matters including pension plans,
audits, Employee Retirement Income Secu-
rity Act (ERISA) compliance and litigation,
stock option plans, tax and corporate law,
and estate planning.

Kristine is a servant leader and currently
serves as the National Association of Legal
Assistants (NALA) Liaison for the San Diego Paralegal Association (and Past President) as well as the
Board Advisor Emeritus and Past President of the California Alliance of Paralegal Associations. She is a
member of the NALA Professional Development Committee, focusing on the leadership development
program (past member of the NALA Continuing Education Council and Ethics Chair). She was a runner
up for the 2008 LAT Paralegal of the Year and, in 2009, was a finalist for the San Diego Daily Tran-
script’s “Top Paralegal” award. She was recently reappointed as a Commissioner and serves as the
Chair of the City of San Diego’s Citizens Equal Opportunity Commission. Kristine is a member of the
University of San Diego Paralegal Program’s Advisory Board and serves as the Secretary of the Filipino
American Chamber of Commerce of San Diego County. During her tenure with the Rancho Peñasqui-
tos Town Council, Kristine served as Secretary and Vice President. On February 15, 2011, Kristine was
inducted into Lambda Epsilon Chi, the National Honor Society in Paralegal/Legal Assistant Studies
University of California San Diego Chapter. On August 31, 2012, Kristine received an award as one of
the 100 Most Influential Filipina American Women in the United States presented by the Filipina
Women’s Network (FWN) under the Founders and Pioneers category to honor Filipina women in their
capacities as the chief executive, president, executive director or founder of a United States based
company, community organization, non-profit, or business venture that they helped start, build or
significantly grow category for her work as President of the San Diego Paralegal Association. Kristine
has also authored a chapter in a leadership book that was published by the FWN in 2014.

Kristine earned a Bachelor of Arts degree in Human Development from California State University at
Long Beach where she was on the Dean’s Honor List. She completed her paralegal studies at UCSD in
2004, became a Certified Paralegal in 2006, and received her Advanced Certified Paralegal (ACP) des-
ignation in Discovery (2009), Trial Practice (2010), and e-discovery (2016). Further, in 2006 Kristine
obtained her Human Resource Management certificate from UCSD. In July 2009, Kristine was ap-
pointed by the President of NALA for a one-year term as the ethics chair for NALA’s Professional De-
velopment Committee and contributed to a bi-monthly ethics column for the NALA publication, Facts
& Findings. Kristine also served as an administrator for her family’s adult residential facility for devel-
opmentally disabled adults from 1998 to 2015. She frequently speaks throughout the nation at vari-
ous events and paralegal programs. She writes for various publications. She teaches legal courses at
paralegal programs in San Diego County. In her free time, Kristine enjoys writing, researching, crea-
tive arts including drawing, playing the violin and piano, hiking, traveling, and spending time with her
friends and family.

23

Presented by  Stands for “Employee Retirement Income
Security Act of 1974”
Marc S. Schechter, Esq.
Kristine M. Custodio, ACP  ERISA is the federal law that regulates
employee benefit “plans”

 Generally, ERISA does not apply to church
and government plans and their participants.

 Preempts most state laws that regulate
employee benefit plans

2

 ERISA mandates fiduciary duties for plan  The Internal Revenue Service (IRS) initially oversaw private
managers and those who control plan assets, pension plans until 1959 when the United States
including requiring disclosure of plan Department of Labor (DOL) began regulating employee
information. benefit plans upon the passage of the Welfare and Pension
Plans Disclosure Act (WPPDA). In 1974, ERISA was passed
 ERISA also allows participants to file legal claims with stricter regulations to protect participants and
for benefits and breaches of fiduciary duty. beneficiaries in employee benefit plans by way of required
plan disclosures, information, and notices. ERISA also
 The scope of ERISA was amended to include required plan fiduciaries to maintain certain standards of
health insurance coverage, specifically the diligence and duty of care in their conduct when managing
Consolidated Omnibus Budget Reconciliation plan funds as well as to provide detailed reporting to the
Act of 1985 (COBRA) and the Health Insurance government about plan assets. Further, ERISA
Portability and Accountability Act of 1996 empowered the DOL to enforce civil penalties against
(HIPAA). violators.

3 4

 The Employee Benefits Security Administration  Plan Information: Plan participants have the
(EBSA) is responsible for administering and right to receive in writing the most important
enforcing the fiduciary, reporting, and disclosure facts about their retirement and health benefit
provisions of Title I of ERISA. Title II of ERISA is plans including plan rules, financial information,
administered by the IRS. Title III is concerned and documents on the operation and
with jurisdictional matters and with coordination management of the plan.
of enforcement and regulatory activities by the
DOL and the IRS. And Title IV covers the  Participant Rights and Disclosures: ERISA
insurance of certain defined benefit pension establishes a claims and appeals process for a
plans and is administered by the Pension Benefit participant seeking benefits. Plan participants
Guaranty Corporation (PBGC). have the right to disclosure of important plan
information and a timely and fair process for
5 benefit claims.

6

1

 Financial, Best-Interest Protection and Conduct:  A fiduciary duty is a legal obligation to act in the best
According to the DOL, anyone who provides investment interests of another. Fiduciaries for retirement benefit
advice to a plan for compensation or has any authority or plans have certain responsibilities to represent the
responsibility to do so are plan fiduciaries (e.g. plan best interests of the plan's participants. For example,
trustees, plan administrators, and members of a plan's under ERISA, plan fiduciaries are required to act
investment committee). As plan fiduciaries, they must prudently in performing fiduciary functions, “with the
abide by the following or may be held personally liable: care, skill, prudence, and diligence under the
 Act prudently and in the sole interest of plan participants and circumstances then prevailing that a prudent man
beneficiaries; acting in a like capacity and familiar with such matters
 Diversify investments in order to minimize risk of large losses; would use in the conduct of an enterprise of a like
 Ensure the plan’s terms are in compliance with all ERISA terms; character and with like aims.” This duty is commonly
 Follow the terms set forth in the plan’s documents (unless known as the fiduciary's duty of care.
inconsistent with ERISA duties); and
 Avoid conflicts of interest. 8

7

 As a fiduciary, administrators are charged with  When a plan fiduciary fails to carry out their
certain duties, including defraying the legal responsibilities, they may be held
reasonable expenses of administering the plan, personally liable to plan participants.
diversifying the investments so as to minimize Employees have a right to take legal action
the risk of large losses, following the plan against the plan manager, plan administrator,
requirements, and avoiding conflicts of interest. or those who control plan assets following a
Also included as part of the fiduciary's breach of their fiduciary duties. Fiduciaries
responsibilities are monitoring investment may be liable for lost earnings or improperly
performance and selecting investment options received profits.
and service providers.
10
9

 A fiduciary has a primary responsibility to act in  Company stock offerings for retirement plans can
the best interests of the plan's participants. Any increase the risk of fiduciary litigation. An individual
actions taken that appear to conflict with this security, like a company stock, is generally more
duty may be seen as a breach. In addition, volatile compared to more diversified investments.
changing ERISA regulations and court decisions The decision to offer company stock as part of a
can make it difficult for plan fiduciaries to 401(k) plan investment option should be carefully
maintain compliance while looking out for the reviewed and documented. To encourage
best interests of plan members. However, there diversification and reduce potential risk, the plan may
are some areas that may be more prone to also want to limit the amount of company stock a
ERISA violation scrutiny than others. participant can hold as part of their plan account. The
duty to diversify does not apply to a plan designated
11 as an Employee Stock Ownership Plan (“ESOP”).

12

2

 Another area commonly the subject of  Other transactions that may invoke a
fiduciary disputes involves fund fees. Many fiduciary violation include delinquent
plan participants focus on investment returns participant contributions, below market
rather than fund fees that regularly subtract interest rate loans to parties in interest,
money from their accounts. However, a small purchase of assets by plans from parties in
difference in fund fees can make a significant interest, sales of assets to parties in interest,
impact on the account balance over the life of benefit payments based on improper
the plan. A careful review of all the plan valuation of assets, and payment of excessive
investment fees should help a fiduciary or unnecessary compensation.
identify excessive fees.
14
13

 Plan providers can benefit from fiduciary  When a plan participant claims a fiduciary has
counseling at any time. Proactively, attorneys breached their duty, this dispute has the potential to
can counsel plan providers on the operation and escalate to an ERISA claim or even formal litigation.
administration of their benefit plan before any Fiduciary counseling can help plan providers
violations occur. This can help avoid a potential negotiate these disputes to avoid litigation and
breach of fiduciary duty by discussing the protect the interests of plan members. Fiduciary
current transactions and investments that the counseling can also benefit plan providers that are
plan provider has concerns about. Avoiding a engaged in ERISA administrative claims and state or
violation in the first place is the most cost- federal litigation. This includes identifying fiduciary
effective way to handle potential fiduciary violation transactions, taking corrective action,
breaches. negotiating settlements, or litigating state and federal
claims.
15
16

 A comprehensive review of the operation of a  Many fiduciary duty breaches are
benefit plan can identify potential ERISA unintentional. If a fiduciary or plan sponsor
fiduciary violations. Although the plan discovers a possible fiduciary duty breach,
administrator may have never been aware of they may be able to correct the problem and
the violations, once discovered, they can take also avoid additional penalties. Plan sponsors
voluntary actions to remedy these breaches. can file a Voluntary Fiduciary Correction
A fiduciary can seek relief from enforcement Program (VFCP) application with the
actions by filing a Voluntary Fiduciary Department of Labor to remedy fiduciary
Correction Program application. breaches.

17 18

3

 The purpose of the VFCP is to encourage employers to comply  Basic ERISA compliance requires employers provide an annual
with ERISA regulations by taking action to correct certain notice to participants about plan information, their rights under
violations. It is intended to protect employees and help plan the plan, and how the plan is funded. This includes ensuring plans
officials understand ERISA protections and regulations. The VFCP comply with ERISA's minimum standards, recordkeeping, annual
is available for certain types of transactions and offers a variety of filing and reporting, and fiduciary compliance. ERISA provides the
acceptable methods for correcting fiduciary violations. To apply minimum standards for participation, accrual of benefits, and
for relief from enforcement actions, plan sponsors need to: vesting of benefits under the plan. Under ERISA, there is also a
 Identify any violations and determine whether they fall within the 19 fiduciary duty for those who administer, manage, or control plan
categories of transactions covered by the VFCP; assets, requiring them to act solely in the interest of plan
 Follow the process to correct qualifying violations; participants and beneficiaries. Failure to comply with ERISA
 Calculate any losses or profits and restore the amounts with interest; requirements for qualified plans can expose a company to ERISA
and litigation and DOL or IRS penalties. Experienced ERISA legal
 File an application with the Employee Benefits Security counsel can help your company maintain ERISA compliance and
Administration office, including documentation showing that avoid costly penalties.
corrective action was taken.
20
19

 ERISA requires certain minimum notice requirements  Employers must maintain accurate records
to plan participants. This includes requiring that all relating to their employee benefit plans. Under
participants receive a Summary Plan Description Section 107 of ERISA, all records related to
(SPD) within 90 days of his or her first day of government filings are to be retained and kept
coverage. SPDs must provide certain information, available for examination for a minimum of six
including the plan name, employer information, type years after the filing date. However, under
of plan, designated agents, eligibility requirements, Section 209, an employer must maintain benefit
description of benefits, plan funding information, records related to employees for such a time as
claims procedures, and statement of ERISA rights. In is sufficient to determine the benefits due to
addition, employees must receive notice of any such employees.
material changes to their benefit plans through a
Summary of Material Modification (SMM) notice. 22

21

 Companies also have mandatory reporting  A plan sponsor will file its Form 5500
requirements under ERISA. For plans with electronically through the Department of
100 participants or more, plan sponsors must Labor's EFAST system. The electronic filing
annually file Form 5500 Annual satisfies ERISA and Internal Revenue Code (IRC)
Returns/Reports of Employee Benefit Plan. reporting requirements through providing a
For plans with less than 100 participants, report of the plan's financial condition,
sponsors can use the short form 5500-SF. investments, and operations. This includes
information about the plan, plan name, plan
23 year, a schedule of plan assets and liabilities,
service providers, insurance costs and providers,
participants, and financial data.

24

4

 Employees and plan participants have minimum  The Employee Benefits Security Administration
protections for claims procedures for employee (EBSA) regularly conducts audits of benefit plans
benefit plans under ERISA. When an employee's to investigate the plans and ensure compliance.
claim is denied, the plan must provide adequate Audits can be triggered by a review of Form 5500
notice of the reason for the denial and give them or other reports, review of Summary Plan
an opportunity for a full and fair review. If the Descriptions, employee complaints, or even
plan makes an adverse determination on the random audits. According to a Department of
claimant's appeal, it must specify the reason for Labor report, about two-thirds of EBSA civil
the decision and provide a statement of the investigations result in monetary recovery or
claimant's right to bring legal action under other corrective action. About one-fourth of
ERISA. criminal investigations resulted in guilty pleas or
criminal convictions.
25
26

 EBSA enforces Department of Labor laws,  ERISA fiduciary violations may also subject
including ERISA. Plan sponsors may be the fiduciary to personal liability for losses to
penalized by EBSA for ERISA violations. plan participants. Plan participants and
Penalties for ERISA violations may depend on beneficiaries have a right to take legal action
the type of violation, the extent of the violation, against the plan manager, plan administrator,
and whether the violation was willful. Penalties or others who control plan assets for a breach
for violations may include fines, payments to of fiduciary duty. Fiduciaries may also be
plan participants, and required changes to the liable to participants for lost earnings or
company's practices and procedures. Plan improperly received profits.
administrators who fail to comply with annual
reporting requirements are also subject to a 28
penalty of up to $1,000 per day.

27

 Willful ERISA violations can even result in  The Department of Labor has voluntary
criminal prosecution. The maximum criminal compliance programs for plan sponsors who
penalties for ERISA violations include up to 10 discover a possible breach of ERISA
years in jail and fines of up to $100,000. requirements. This includes the Delinquent
Companies charged with ERISA violations Filer Voluntary Compliance Program (DFVCP)
can face criminal fines of up to $500,000, in and the Voluntary Fiduciary Correction
addition to any civil liability. Program (VFCP).

29 30

5

 When a plan administrator has not complied with the QUESTIONS?
ERISA annual reporting requirements, the DFVCP gives
administrators a way to satisfy the requirements and 32
avoid additional civil penalty assessments. By filing
delinquent annual reports through the DFVCP, plan
administrators can voluntarily pay a reduced penalty
amount.

 Eligibility for the DFVCP is limited to plan administrators
with filing obligations under Title I of ERISA who have not
already been notified by the DOL of their failure to file an
annual report. Participation includes filing Form 5500 or
5500-SF Annual Returns/Reports of Employee Benefit Plan
and submitting filing information and payment under the
reduced penalty structure.

31

Contact Marc or Kristine at:

Butterfield Schechter LLP
10021 Willow Creek Road, Suite 200
San Diego, California 92131
(858) 444-2300

www.bsllp.com

[email protected]

[email protected]

33

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