Update on Len Krick’s Situation in Nevada

Update on Len Krick’s Situation in Nevada

Here’s an update on the issue with the Nevada State Securities Division:

  1. I delivered the 200,000 pages of documents plus 2,750 electronic files to the State by the deadline on the subpoena.
  2. I am currently in a deal which is scheduled to close escrow this Friday. The parties decided to do it as a stock sale and I backed away at that point. The selling entity is an old C-corp. I have been working on this deal for a year. The commission due is $297,500.
  3. The State warned my securities attorney that if I was involved in any stock deals after I received the subpoena, that I cannot conclude them that way. Instead, I need to “turn them into a consulting agreement” and “bill” my client for time at standard rate.
  4. They did not indicate that they were unaware of my big deal that I am doing and that, on January 28th, it turned into a stock, but we know that they must be aware because they were emphatic about “any deal since the subpoena”.
  5. So, I had my attorney draft the Second Amendment to the Listing Agreement, which I discussed in my last e-mail. I spoke with my client. He said he would sign it if I gave him a discount on my fee (meanwhile it was his idea to do the transaction into a stock deal, not mine). I agreed and sent him the amendment, which is a $52,500 discount from the full fee.
  6. His attorney would not let him sign it, unless we have a letter from the State Securities Division, saying that the “consulting agreement” is their idea and his client won’t get into trouble for signing it and paying me a “consulting fee.”
  7. The Chief Investigator, who signed my subpoena, is on vacation until May 16th. No one at the Division knows anything about her idea to “turn them into a consulting agreement” and “bill” my client for time at standard rate.
  8. We have asked the my client to put my fee into an escrow account or attorney trust account, until the State approves the release. So, now the payment of this fee is up to the State.

I could have just told him to go by the Listing Agreement, which is a contract, but this would be a “commission,” and I add another log on the fire with the State.

By the way, I have just learned that the State agrees with the State of Utah, who warned the business brokers about these kinds of transactions on May 7, 2009. (View the letter.) Too bad they didn’t notify the licensee in Nevada.

Stay tuned..

Len Krick, MBA, SBA, CMEA
Certified Business Intermediary
Merger and Acquisition Master Intermediary
Charter and Founding Member of the Nevada Business Brokers Association
President and Principal Broker
Sunbelt Business Brokers of Las Vegas, Inc.

 
 
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