Running Head: REFLECTION PAPER 1 Abstract This paper covers in depth explanations for trends and information obtained from the one on one small business surveys I performed here in Central Arkansas. This survey was designed to highlight legal issues encountered during the day to day operations of businesses as well as how these businesses go about rectifying such situations. Problems that arise in the day to day operations of businesses and their common practices is broadly what I will be covering. More specifically are six key sections including my introduction and market region information, business resources, survey results and summary, my top issue and existing literature review, case and state laws, and my conclusion and recommendations. The information in these sections facilitates a connection to real world applications and material learned throughout the course as well as allowing us to place ourselves in the business owners shoes to a certain degree. Reflection Paper 2 Small Business Survey Reflection Paper By asking businesses about their experience with these topics, it provided me with information that allowed me to see how their operations are impacted by such a multitude of different problems. Some businesses are readily equipped to handle problems arising in the workplace while others are ill-prepared and find themselves not knowing where to look in certain situations. There are a few common denominators among these business but none are too alike and all face different challenges even if they all work in common fields. As stated above, I will be covering an introduction and market region information, business resources, survey results and summary, a top issue and existing literature review, case and state laws, and my conclusion and recommendations. While fully covering these issues, I will be placing great emphasis on the legal issues that in one way or another these businesses are all faced with at some point. Introduction and Market Region Information The three businesses I surveyed were involved with either one or a combination of the following; commercial and residential real estate, banking and commercial lending, and residential mortgage brokering. All of these businesses are located here in Little Rock with one being a sole proprietorship engaging in residential real estate, another a Limited Liability Company involved with commercial real estate and lending, and the last being a bank which is a S Corporation. The LLC is located in Riverdale a few miles from the S Corporation which is located downtown and the sole proprietorship is located in West Little Rock. The bank has many local, small businesses they lend to and provides Little Rock and Northwest Arkansas with mortgage services as well as having many of the 197,000 Little Rock citizens of all ages and ethnicities as account holders. By only having one Northwest Arkansas mortgage center, they serve an estimated less than 5% of the roughly 90,000 citizens there. The LLC sells and buys few Reflection Paper 3 commercial properties in Northwest Arkansas and has served as a commercial loan broker to a couple hundred clients over many years in states such as California, Louisiana, and Oklahoma. This LLC's main place of business is usually all over the state of Arkansas and arranges financing for mostly white, middle to late aged businessman according to the owner's recollection of his many years in business. Lastly is the sole proprietorship who helps with real estate transactions strictly with clients located here in Little Rock. He does business with people of all ages and races and has worked with under 50 clients thus far. Business Resources All of these businesses are either a part of or seek answers from a number of local organizations. Both the commercial lending LLC and sole proprietorship real estate broker are both members of the Little Rock Board of Realtors as well as the Arkansas Real Estate Commission. The Little Rock Board of Realtors provides workshops for agents and brokers as well as helpful resources to avoid disputes that could send agents and brokers to the Arkansas Real Estate Commission. All three of the businesses were members of both local and state chambers of commerce and one was a member of the Better Business Bureau. The commercial lending LLC was a substantial donator to the U of A at Fayetteville and has had a couple student spend a few months interning with him. An interesting agency all were apart of was local civic clubs. All the business owners said they enjoyed meeting up with those in the same field and discussing business trends and news in their fields. Being involved with local organizations was important to these businesses because involvement in the community provides for a positive look for them as well. Reflection Paper 4 Survey Results and Summary As stated above the three business I surveyed were a local bank, a commercial loan broker, and independent real estate broker all of which are located in Little Rock. The interviews with the bank and commercial broker were conducted on Thursday March 25, 2016 and the interview with the real estate broker was on Friday March 26, 2016. Surveying these businesses provided me with a chance to draw some fact based conclusions about these company's experiences and operations. A key trend I noticed among them all that I found very interesting was their desire to seek more professional training in one field or another. More particularly was that they all seemed to be struggling with keeping up with constantly evolving technology and wanted to be able to maximize the technological resource's available to them to the best of their abilities. Secondly was their opinions on how to deal with legal problems, whether it be arbitration, mediation or litigation. The bank and commercial lender had all been in mediation a number of times and said that they favored it rather than litigation due to the cost and publicity associated with litigation. A few trends I found to not be surprising was that all three of the businesses dealt little to none with patents, trademarks, and copyrights. The bank was the only one that had any dealings with any of the three and that was through copyrights on their name and logos. Neither the LLC or sole proprietorship had any patent, copyright, or trademark filings. Fraud and theft were major concerns to the bank for obvious reasons such as bad checks and fraudulent purchases with accountholders debit cards. The commercial lender had experienced his fair share with fraud and theft as well by having a few clients in years past attempting to use falsified income statements and lying about equity they claimed to have. Reflection Paper 5 Top Issue and Existing Literature Review The top issue that I noticed among the three was fraud. I chose this issue because of the importance it has in relation to all three of the businesses but also because of the experiences two of the businesses I interviewed had encountered. First off is the banks experience with fraud. Credit and debit card fraud is a huge issue that plagues The United States which accounts for forty-seven percent of the worlds credit card fraud (T. Holmes, 2015). Due to this ever increasing fraudulent activity with accountholders cards, this local bank has recently had to undertake the large cost of providing accountholders with debit cards that now have EMV chips to reduce fraud. EMV chips create a unique transaction code for every transaction that will not work for a subsequent transaction. Fraud relates to the commercial lender in the form of altered financial documents and misappropriation of funds. When fraudulent documents are used they are most often in the form of falsified tax documents, rent rolls, and appraisals according to this lender. Misappropriation of funds is also a major issue as some loan recipients use the funds for personal use or to satisfy existing debts that have no relation to the intended use of the funds. Lastly is the relation of fraud to real estate. Fraud and real estate is a major issue although not as widespread as credit card fraud. A common real estate fraud that is prevalent in newly constructed properties is builder bailouts in which fake down payment assistance or \"shell buyers\" are used to purchase newly built property subsequently making the value of the loan higher than the new home. Another issue is \"shell companies\" acting as LLC's purchase property issuing sellers false short sale documents and upon the transfer of funds, false HUD documents are sent to the seller making them believe their mortgage was paid off. Both of these issues are among the many that real estate agents and their brokers face and require these agents and brokers to be on their toes Reflection Paper 6 during transactions. An interesting article relating to fraud is a recent case in October of 2015 in which a local doctor defrauded insurance companies for 2.2 million dollars for services that weren't performed (Little Rock, 2015). This article along with the case we discussed in class about Steve Parks coal tax credit scheme shows the relevance of fraud to our community. Case and State Laws Both of the Arkansas State Laws I will cite below are both criminal offenses relating to forgery and fraudulent practices. The first state law that I will discuss is Arkansas Statute 5-37207, fraudulent use of a credit card or debit card (\"Arkansas Code,\" 2014). This statute was amended on March 13, 1997 to clarify vague terms pertaining to offenses of theft and fraudulent use of a credit card. 5-37-207 states that a person commits the offense of fraudulent use of a credit or debit card when used for the purpose of defrauding. It is a Class B Felony and was created to severely punish those whom commit credit card fraud by sentencing them to five to twenty years in prison and up to a fifteen thousand dollar fine. Secondly, Arkansas Statute 5-37205 makes issuing a false financial statement illegal (\"Arkansas Code,\" 2014). This statute states that a person commits the offense of issuing a false financial statement if with the purpose to defraud or injure. This Statute is a Class A Misdemeanor punishable by up to one year and jail and a fine of up to twenty-five hundred dollars. Both of these laws are designed to protect individuals from fraud and attempt to reduce fraudulent practices by enforcing punishments for such fraudulent practices. Conclusion with Recommendations Conducting this small business survey allowed me to apply the topics I have learned in class to the not only the problems small businesses face but also provided me with first-hand Reflection Paper 7 knowledge of all the different aspects of running a business. Examples of this range from relating business structures learned in class and seeing how they are actually used to real life examples of problems such as business torts that I discussed with the businesses I interviewed. As well as taking an in text view of our employment relationship section and seeing practical applications of it being used in the modern business world. The legal issues that these small business face are numerous and it makes me realize all the thought they take into account just to stay on the right side of the law. After taking this class if I had to make recommendations to these businesses on avoiding legal situations such as fraud it would be to lawyer up. Whenever they find themselves in a legal situation that they aren't 100% sure they fully understand I would suggest always seeking professional advice. These small business owners don't own corporations worth hundreds of millions that have a cushion to fall back on when they find themselves on the wrong side of the law with an issue such as being defrauded. The decisions these small business owners make pertaining to a legal question could be one that puts them in a situation that could make them liable for litigation and substantial penalties that could bankrupt them. Cost of professional advice might be a few thousand dollars for a consultation with a lawyer but in the long run I would imagine it would almost always be worth it. It is hard for me to make a list of recommendations to these business because I was learning when talking with them and could not relate to many of their problems as I have no experience with the complex issues they face. Reflection Paper 8 References Holmes, T. (2015, September 16). Credit card fraud and ID theft statistics. Nasdaq. Retrieved from http://www.nasdaq.com/article/credit-card-fraud-and-id-theft-statistics-cm520388 Little Rock doctor pleads guilty to health care fraud admits to $2.2 million in fraudulent billing. (2015, October 13). Justice. Retrieved from https://www.justice.gov/usao-edar/pr/littlerock-doctor-pleads-guilty-health-care-fraud-admits-22-million-fradulent-billing (2014). 2014 Arkansas Code. Criminal Offenses. Subtitle 4, Chapter 37, Subchapter 2. Retrieved from http://law.justia.com/codes/arkansas/2014/title-5/subtitle-4/chapter-37/subchapter2/section-5-37-205/ (2014). 2014 Arkansas Code. Criminal Offenses. Subtitle 4, Chapter 37, Subchapter 2. Retrieved from http://law.justia.com/codes/arkansas/2014/title-5/subtitle-4/chapter-37/subchapter2/section-5-37-207/