Loading ...
Sorry, an error occurred while loading the content.

ProAdvocate.org and Texas Joint Stock Companies

Expand Messages
  • stogie414
    Found the following article today while researching ProAdvocate.org after somebody posted an inquiry on Rob Lambert s board. Seems like ProAdvocate s offices
    Message 1 of 1 , Sep 4, 2004
    View Source
    • 0 Attachment
      Found the following article today while researching ProAdvocate.org
      after somebody posted an inquiry on Rob Lambert's board. Seems like
      ProAdvocate's offices are a $65 per month rent-an-office deal in
      Dallas, http://www.abcn.com/us/texas/executive-suites-dallas2591/ and
      they are pitching several scams, including a "1st and 14th Amendment
      Association" and a structured involving a Nevada corporation and a
      Texas Joint Stock Company.

      Anyhow, here's what I found on the latter at
      http://www.quatloos.com/texas_joint_stock_co.htm
      ___________________

      Texas Joint Stock Company Scam

      The Texas Joint Stock Company scam is an form of asset protection
      scam that these days seems to be run mostly from the Dallas area by a
      bunch of con artists who got into trouble a few years ago selling
      bogus Pure Trusts. Having been whacked by the IRS, yet desiring
      something to sell to suckers, these con artists have come up with yet
      another mythical asset protection device in the form of the Texas
      Joint Stock Company.

      So what is a Texas Joint Stock Company? It is an unincorporated
      entity, much like a general partnership. Section 31.10 of the Texas
      Business and Commerce Code requires that any person conducting
      business as a Texas Joint Stock Company must file in each county in
      which the entity is doing business a statement setting forth that a
      fictitious business name will be used (not to exceed 10 years). The
      Texas Joint Stock Company can be sued in its own name, and in many
      ways is treated like a general partnership – including for many
      debtor-creditor issues.

      What the Texas Joint Stock Company amounts to is an entity that is
      treated like a general partnership, which is very unfortunate
      considering that general partnerships provide very little in the way
      of asset protection. Now, if the Texas Joint Stock Company was
      similar to a Limited Partnership, it might be more interesting – but
      it isn't.

      The Texas statutes make clear that stock in a Texas Joint Stock
      Company may be executed upon and sold by creditors of a shareholder.
      This is crystal clear in Section 34.044 of the Texas Civil Practice &
      Remedies Code

      § 34.044. STOCK SHARES SUBJECT TO SALE. Shares of stock in a
      corporation or joint-stock company that are owned by a defendant in
      execution may be sold on execution.

      While the promoters who try to sell Texas Joint Stock Companies often
      (falsely) claim that these entities are "better than limited
      partnerships and LLCs" this is shown to be patently false by the
      above paragraph. With a limited partnership or LLC, a creditor is
      stuck with a "charging order" against the membership interest, but
      with a Texas Joint Stock Company a creditor of a shareholder can
      seize and sell the debtor's shares.

      Even a general partnership has charging order protection, but as
      shown the Texas Joint Stock Company doesn't. If you said that Texas
      Joint Stock Companies have all the most debtor-unfriendly features of
      both general partnerships and corporations, you wouldn't be far off.
      No asset protection planner while sober would consider using such an
      entity if potential future liability from within the entity or to a
      shareholder was possible. But probably even a drunk planner could
      presumably read the plain text of Article 6137 from Vernon's Texas
      Civil Statutes and know exactly why Texas Joint Stock Companies
      provide no meaningful asset protection:

      In a suit against such company or association, in addition to service
      on the president, secretary, treasurer or general agent of such
      companies or association, service of citation may also be had on any
      and all of the stockholders or members of such companies or
      associations; and, in the event judgment shall be against such
      unincorporated company or association, it shall be equally binding
      upon the individual property of the stockholders or members so
      served, and executions may issue against the property of the
      individual stockholders or members, as well as against the joint
      property; but executions shall not issue against the individual
      property of the stockholders or members until execution against the
      joint property has been returned without satisfaction.

      In other words, so long as a creditor is smart enough to sue the
      individual members of a Texas Joint Stock Company in addition to the
      organization itself, no asset protection is afforded. The creditor
      might be slowed down a bit having to chew on "joint" property first,
      but eventually the shareholder's assets will be attacked too.

      The concept of using Texas Joint Stock Companies as an asset
      protection device was not thought up by licensed attorneys after deep
      research into the law. Rather, just a bunch of former Pure Trust
      salesmen stumbled upon the term and figured that they had found
      something that could be marketed to suckers. Bundled for sale with
      Nevada corporations (which have no significant asset protection
      advantages over the corporations of other states, but are also
      shamelessly marketed), and the Texas Joint Stock Company promoters
      offer packages that promise absolute asset protection, but in the
      reality of the courtroom will offer all the resistance of wet toilet
      paper.

      If asset protection is a concern, just say "No" to Texas Joint Stock
      Companies, and run like hell from whoever it is that is trying to
      sell you one.

      By the way, for a couple of good cases describing the Pure Trust
      scam, see http://www.assetprotectioncorp.com/dahlstm1.html and
      http://www.assetprotectioncorp.com/dahlstm2.html
    Your message has been successfully submitted and would be delivered to recipients shortly.