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Costa Rican Sociedad Anónima Not Amenable To Pennsylvania Charging Order In Estate Of Lieberman



The Estate of Dr. Richard Lieberman obtained a judgment for about $1.8 million against a Costa Rica corporation called Playa Dulce Vida, S.A., in an action before the U.S. District Court for the Eastern District of Pennsylvania. The Estate then applied to the Court for a charging order against the Costa Rica corporation, arguing that a Costa Rica “S.A”, or Sociedad Anónima, is akin to a U.S. limited liability company, and thus should be subject to a charging order under the Pennsylvania charging order statute. So, the question before the Court was whether a charging order should be issued against a Sociedad Anónima, which is a very popular form of entity nationwide.

The Court in a Memorandum Opinion in Estate of Lieberman v. Playa Dulce Vida, S.A., 2023 WL 138317 (E.D.Pa., Jan. 9, 2023), answered this question in the negative, and denied the application for a charging order. There were two reasons for this denial, both of which are interesting in their own way.

First, it is clear that a Sociedad Anónima is a form of corporation and not an LLC. Thus, the Pennsylvania Uniform Limited Liability Company Act would not apply to an S.A. in general, nor would the charging order provision apply to an S.A. more specifically. This is interesting because, just as the United States has various types of business entities, so do other countries have their own various types of business entities. Thus, what might pass for an corporation or partnership in one country might be treated as something else entirely in another country.

When one starts to think of the global economy against the backdrop of the myriad of types of entities arising out of Anglo-American common law, European and Latin American civil law, widely differing forms of Asian law and more, then one can begin to understand the magnitude of the issue. In the U.S. at least, we solve that problem by hammering strange non-U.S. entities into familiar U.S. pigeonholes, based on such factors as how they really operate, their historical background, how they are treated for tax purposes, and numerous other factors. With the Sociedad Anónima, however, it is relatively easy because it is clear that S.A.’s are simply forms of corporations, and not LLCs or partnerships or trusts or anything else.

The second issue identified by the Court is interesting in a completely different and much more practical way. Fundamentally, a charging order is a remedy that is used by a judgment creditor to establish a lien on the economic rights of an LLC or partnership interest that is owned by the judgment debtor. In this case, however, the Estate sought a charging order against the judgment debtor itself, PDV, which makes absolutely no sense if one even minimally comprehends how a charging order is supposed to work.


In other words, you don’t get a charging order against the debtor itself ― no matter what type of entity it is ― but instead you get a charging order against things that are owned by the debtor, if those things are interests in other LLCs or partnerships. The charging order then creates a lien on those LLC or partnership interests that are owned by the debtor, and redirects any payments to the creditor to effectively reduce those liens. For the Estate here to apply for a charging order against the debtor itself demonstrates that the Estate’s attorneys very fundamentally misunderstood the remedy of a charging order and its operation.

This now brings us to yet a third issue raised by the Court’s Memorandum, but not discussed by it: What does the Estate need to do to collect on its judgment against PDV? The Estate’s judgment is a U.S. judgment, which means that it is only good in the U.S. unless recognized elsewhere. Thus, unless and until the Estate has the judgment recognized somewhere else, it will be stuck with collecting only against PDV’s assets. However, as a foreign company, PDV might or might not have any assets within the U.S. to collect against ― the Memorandum just does not say either way.

What the Memorandum does say is that PDV owns and operates a resort in Costa Rica, which would seem like a juicy asset for any creditor. Can the Estate get at the Costa Rica resort with its U.S. judgment? The answer here is likely in the negative, unless there are other things going on that we don’t know about. A U.S. judgment, and even a judgment by a U.S. District Court, typically has no collection value outside the borders of the U.S., since the Court’s jurisdiction and thus its enforcement ability stops at the border.

With individual debtors, sometimes a U.S. court can order the individual debtor to bring (“repatriate”) certain types of assets back to the U.S. so that those assets can be made available to creditors. If the individual debtor refuses, the U.S. court can hold the debtor in contempt and even incarcerate the debtor until the repatriation is made. However, this is usually only good for liquid assets, such as moneys in bank accounts, and not real property ― although in some cases, a court might order the debtor to liquidate the property abroad and return the proceeds to the U.S.

The problem with entity debtors, such as PDV, is that they while they can be held in contempt, they cannot be incarcerated, so the only thing that a court can do to an entity in the event of contempt is to impose monetary fines. But this then puts the debtor back to Square One in terms of finding assets to satisfy the fine.

Thus, in this case, if the Estate desires to collect against PDV, it will have to have its U.S. judgment recognized in Costa Rica. But that’s not quite as easy as it sounds. Costa Rica is not controlled by the U.S. Constitution which has a “Full Faith and Credit” clause that makes the registration of most judgments between states and with the federal government a breeze in most cases. Thus, unless there is some treaty in effect between the U.S. and Costa Rica, the latter doesn’t have to automatically register the U.S. judgment as a matter of course.

What this means is that the Estate will have to seek to register its U.S. judgment in Costa Rica. I have utterly no idea what this entails under Costa Rican law, but typically most countries either have a statute that allows for the registration of foreign money judgments or they require a new lawsuit on the foreign judgment to be brought locally to establish it as a local judgment. But some countries do not allow either of these procedures, and instead require that the whole lawsuit be tried ab initio as if the foreign proceedings never occurred.

Assuming that the Estate can obtain a Costa Rican judgment against PDV one way or another, then the judgment enforcement proceedings will take place in the Costa Rican courts and will utilize Costa Rican procedures. Again, who knows what those procedures might be like, but being a civil law country they are probably radically different in form, but perhaps not so much in result, than a levy under Anglo-American law. Of course, local Costa Rican counsel will have to be retained to undertake this judgment enforcement.

It might also be possible for the Estate to try to intercept moneys paid by U.S. tourists to PDV in New York, through which most such international transactions pass. In that event, the Estate would have to register its judgment from the Eastern District of Pennsylvania to the Southern District of New York, and then it would have to figure out how such moneys flow. Presumably, an assignment order could be obtained to then pick up credit card payments to PDV. Not easy, but not impossible either. Such intercepted payments might or might not pay the judgment entirely, but they might bring PDV to the table for a settlement long in advance of Costa Rican proceedings threatening the sale of the resort.

Anyway, these are the sorts of issues that judgment enforcement attorneys such as myself have to deal with regularly, and this case at the very least has given me the opportunity to illustrate them for those who are otherwise unfamiliar.


Bonds See 2023 Recession, Stocks Aren’t So Sure



The yield curve is one of the most robust recession predictors and has signaled a recession may be coming since mid 2022. In contrast, U.S. stocks as measured by the S&P 500 are up materially from the lows of last October and only just below year-to-date highs, seemingly rejecting recession fears. Yet, fixed income markets see the Fed potentially cutting rates by the summer, perhaps reacting to a U.S. recession.

The Evidence From The Bond Markets

The recessionary evidence, at least from fixed income markets, is mounting. The 10 yield Treasury yield has been below the 2 year yield consistently since last July. That is is called an inverted yield curve and has signaled a recession fairly reliably when compared to other leading indicators.

Building on that, fixed income markets see almost a nine in ten chance that the Federal Reserve cuts rates by September of this year. That’s something the Fed has repeatedly said they won’t do on their current forecasts. Yet, a recession could cause it to happen.

The Stock Market

In contrast, the stock market shows some optimism. The S&P 500 is up 7% year-to-date as the market has shrugged off fears of contagion from recent banking issues. In particular, tech stocks have rallied.

In contrast, more defensive sectors such as healthcare, utilities and consumer goods have lagged in 2023. This suggests that the stock market is taking more of a ‘risk on’ position and is perhaps less worried about the economy.


That said the stock market is a leading indicator of the business cycle, it may be that stocks see a recession, but are now looking past it to growth ahead and are factoring in the lower discount rates that a recession might bring as interest rates decline. Also, the U.S. stock market is relatively global, so the fate of the U.S. economy is a key factor in driving profits, but not the only one.

What’s Next?

Monitoring unemployment data will be key. Though the yield curve is a good long-term forecaster of recessions it is less precise in signaling when a recession starts. Unemployment rates can offer more accurate recession timing. Unemployment edged up in February, suggesting a recession may be near, but we’ve also seen monthly noise unemployment. Two similar monthly unemployment spikes during 2022 both proved false alarms.

However, if we see a sustained move up in unemployment from the low levels of 2022 that may be a relatively clear sign that a recession is here. Economist Claudia Sahm estimates that a sustained 0.5% increase in unemployment rate from 12-month lows is sufficient to trigger a recession. Unemployment rose 0.2% from January to February 2023, so maybe we’re on the way there. Of course, the jobs market performed better than expected in 2022 and it could do so again. Still, fixed income markets do suggest a 2023 recession is coming. Stock markets don’t necessarily share that view.

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Which States Have The Highest And Lowest Life Expectancies?



There’s a wide variance of life expectancies among the 50 states in the U.S., according to a recent report prepared by Assurance, an insurance technology platform that helps consumers with decisions related to insurance and financial well-being.

Figure 1 below shows the 10 states with the highest life expectancy, starting with Hawaii, the state with the highest life expectancy.

Figure 2 below shows the 10 states with the lowest life expectancy, starting with Mississippi, the state with the lowest life expectancy.

Assurance scoured life expectancy data prepared in January 2023 by the U.S. Centers for Disease Control and Prevention (CDC). With this data, Assurance created several easy-to-understand graphics that offer information about life expectancies.

Life expectancies are a basic measure of well-being

As measured by the CDC, life expectancies are a basic measurement of well-being in a broad population and not a prediction of how long an individual might live. The CDC measures the expected lifespan for a person born in the year of measurement. This measurement is calculated based on the assumption that the individual will live and die according to the rates of death that are prevalent in the measurement year for each age. There’s no assumed improvement or backsliding in the assumed mortality rates in future years for each age in the life expectancy calculation.


By contrast, an estimated lifespan for an individual would consider their current age, their gender, and some basic lifestyle information. It might also attempt to project future improvements or backsliding in mortality rates based on key factors.

Significant influences on life expectancy calculations

Leading causes of death in the U.S. are heart disease, cancer, and accidents in that order. These immediate causes are significantly influenced by factors in the population such as poverty rates, educational attainment, rates of obesity and smoking, access to healthcare, prevalence of violent crime, and the support people receive from federal, state, and local governments. All these factors can vary widely among different states, which can be a key reason why life expectancies vary by state.

When you think about it, all these factors also have the potential to influence a person’s quality of life. The measured life expectancy rate rolls up all these factors into one objective measurement of well-being that’s based on population data.

In addition to the factors listed above, mortality rates increased and life expectancies decreased in the past few years due to the Covid-19 pandemic. A recent article titled “Live Free And Die” summarized recent research results that show that life expectancies in most countries around the world rebounded after the Covid-19 pandemic but that they continued to decline in the United States. Many of the reasons cited in the article for the continued decline in U.S. life expectancies are the same or similar to the factors listed above.

NPR‘Live free and die?’ The sad state of U.S. life expectancy

Why should retirees care about the life expectancies reported here if these measures don’t predict your own lifespan? Life expectancy calculations indicate the general well-being of the entire population in your area. While the living conditions in your area can influence your own lifespan and quality of life, retirees should focus on their remaining life expectancy given their age. They should also consider how the factors listed above that influence life expectancies in the population might apply to them.

You can obtain customized estimates of your remaining life expectancy at the Actuaries Longevity Illustrator. Part of your planning for retirement is understanding how long you an an individual might live, instead of relying on generalized information about larger populations you see in the media.

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IRS Dirty Dozen Campaign Warns Taxpayers To Avoid Offer In Compromise ‘Mills’



Owing taxes can be stressful. Unfortunately, the actions of some companies can make it worse. As part of its “Dirty Dozen” campaign, the IRS has renewed a warning about so-called Offer in Compromise “mills” that often mislead taxpayers into believing they can settle a tax debt for pennies on the dollar—while the companies collective excessive fees.

Dirty Dozen

The “Dirty Dozen” is an annual list of common scams taxpayers may encounter. Many of these schemes peak during tax filing season as people prepare their returns or hire someone to help with their taxes. The schemes put taxpayers and tax professionals at risk of losing money, personal information, data, and more.

(You can read about other schemes on the list this year—including aggressive ERC grabs here, phishing/smishing scams here and charitable ploys here.)

Tax Debt Resolution Schemes

“Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said IRS Commissioner Danny Werfel.

“This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”


Offers In Compromise

Legitimate is a key word. Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But, as the IRS notes, these “mills” can aggressively promote Offers in Compromise—OIC—in misleading ways to people who don’t meet the qualifications, frequently costing taxpayers thousands of dollars.

An OIC allows you to resolve your tax obligations for less than the total amount you owe. You generally submit an OIC because you don’t believe you owe the tax, you can’t pay the tax, or
 exceptional circumstances exist.

Because of the nature of the OIC—and the dollars involved—the process can be time-consuming. It can also be confusing for taxpayers who may not have a complete grasp on their finances.

First, you must complete a detailed application, Form 656, Offer in Compromise. You must also submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, with supporting documentation (generally, bank and brokerage statements and proof of expenses).

You’ll also need to submit a non-refundable fee of $205 and payment made in good faith. The payment is typically 20% of the offer amount for a lump sum cash offer or the first month’s payment for those made over time. Generally, initial payments will not be returned but will be applied to your tax debt if your offer is not accepted. Payments and fees may be waived if the OIC is submitted based solely on the premise that you do not owe the tax or if your total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines.

The IRS will examine your application and decide whether to accept it based on many things, including the total amount due and the time remaining to collect under the statute of limitations. The IRS will also review your income—including future earnings and accounts receivables—and your reasonable expenses, as determined by their formula. The IRS will also consider the amount of equity you have in assets that you own—this would include real property, personal property (like automobiles), and bank accounts.


Before your offer can be considered, you must be compliant. That means you must have filed all your tax returns and paid off any liabilities not subject to the OIC. After you submit your offer, you must continue to timely file your tax returns, and pay all required tax, including estimated tax payments. If you don’t, the IRS will return your offer.

Additionally, you cannot currently be in an open bankruptcy proceeding, and you must resolve any open audit or outstanding innocent spouse claim issues before you submit an offer.


You can probably tell—it’s a lot to consider. You may want representation. A tax professional can help marshal you through the process and offer practical guidance, while communicating what fees could look like.

By contrast, according to the IRS, an OIC “mill” will usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person’s tax debt for cheap. Also telling: the fees tend to be significant in exchange for very little work.

Those mills also knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing taxpayers money and time. You can check your eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool.

“Pennies On A Dollar”

What about those promises that taxpayers can routinely settle for pennies on a dollar? Not true. Generally, the IRS will not accept an offer if they believe you can pay your tax debt in full through an installment agreement or equity in assets, including your home. That’s why the IRS tends to reject a majority of OICs that are submitted. The acceptance rate is less than 1 in 3, according to the 2021 Data Book.

The IRS will generally approve an OIC when the amount offered represents the best opportunity for the IRS to collect the debt. It’s true that there’s a formula that the IRS uses to figure out how much they think they can collect from you. But there is some wiggle room to account for special circumstances, including a loss of income or a medical condition. It’s worth noting those are the exceptions, not the rule.


While submitting an OIC may keep the IRS from calling you, it doesn’t stop all collections activities—don’t believe companies that suggest that submitting an OIC will make your tax debt disappear. Penalties and interest will continue to accrue on your outstanding tax liability. Additionally, the IRS may keep your tax refund, including interest, through the date the IRS accepts your OIC.

You may also be liened. In most cases, the IRS will file a Notice of Federal Tax Lien to protect their interests, and the lien will generally stay in place until your tax obligation is satisfied.

Be Skeptical

An OIC is a serious effort to resolve tax debt and shouldn’t be taken lightly. Be skeptical—if it sounds too good to be true, it likely is. If you’re considering an OIC, hire a competent tax professional who understands the rules and is willing to level with you about your chances of being successful—including other options. Don’t fall into a trap that can make your situation worse.

MORE FROM FORBESIRS Urges Those Hoping To Help To Beware Of Scammers Using Fake Charities

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