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California Won't Accept Its Own IOUs
Courthouse News ^ | 08/04/09 | MARIA DINZEO

Posted on 08/09/2009 4:51:50 AM PDT by TigerLikesRooster

California Won't Accept Its Own IOUs

By MARIA DINZEO

SAN FRANCISCO (CN) - Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors' federal class action claims the state is trying to balance its budget on their backs.

Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California "paid" her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called "sale" of the uniforms.

The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat. They say California has used them as "suckers" as it looks for a way to bankroll its operations while avoiding its own financial obligations.

(Excerpt) Read more at courthousenews.com ...


TOPICS: Business/Economy; Extended News; News/Current Events; US: California
KEYWORDS: california; iou
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1 posted on 08/09/2009 4:51:50 AM PDT by TigerLikesRooster
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To: TigerLikesRooster

It s/b illegal for Calfornia to make purchases when it does not have money to make payment.


2 posted on 08/09/2009 4:54:57 AM PDT by Loyal Buckeye
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...
As we have suspected, state can issue IOU’s but won't take it as payment.
3 posted on 08/09/2009 4:56:05 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster
Refusing to take their own IOU’s will be a court case they will lose shortly.
4 posted on 08/09/2009 4:56:56 AM PDT by org.whodat (Vote: Chuck De Vore in 2012.)
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To: org.whodat

Maybe, if they can get it heard in a Federal court. State court? Not so much.


5 posted on 08/09/2009 4:59:35 AM PDT by Wolfie
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To: TigerLikesRooster
This is precisely the reason to never, never, never have it so you're due a tax return....which might never appear. Have your accountant calculate returns carefully enough so that you owe a little bit at the end of the year. It's much safer that way.


6 posted on 08/09/2009 4:59:55 AM PDT by Blue Jays (Rock Hard, Ride Free)
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To: TigerLikesRooster

good thing that Dems and RINOs can walk on water.


7 posted on 08/09/2009 5:00:58 AM PDT by Diogenesis ("Those who go below the surface do so at their peril" - Oscar Wilde)
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To: Loyal Buckeye

I guess that California wants to decrease the number of folks willing to do business with it.


8 posted on 08/09/2009 5:04:14 AM PDT by donmeaker (Invicto)
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To: TigerLikesRooster
LOL... now pass the popcorn

Now this is getting interesting

9 posted on 08/09/2009 5:10:28 AM PDT by davidosborne (KeyWords: palin2012, sarahpalin2012)
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To: TigerLikesRooster

This is insane, people cannot cash these stupid IOU’s to pay employee’s, costs of materials, taxes.

Rush warned people about Arnold.


10 posted on 08/09/2009 5:22:08 AM PDT by stockpirate (..."when the government fears the people, there is liberty. "- Thomas Jefferson)
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To: TigerLikesRooster

Liberalism is all about your money not theirs.


11 posted on 08/09/2009 5:29:14 AM PDT by BuffaloJack (thirst for absolute power is the natural disease of monarchy - Thomas Paine)
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To: TigerLikesRooster

That simply means the state of California has defaulted on its debt.

Very unwise to hold California paper, whether it is an IOU or bond at this point.


12 posted on 08/09/2009 5:30:44 AM PDT by DB
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To: TigerLikesRooster

I suspected.

But, even more disturbing: our federal monies, which are made of paper, have no intrinsic value (unlike gold or silver coinage) and is only valuable because the government tells us these scraps of linen paper are worth something... just like CA told people its IOUs were worth something.


13 posted on 08/09/2009 5:31:41 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: TigerLikesRooster

Argentina, here we come!


14 posted on 08/09/2009 5:35:27 AM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: TigerLikesRooster; All

I would argue before a court that California should not have a choice about taking their IOUs as payment. An IOU is an official recognition of debt and the “payment” would simply be a reduction in that debt. That should actually be a fairly easy win in any court.


15 posted on 08/09/2009 5:42:45 AM PDT by politicalmerc (If Birthers are so silly, then why not show the BC and put them to shame?)
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To: org.whodat

We don’t know the whole story. What was the language on the notes? If the notes indicated they were not acceptable by the State for payments of various taxes, it might be difficult.

The vendor should have refused acceptance and continued to bill the state and adding late fees and interest.


16 posted on 08/09/2009 5:52:12 AM PDT by bert (K.E. N.P. +12 . fasl el-khitab)
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To: bert

No State Shall Make Anything but Gold and Silver Coin a Legal Tender in payment Of Debt


17 posted on 08/09/2009 5:56:19 AM PDT by eyeamok
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To: TigerLikesRooster

Uh Duh!! Like they are like worthless dude!


18 posted on 08/09/2009 6:04:24 AM PDT by timetostand
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To: TigerLikesRooster

Just a complex way for the state to confiscate the assets of legitimate businesses while saying that it isn’t.

In other words, government gradually taking over the means of production. (see communist manifesto)


19 posted on 08/09/2009 6:05:23 AM PDT by Leftism is Mentally Deranged (Liberal agenda: prescription for pathological dependence - Rossiter)
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To: TigerLikesRooster

So the way I see this any contractor who has good sense will stop taking government contracts.

How long can California survive when people stop working for them?


20 posted on 08/09/2009 6:20:35 AM PDT by Venturer
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To: TigerLikesRooster
The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat.

right there's the problem...

21 posted on 08/09/2009 6:33:17 AM PDT by Chode (American Hedonist -ww- I AM JIM THOMPSON!)
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To: TigerLikesRooster

The Phila. city schools are issuing IOU’s to vendors. Our family does business with the schools (musical instrument accessories) but we won’t do any business with them at this point unless we’re paid up front.


22 posted on 08/09/2009 6:48:19 AM PDT by randita (Chains we can bereave in.)
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To: donmeaker

That isn’t necessarily a bad thing.


23 posted on 08/09/2009 6:49:10 AM PDT by ronnietherocket2
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To: stockpirate

Is this Arnold’s fault, or the fault of the California voter?


24 posted on 08/09/2009 6:49:41 AM PDT by ronnietherocket2
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To: TigerLikesRooster
Show of hands from all of those who are surprised by this...waiting.......waiting.... oh wait one hand from a lurking troll from DU.
25 posted on 08/09/2009 6:49:46 AM PDT by mad_as_he$$ (Nemo me impune lacessit The law will be followed, dammit!)
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To: bert

OTOH, The state is claiming that the IOUs are a valid form payment for tax purposes, so it is illogical that it would be invalid to pay your California taxes with them.


26 posted on 08/09/2009 6:52:42 AM PDT by ronnietherocket2
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To: TigerLikesRooster
As we have suspected, state can issue IOU’s but won't take it as payment.

So much for my plan to get rich on these things. If the state won't take them, they must not be worth the paper they are printed on. Glad I didn't buy any at 5% of par. I still might be willing to take a chance at about 1%. They might be framed collectibles some day.

27 posted on 08/09/2009 7:05:02 AM PDT by PAR35
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To: randita

Wow that’s a tough one. Suppose one of your competitors will do bussiness on those terms. When (if) good times return you’re out of a lucrative govt deal.


28 posted on 08/09/2009 7:09:52 AM PDT by AndrewB (FUBO)
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To: org.whodat

As conservatives, we should be on Calif’s side on this one. As a sovereign state, it should have a right under the constitution to hose folks. There is a reason states can’t file for bankruptcy protection.

And folks should bear the consequences of selling to an insolvent entity on credit.


29 posted on 08/09/2009 7:10:00 AM PDT by PAR35
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To: TigerLikesRooster

Bump for later.


30 posted on 08/09/2009 7:13:20 AM PDT by Diana in Wisconsin (Save The Earth. It's The Only Planet With Chocolate.)
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To: TigerLikesRooster

She has yet to receive any money so how can the State tax that???


31 posted on 08/09/2009 7:30:52 AM PDT by CodeToad (If it weren't for physics and law enforcement I'd be unstoppable!)
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To: stockpirate

What’s the big deal? All those small businesses can run right down to the bank and get a loan to cover their operating expenses, right? Shouldn’t be a problem with the booming economy.


32 posted on 08/09/2009 7:41:21 AM PDT by ProtectOurFreedom
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To: TigerLikesRooster

Has this been confirmed? This article appears to be from an obscure website, and I haven’t seen any other articles asserting this.


33 posted on 08/09/2009 8:29:42 AM PDT by snowsislander (NRA -- join today! 1-877-NRA-2000)
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To: snowsislander
According to Jul. 29 AP article:

http://news.yahoo.com/s/ap/20090730/ap_on_re_us/us_california_ious_2

California contractor paid with IOU sues the state

Wed Jul 29, 8:28 pm ET

SACRAMENTO, Calif. – A vendor who provided 1,200 embroidered polo shirts and uniforms to a state-run youth camp and got paid with an IOU filed a lawsuit Wednesday against the state of California.

Nancy Baird, the owner of an EmbroidMe franchise in Paso Robles, sued state Controller John Chiang and state Treasurer Bill Lockyer in U.S. District Court in San Francisco.


Nancy Baird mentioned in the above AP article is also the lead plaintiff in the lawsuit reported at the Courthouse News article at the top. Apparently, it has turned into a class action suit.
34 posted on 08/09/2009 8:45:25 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: eyeamok
Article 1, Section 10, paragraph [1].
35 posted on 08/09/2009 8:49:09 AM PDT by Total Package (TOLEDO, OHIO THE MRSA INFECTION IN THE STATE and the death of freedom)
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To: TigerLikesRooster

That is wrong on so many levels.

In the end, the people are responsible. They elected the fools that are running the asylum. Maybe next year, they can rectify some of the problem.


36 posted on 08/09/2009 9:20:55 AM PDT by CriticalJ
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To: TigerLikesRooster

IOW
California won’t accept the worthless crap IOUs it foists on vendors and taxpayers. I hope and prey they lose in court


37 posted on 08/09/2009 11:18:50 AM PDT by dennisw (Free Republic is an island in a sea of zombies)
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To: TigerLikesRooster

I have to ask: Doesn’t $27,000 buy a whole trainload of polo shirts?


38 posted on 08/09/2009 11:27:03 AM PDT by steve86 (Acerbic by nature, not nurture)
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To: snowsislander

Has this been confirmed? This article appears to be from an obscure website, and I haven’t seen any other articles asserting this......

Go to google news and you will find many articles for “Nancy Baird” who is suing


39 posted on 08/09/2009 11:37:14 AM PDT by dennisw (Free Republic is an island in a sea of zombies)
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To: timetostand

“Uh Duh!! Like they are like worthless dude!”

I’ll buy all you have for 50 cents on the dollar!!!


40 posted on 08/09/2009 11:52:34 AM PDT by dalereed
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To: TigerLikesRooster
I don't know if this is part of California's dishonesty, incompetence, or part of a plan.

For dishonesty, California is insisting the vendors take something for payment that the state won't take for payment. You know California is paying some of it's bills, so how much you want to bet that the people getting paid are politically connected?

Remember when Hillary found all the "abnormalities" in the WH travel office? This would be an easy ploy for California to run vendors out of business, and advance businesses that will contribute politically to the "right" causes.

You know they're picking out which vendors they pay, and you know they're doing it because of political affiliation.

41 posted on 08/09/2009 12:08:45 PM PDT by Richard Kimball (We're all criminals. They just haven't figured out what some of us have done yet.)
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To: Chode
The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat.

I think the most vulnerable businesses (those who would go out of business without government customers, and who don't have "connections") were told "accept IOUs, or be blacklisted from doing business with California agencies"

42 posted on 08/09/2009 12:19:42 PM PDT by PapaBear3625 (Public healthcare looks like it will work as well as public housing did.)
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To: TigerLikesRooster; dennisw
Thanks. I had tried searching using other keywords, but using "Nancy Baird" gave lots of hits, including this article which had an interesting quote:

She took the IOU to the bank only to find that they refused to honor it.

"I'm like, 'Why not?' 'Well, there's a stipulation you have to be a customer for a year and you've only been here nine months,' and I'm like, 'Are you kidding me?'" Baird recalled. "I was under so much stress because all of this stuff that I just sat in my car and cried."

I wonder just whose stipulation that might be; I have read the guidance from the Fed and from the California authorities, and I don't believe there was anything like a suggested requirement that someone be a customer for a year before honoring these instruments is mentioned.

43 posted on 08/09/2009 2:58:56 PM PDT by snowsislander (NRA -- join today! 1-877-NRA-2000)
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To: Richard Kimball

Good thought, didn’t the federal government just do almost that very thing to car dealership owners?


44 posted on 08/09/2009 3:13:25 PM PDT by mrsmel (Put the Gitmo terrorists near Capitol Hill.)
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To: snowsislander; TigerLikesRooster

Various counties and municipalities issued scrip during the Depression. I did a quick look and the scrip I saw was also good for paying debts and taxes to the entity that issued it. So California is operating a shameful rip-off compared to what impoverished governments did during the 1930’s


45 posted on 08/09/2009 4:01:44 PM PDT by dennisw (Free Republic is an island in a sea of zombies)
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To: snowsislander

http://news.google.com/news?hl=en&q=%22Nancy%20Baird%22&sourceid=navclient-ff&rlz=1B3GGGL_enUS327US327&um=1&ie=UTF-8&sa=N&tab=wn

Wow...even the New York times is covering Nancy Baird and her mini tax and IOU revolt


46 posted on 08/09/2009 4:03:35 PM PDT by dennisw (Free Republic is an island in a sea of zombies)
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To: AndrewB

We don’t really have competitors as it’s a very specialized niche and also we’re not talking a lot of money, or else what you wrote would definitely require thought.


47 posted on 08/09/2009 4:04:40 PM PDT by randita (Chains we can bereave in.)
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To: PapaBear3625
absolutely
48 posted on 08/09/2009 4:08:28 PM PDT by Chode (American Hedonist -ww- I AM JIM THOMPSON!)
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To: steve86

“I have to ask: Doesn’t $27,000 buy a whole trainload of polo shirts?”
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Of course not, you could probably haul that many in a pickup truck if they are good quality. Even the very cheapest wouldn’t nearly load an eighteen wheel truck. If they are the very finest you might come close to loading them into a large car trunk.


49 posted on 08/09/2009 5:13:52 PM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: steve86

Depends on which shirt and how many stitches are in the design, and the number of locations emb. But a unit cost of 24.00 should have been a nice profit.


50 posted on 08/09/2009 5:45:21 PM PDT by mission9 (It ain't bragging if you can do it.)
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