United States vs. Peters
An alter ego is an essential and equitable device applied by courts to prevent abuses by those disrespectfully uses legal shield provided to entities. Frank E. Peters, a defendant was charged by United States District of New York for unlawful strategy against Chase bank. Chase allowed loans to clients up to 85% of accounts receivables (Ego, 1999). Specific accounts receivables were to be respected during borrowing. All of a sudden, loanees began experiencing cash- flow shortages. Peters was charged of prebilling, rebilling and holding the month techniques which pushed Chase bank to financial problems.
Prebilling involved making sales invoice before the actual purchase of goods. This affected unripe purchases by making them appear to be accounts receivable. Holding the month was characterized by including accounts receivables that did not ripen until the end of month. Peters was charged with scheme to defraud chase bank by overvaluing assets used to secure and maintain revolving line of credit. The Court concluded that this case was a forfeiture of the receipts of the criminal violation. In addition, the loan would pierce the corporate veil because corporations were his own alter egos. This help him liable.
Moving corporations’ headquarters abroad is not ethical. Corporate Law of Tax provides that all corporations must pay 35% income tax to the government (Devereux et al, 2002). In addition, tax is charged for corporations abroad. Comparatively, paying government tax is higher than paying dividends to shareholders. Government tax is paid whether the corporation makes profit or not while shareholders dividends are paid as per the profit earned.
References
Devereux, M. P., Griffith, R., & Klemm, A. (2002). Corporate income tax reforms and international tax competition. Economic policy, 17(35), 449-495.
Ego, A. (1999). Interpretation as pragmatics.