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Businesses United States

New York State Attorney General Investigating WeWork (reuters.com) 20

Posted by msmash from the Up-next dept.
The New York State Attorney General (NYAG) is investigating WeWork, Reuters is reporting, citing people familiar with the matter, adding to a mounting series of problems that have turned the workspace provider from a Wall Street darling to a pariah in a matter of weeks. From the report: The company, which is expected to lay off thousands of employees beginning this week as it faces ballooning losses, confirmed on Monday that it had been contacted by the office of the NYAG, Letitia James. "We received an inquiry from the office of the New York State Attorney General and are cooperating in the matter," said a WeWork spokeswoman when contacted by Reuters.
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New York State Attorney General Investigating WeWork More

New York State Attorney General Investigating WeWork

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  • So, we're now wasting tax dollars investigating failed companies' business plans?

    Surely there are some real, violent crimes out there that could better use the resources?

    You know, things that affect real peoples' lives?

    • Re:So....wasted tax dollars? (Score:5, Informative)

      by LatencyKills ( 1213908 ) on Wednesday November 20, 2019 @12:14PM (#59435244)
      People (admittedly mostly rich people) lost money, and some people lost jobs (though they can find others in this economy just for being warm and/or breathing), but if all of that happened due to fraud or if the head guy whose name escapes me was playing funny accounting games to make himself rich, yes, it should be investigated.
      • No investor has lost money - yet. We still exists, and has not folded. Now, it most likely WILL fold sometime in 2020, but until that happens - no money has been lost.

    • Re:So....wasted tax dollars? (Score:5, Insightful)

      by slack_justyb ( 862874 ) on Wednesday November 20, 2019 @12:31PM (#59435328)

      Neumann bought properties which he then leased back to WeWork, borrowed against his own stake in the company, and had also planned to charge WeWork almost $6 million to use his trademark of the word “We” after the company rebranded itself The We Company.

      I think that's worthwhile to investigate as it stands to be a bit of unjust enrichment [uslegal.com]. Also it seems they are no stranger to investigation.

      This is not the first time WeWork has been scrutinized by the NYAG. The company rolled back its policy of requiring employees to sign noncompete agreements after reaching a settlement with the attorney general last year.

      The entire point is to ensure that companies don't follow suit in this kind of nonsense by showing that States are willing to do something about shady business dealings. There's nothing wrong with making money but if you have to harm those who invest in you and are employed by you to make said money, then you definitely are doing more harm than good overall. We ought not accept that as "just a price to pay" for capitalism. If your company is one that honestly will be one that is profitable, it'll happen without resorting to shanking everyone around you within your company. This is just my two cents, but this is definitely a mentality that we want to discourage. I don't think it is healthy.

    • Why not both? Corporate corruption absolutely should be investigated and prosecuted, and often affects many more people than, say, a single murderer.

      • Corporate corruption absolutely should be investigated and prosecuted, and often affects many more people than, say, a single murderer.

        You can't seriously be placing the value of some people losing some money over the value of losing even a SINGLE person's life, can you?

        You can always make more money.....you get only ONE shot at life.

        And all I hear about is the law enforcement around the US being short on funding....so, they have to make choices on what they investigate, etc.

        So, if given the choice...wh

  • cease! the AG of New York(State AGs in general) actually looking in to something(non political) that actually has a bit of a stench..

    Just my 2 cents ;)
  • Comment removed based on user account deletion
  • From the stories I hear, WeWork’s problems are the result of idiocy but nothing I can say is criminal. The founder and CEO’s antics are a cautionary tale of charismatic founders. Unless WeWork lied in the their financial disclosures like Theranos did, unfortunately WeWork might be off the hook for any other shenanigans.

    • Re: (Score:3, Informative)

      by cusco ( 717999 )

      Well, the founder bought buildings and then leased them to the company at well above market rates, so he was ripping off investors. You see, rich people are going to lose money so it's going to be investigated. No one is worrying about the line employees that the company has been abusing and ripping off since the company's foundation, though.

      • What part of that was criminal? Foolish, idiotic, or sleazy maybe. If all of that was disclosed then it isn’t criminal.

  • Good, self-dealing execs suck (Score:3)

    by ErichTheRed ( 39327 ) on Wednesday November 20, 2019 @01:48PM (#59435708)

    For everyone saying stupid rich people were the only ones harmed, I disagree.

    One of the things about the whole WeWork thing that kind of smelled to me was Adam Neumann owning the buildings that his company was renting from him. If that's legal, why can't I just set up a single-person LLC, sell my house to the LLC and "pay myself rent," all while being able to deduct every single related expense from my income?

    Small business owners do this all the time, but there's a reasonable chance they'll be caught if they get too greedy. Ever see expensive cars with a magnetic sign for the owners' "business" slapped on the side driving around doing non-businessy things? Guaranteed it's a small business owner whose business owns every asset they have and generates massive expenses to offset any earnings. I'm hoping they're going after Neumann as an example of self-dealing not being above the law. I'd love to deduct every single real and imagined living expense by doing this...New York is a high tax state...but us little people are more likely to get busted.

    • One of the things about the whole WeWork thing that kind of smelled to me was Adam Neumann owning the buildings that his company was renting from him. If that's legal, why can't I just set up a single-person LLC, sell my house to the LLC and "pay myself rent," all while being able to deduct every single related expense from my income?

      You absolutely can do that. However, you must also declare the housing you receive from your LLC as a "fringe benefit" and declare that equivalent value as compensation, meaning you have to pay personal income tax on it. And of course, as an LLC, all profits/loss flow through to you anyway, so it would be a net zero.

      You MAY benefit with a C corp - since those profits do not automatically flow through to you. Especially if your personal income/SSI tax rate is less than the 21% corporate tax rate. Otherw

    • If that's legal, why can't I just set up a single-person LLC, sell my house to the LLC and "pay myself rent," all while being able to deduct every single related expense from my income?

      Because you're a reasonable human being who is playing the the spirit of the rules, and not just the letter.

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