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Being Illegal - A California Cautionary Tale

post #1 of 61
Thread Starter 
I have to vague on company names, the people and the product sold, but this is 100% true.

I am friends with someone that is very successful wholesaling his product to over 30 venues across California and Washington state as well as operates a very successful storefront here in SF. Let's call him "Dave", and lets say he sells "soda". He just opened a 2nd storefront with the idea to have this storefront specialize in a certain dessert product in addition to his "soda". So he decided to partner up with another very successful person, lets call her "Maude" and lets say she makes "marshmallows". "Maude" has been in business for over 6 years, has been on the Food Network, sold her product nationally in Whole Foods and other stores, has won national competitions and so on. I'm not making this up. She is known.

2 months ago "Dave" got a visit from the HD and an FDA inspector. Apparently "Maude" has been making her "marshmallows" out of her house and of course, "Dave" had no idea. Allegedly, "Maude" filed some of the required paperwork when she started several years ago, but she stopped paying her fees and submitting her product for review to be sold after her 1st year in business. She apparently turned her home home into a "marshmallow" making factory and fabricated her nutritional labels and yearly FDA paperwork. She is in massive debt, and although her product was top-notch, she long ago made the decision that paying taxes paying her licensing fees, and filing her paperwork was secondary to paying these debts.

My friend "Dave" was threatened with a $100,000 fine and 3 years in prison if he didn't pull her product immediately and surrender it to the FDA inspector. Her product vanished from the shelves of Whole Foods (and other stores) within 24 hours.

To say the least, "Maude" is in a lot of trouble, and we (those that know her and the situation) will not be surprised if she gets federal jail time.

Many of us talk about how much trouble one can get into by trying to fly under radar and not do whatever is necessary to follow the laws of our areas, but rarely does anyone post that they actually KNOW someone who got in trouble for not being legal, and since this is such an extreme situation I had to share.

I mean, seriously, I can't imagine having the stones to fabricate FDA paperwork!!!
post #2 of 61
icon_surprised.gif

There. Their. They're not the same.

I hope I die before "your" becomes the official contraction of "you are."

Reply

There. Their. They're not the same.

I hope I die before "your" becomes the official contraction of "you are."

Reply
post #3 of 61
It's an interesting story. Thanks for posting it, but I'm not sure it's a cautionary tale. Not being licensed seems like the least of Maude's transgressions.

Maude is certifiablly insane or really desperate. Not sure why she thought shed get away with tax evasion, fraud, etc. for long.
post #4 of 61
Thread Starter 
Well, "cautiuonary" because a lot of people here make and sell stuff under the table... this IS an extreme example of getting busted, but the fines and penalties would be the same for someone doing it under the table. I dunno, after hearing all about it I did a double check of all my stuff to make sure there was nothing I missed for my business icon_biggrin.gif
post #5 of 61
Maude should be more worried about the IRS than the FDA.
post #6 of 61
I agree with Jason, IRS is much scarier than the FDA.
Lyndi M.
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Lyndi M.
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post #7 of 61
SF, it's always good to double check to make sure your in compliance with all applicable laws and regulations, I don't think Maude's problems were due to overlooking things. I'm not from CA, but i suspect that the severity of the punishment that Maude is facing (setting aside her false statements to the FDA and the tax evasion charges) for baking out of an unlicensed kitchen is due in great part to the fact that her goods were served to potentially tens of thousands in several states, or perhaps nationwide.

I think most illegal bakers who read these forums are aware of the risks. I just don't think winding up like Maude is a very likely risk.
post #8 of 61
Thread Starter 
I guess my main point is that people think the punishment is a slap on the wrist when that's not always the case. I've never heard of or seen the punishment be this severe before (of course I've also never heard of anybody doing anything so stupid). It just made it very real to me that what we do has very real consequences when we color outside of the lines.
post #9 of 61
I think the reason why people who sell illegal won't see it the same, well, cause it really isn't. "Maude" actually went on national tv and sold her product in a national chain store. This is far from the typical I sell cakes illegally and don't even advertise it. This person was screaming what they sold out loud, in front of the entire country. Now I am not promoting to sell illegally, but this just isn't the same thing people talk about on here.

And Jason is right. The IRS is going to get her a--!
post #10 of 61
And I agree there are consequences, but they are usually fines. This person is probably going to jail, crazy fines, and has possibly opened herself up to law suits from those she defrauded.

And let's not forget the wrath of the IRS.
post #11 of 61
In my area, the HD tries to work with illegals to either shut down or comply because the cosequence is police involvement. So don't be so sure what the sanction is until you ask or look it up.
post #12 of 61
I don't think that this kind of thing is as uncommon as some of you seem to think it is...VA has a cottage food law for baking now, but before that there were plenty of people who were operating illegally right out in plain sight. I personally spoke to a few of them telling them that they should get legal, and it wasn't so hard. I got a lot of "Oh, I know, but I don't want to go through the process..." in response. In the meantime, they continued to hand out business cards everywhere they went and advertise online. They were fully aware thay they were operating illeglly but didn't feel like filing the paperwork to make it legal.

There are laws in place here about catering, and people will still get busted by the caterer I know who turns illegal caterers in. He says that the best place to find people to turn in is to look around at costco and see who's loading up their flatbed carts full of supplies. He asks them if they're caterers then gets their business cards, goes home to look up whether they're legal, and turns them in if they're not.

My pont is that the story is a little "larger" than someone who stays local, but there are plenty of people who are illegal and just feel like they don't want to go bother through the process of getting legal for whatever reason. "Maude" might have been bolder than others by going on tv etc, but she's not alone in the idea that she was above following the rules.
post #13 of 61
and yeah, she'd better get ready to kiss her a$$ goodbye when the IRS gets a hold of her.
post #14 of 61
Quote:
Originally Posted by scp1127

In my area, the HD tries to work with illegals to either shut down or comply because the cosequence is police involvement. So don't be so sure what the sanction is until you ask or look it up.



I do know the sanctions in my area. That's why I said what I said. Even you said your area is either helping them comply or shutting them down, not putting them in jail.
post #15 of 61
Quote:
Originally Posted by costumeczar

I don't think that this kind of thing is as uncommon as some of you seem to think it is....

My pont is that the story is a little "larger" than someone who stays local, but there are plenty of people who are illegal and just feel like they don't want to go bother through the process of getting legal for whatever reason. "Maude" might have been bolder than others by going on tv etc, but she's not alone in the idea that she was above following the rules.



I don't think anyone who reads these boards is under the belief that there arent lots of unlicensed bakers. There are posts about it almost every day. I just don't think that Maude's story is anymore a cautionary tale for most unlicensed bakers than a story about a serial ax murderer who is finally arrested would be. We debate the morality/risks of baking unlicensed all the time here, and again, I don't think Maude's sad story advances the debate any.
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