X - post Landry Academy Financial Problems?

[StephanieZ]

If anyone has paid recently (as in the last few months), I'd immediately contact your CC company to try to challenge the payment. Sooner rather than later!!!

 

IMHO, it's really totally irredeemably unethical to not pay your staff . . . and to keep encouraging folks to send payments when you know you're in big trouble. 

 

We've owned a business for a long time, and when times were tight in the early years and we didn't have a big cash cushion, we've gone months without taking paychecks ourselves . . . we've run up personal debts to float the business . . . we've even run 30 days behind on some vendors . . . Cash flow is tricky and we took some lumps and had plenty of sleepless nights . . . but, we would never, ever, ever mess with staff payroll. EVER. You know what and how much payroll is going to be . . . you hire people . . . you plan accordingly, and you PAY THEM. Period. Our business model isn't one of advance payment by customers, but I guarantee you that if it were, we'd have felt the same way about customer payments. You can float vendor/utility/whatever bills, but you never, ever, ever don't pay your staff or stiff a client. If you have to write a personal cash advance check from your personal credit card into your business account to make payroll, or you have to have your personal bills late, that is what you do. Period, because you take on a moral duty to your staff when you hire them! Period! 

 

If your business is in such trouble that you might not be able to make payroll, even after all your personal resources are tapped out, you shut it down before you short your staff. That these teachers are Independent Contractors with no unemployment coverage just amplifies the harm done to them by the company, IMHO, and makes it all the more unforgivable. 

 

I knew someone who'd owned a business that failed, and they made the grave error of not sending the IRS the withholding taxes for their staff for several months using that "float" to try to tide the business over the rough patch . . . so they ran up substantial debt to the IRS before going bankrupt. REALLY REALLY bad mistake. That debt was following him for LIFE, period. You don't get out of those sorts of IRS debts. I knew him when I was very young, pre-business ownership, but that made a big impact on me . . . I took that knowledge into business ownership, which made my golden rule, right along with always, always making payroll . . . that you always, always paid the IRS and other tax agencies all their due immediately You just should never, ever mess with the IRS or other tax agencies.

 

SO, based on that insight and the reports here, my guess is that the business owners spent recent months accumulating cash/paying down debt for the IRS and/or other gov't agencies . . . holding back payroll, sucking in customer advance payment   . . .  all to get as much paid to the unforgiving IRS as possible. That would be a "smart" business move, as most other debts can be forgiven in bankruptcy, so the owners can come out of bankruptcy in much better shape if they have paid the government their due but owe more to vendors/clients/staff . . . but, to me, that is a totally scum ball move -- to short your staff and your clients in order to save your own butt. I can live with stiffing your vendors/utilities/mortgage company via bankruptcy. . . but staff -- NO, clients who trusted you -- NO. 

 

Ugly, ugly, ugly. 

[Lecka]

This is very much an aside, but many years ago I worked at a restaurant while it went out of business. It was sad for the owners. It was sadder (imo) for employees who were not paid their last paycheck and needed the money to pay their own bills (not my situation as I still lived with my parents).

 

Six months later I received my last paycheck in the mail, and my understanding was that they could have not paid us bc of how the bankruptcy went, but one of the owners had her own job and paid us from that salary even though it wasn't legally required of her.

 

The restaraunt was purchased by new owners and is now a successful business again.

 

It was a weird situation I was involved with at age 17, and I hope this can become some kind of educational opportunity for your kids.

 

I am afraid my lesson learned is that you might not get your last paycheck or might not get it until a lot of time has passed. On one hand it has made me see the importance of an emergency savings account.

 

On the other hand I am suspicious or cynical at times and I don't think it is the best.

[Nancy in NH]

Can anyone attend these meetings?  I tried logging in (although after the 8 PM start time) and was denied access.

 

Nancy in NH

 

I received this in an email a little while ago:

 

Families of Landry Academy,

We became aware of the difficulties that Landry Academy was
having recently and contacted Greg Landry to see how we might
help in these very difficult times. We have now had several
conversations and emails with Greg Landry as we have discussed
how to make the best of this for everyone.

There is one thing that is clear from our conversations: he is
heartbroken to see this happen and has done everything he knows
to do to avoid it. He is now doing everything he can to help you
in an orderly transition and to minimize the interruption of the
education of your children and to minimize its financial toll on you.

Before going further I should tell you about Veritas. Veritas is nearly
20 years old. We are a curriculum and online course provider for
classical education. Of nearly 100 teachers around 2/3 have
advanced degrees. All of them love teaching.

Learnmore about us at www.VeritasPress.com

When we became aware of this difficulty we sought, with Greg, to
create an outcome that would help you, the teachers and, ultimately
God’s Kingdom. There are two direct benefits we’ve agreed to offer
you.

1. Extraordinary pricing on second semester courses (spring 2017).
2. A way to use generic credits you have already purchased for
the 2017-18 school year.

For your convenience we have scheduled two identical meetings in
our large online meeting room to share the details. Hopefully, one of
them will fit your schedule. The meetings will take place at:

8:00pm EST on 12/29/16; and

8:00pm EST on 1/2/17

To attend click on this link:

http://vpsa.adobeconnect.com/vsameetingroom/

Then log in as a guest. Enter your first and last name. If you arrive
before the host, a screen will indicate that the host has yet to arrive,
and when the host does arrive, you will be automatically let into the
room.

Please pray for Greg and his wife, this has been a very trying time
for them. Please pray for the teachers, their circumstances vary, no
doubt, but many are dependent on their teaching to pay their bills.
Please pray for all the families and students as plans and changes
are made. Finally, please pray for us at Veritas, that we might do all
we can do to serve you well as we seek to fulfill our mission of
Restoring culture to Christ one young heart and mind at a time.

We look forward to working with you.

Marlin Detweiler
President
Veritas Press, Inc.
1805 Olde Homestead Lane, Lancaster PA 17601
(800) 922-5082
(717) 519-1974
www.VeritasPress.com

 

[Renai]

Can anyone attend these meetings?  I tried logging in (although after the 8 PM start time) and was denied access.

 

Nancy in NH

 

I think it got full. As people are dropping out of the meeting, space will probably open up. They are recording the meeting, and will have it available.

[TwoEdgedSword]

I haven't been able to get in yet.

[historymatters]

 

 

 I can't print my kids' transcripts

I would try again tomorrow after the maintenance is completed, just in case they are available then.  Some people have been getting in, it just takes multiple tries to find a window when it will let you in around the maintenance.

 

 

I wasn't able to access the main home page to Landry, but I was able to access my dd's transcript from her 1 semester class.

 

Try this: https://landry.geniussis.com

put in your family login and password and see if you can get what you need.

 

 

[rjand6more]

I came late(15 minutes) and have been denied multiple times.

[itsheresomewhere]

They capped the meeting at 500.

I am copying this from another place- 

 

Right now, they are giving a summary. New semester starts 1/23 for online courses. They meet 2x a week for 90 minutes (high school level). They have an end of year gathering in Lancaster, PA with close to a week long of events.

249 for second semester course (regular price is $310, which is half price of a full course). Need to sign up before 1/23.

In 2017 -2018 year, classes/ credits (generics) - each is worth $50 towards a VSA full year course (regularly priced around $650 - $699 from what I saw earlier). Courses must be purchased before school year (9/1/17).

Generics = $50 credit per generic that can be used towards VSA classes in the fall.

 

One is saying an email of this will be sent of the course offering tomorrow.

 

[Momofeat]

I dropped out because I don't think it's going to help my family's situation.

 

Bottom line:

 

Students can take classes for $249 instead of $310 next semester.

 

Next year, $50 can be discounted from a year-long class if you hold any Landry generics.

[Lanny]

<snip>

Also, FWIW, any business offering big discounts for long term packages paid in advance is sketchy IMHO. Especially in homeschooling, it's sketchy to encourage folks to commit to years of classes when we all know family and individual needs can change rapidly. A moderate discount to reward loyal customers is one thing, but deals encouraging folks to prepay for years of classes is crazy. Essentially, it's a pyramid scheme where they were pulling in advance tuition and spending it on current needs  . . . So, IMHO, see that as a big fat warning sign to not get lured in to schemes like this!!

 

That is the Ponzi-like part of this operation. It was not a true Ponzi scheme (many people received wonderful services), but the huge discount, to encourage people to pay for services they would (hopefully) receive, at some date in the future, is very questionable.  One of the issues may be that they spent the money many customers (including some participating in this thread) had sent them in advance, deposits to be used to pay for future courses. A "Credit" in their account with the school.  Those are not "investments", those are payments sent to get a "Credit" on the books of the school, to be used to pay for future courses. Something is not correct about that

[cjzimmer1]

I'll further add to the discussion of $ at Veritas.  The credits will only be good for the 2017-2018 year and only on year long classes.  Only one $50 credit per class.  They are considering some discount on their self paced classes but hadn't considered that before the meeting so had no idea what kind of discount might be offered.  There is a $95 deposit due up front but that will be taken off the total cost.  The reminder of the balance can be made in payments (at least for the spring semester).  They are working on putting together a spreadsheet with the class to class comparison and are looking into the possibility of adding classes where there is no direct option.  They like everyone else has had very little time to prepare and are doing their best to come up with options even though they are on Christmas break.

Edited December 30, 2016 by cjzimmer1

[itsheresomewhere]

Based on what is being said on other sites/places, it is starting to sound more like fraud to me.  If it is true and he knew that there is a major cash flow issue going on since summer, he should not have collected for trips in 2017, 2018 and selling discounted classes in November.  And collecting payment in December when you know the ship is not coming back is just wrong.

 

Can I just say that it is so refreshing to see not one nasty comment here for the teachers who left. Some of the comments elsewhere about the teachers leaving when they should have stuck it out without pay is just wrong.

[Lanny]

Posting this as several parents are reporting that their predated checks were recently cashed and some had credit card payments go through. 

 

 

If anyone on here has sent them predated checks- I would be calling my bank and putting a stop payment on them NOW.  If you have used a credit card recently for LA, I would put a dispute on it.  

 

RE: Post dated checks -  I have not written a paper check for years (on my U.S. account or my Colombian account) so I am not  positive about the current regulations.   I had the impression, some years ago, that if someone set up a "Stop Payment Order" with their bank in the USA, that if the bank did not stop the check and the check was deposited, ahead of the date on the check  (which was in advance of the date the check was written) that the bank was not liable. The idea was that they would try to stop the check from going through, but that if they did not stop the check, the bank was not liable.  I HOPE THAT IS NOT TRUE and that if anyone had written a check with a date in advance of he date the bank processed and paid the check, that they would get their money back from the bank.    

 

Recent credit card payments hopefully will be removed by the bank that issued the credit card. If I had that situation, I would be contacting my bank, tomorrow, Friday, December 30, 2016, first by phone and then by FAX or Registered Mail. 

[mom2scouts]

 

Also, FWIW, any business offering big discounts for long term packages paid in advance is sketchy IMHO. Especially in homeschooling, it's sketchy to encourage folks to commit to years of classes when we all know family and individual needs can change rapidly. A moderate discount to reward loyal customers is one thing, but deals encouraging folks to prepay for years of classes is crazy. Essentially, it's a pyramid scheme where they were pulling in advance tuition and spending it on current needs  . . . So, IMHO, see that as a big fat warning sign to not get lured in to schemes like this!!

 

I was really interested in Landry, but this was what kept me from using them. I saw many positive reviews and people saying it was "risk free because the generics never expire and you can sell them" and my intuition kept telling me it wasn't sustainable long term. Every time I considered buying generics, I wondered if it was wise to spend money when I didn't know if the business would still exist in the 2018-19 school year. That's a long time to wait for services that have already been purchased! I finally decided I would only use them if I was registering for the next semester even if that meant I had to pay more.

 

RE: Post dated checks -  I have not written a paper check for years (on my U.S. account or my Colombian account) so I am not  positive about the current regulations.   I had the impression, some years ago, that if someone set up a "Stop Payment Order" with their bank in the USA, that if the bank did not stop the check and the check was deposited, ahead of the date on the check  (which was in advance of the date the check was written) that the bank was not liable. The idea was that they would try to stop the check from going through, but that if they did not stop the check, the bank was not liable.  I HOPE THAT IS NOT TRUE and that if anyone had written a check with a date in advance of he date the bank processed and paid the check, that they would get their money back from the bank.    

 

Recent credit card payments hopefully will be removed by the bank that issued the credit card. If I had that situation, I would be contacting my bank, tomorrow, Friday, December 30, 2016, first by phone and then by FAX or Registered Mail. 

I think it is true that the bank is not liable for post dated checks which are paid early. One of my sons paid his rent and asked the landlord to hold it for two days so he could be sure his paycheck was deposited. The landlord cashed it anyway and my son was given the overdraft charges. They told him a future date on a check will not stop a check from being paid. Anyone who's paid LA recently with a check should immediately try to stop payment on it.

Edited December 30, 2016 by mom2scouts

[Guest]

RE: Post dated checks -  I have not written a paper check for years (on my U.S. account or my Colombian account) so I am not  positive about the current regulations.   I had the impression, some years ago, that if someone set up a "Stop Payment Order" with their bank in the USA, that if the bank did not stop the check and the check was deposited, ahead of the date on the check  (which was in advance of the date the check was written) that the bank was not liable. The idea was that they would try to stop the check from going through, but that if they did not stop the check, the bank was not liable.  I HOPE THAT IS NOT TRUE and that if anyone had written a check with a date in advance of he date the bank processed and paid the check, that they would get their money back from the bank.    

 

Recent credit card payments hopefully will be removed by the bank that issued the credit card. If I had that situation, I would be contacting my bank, tomorrow, Friday, December 30, 2016, first by phone and then by FAX or Registered Mail. 

 

I was always under the impression that post dating a check meant squat, so now I'm curious.  I thought it was a courtesy thing, but whomever you handed the check to could technically cash it at any point. The date meant nothing. In other words, don't hand someone a check if there aren't sufficient funds in your account at that moment to cash it. It's crappy if they did it, but I think it's perfectly legal. I don't think banks take a glance at all at dates on checks. It's up to the writer of the check to have the funds at all times. 

 

ETA: CFPB's answer on the matter: http://www.consumerfinance.gov/askcfpb/967/can-bank-or-credit-union-cash-post-dated-check-date-check.html

Edited December 30, 2016 by texasmom33

[razorbackmama]

That is the Ponzi-like part of this operation. It was not a true Ponzi scheme (many people received wonderful services), but the huge discount, to encourage people to pay for services they would (hopefully) receive, at some date in the future, is very questionable.  One of the issues may be that they spent the money many customers (including some participating in this thread) had sent them in advance, deposits to be used to pay for future courses. A "Credit" in their account with the school.  Those are not "investments", those are payments sent to get a "Credit" on the books of the school, to be used to pay for future courses. Something is not correct about that

 

It's unearned revenue in accounting terms, which is a liability. It's money owed to someone. Businesses do it all the time (like with a magazine subscription), but the bookkeeping has to be done correctly in order to account for it. I'm thinking their bookkeeping was NOT done properly at all.

[justasque]

I guess the part I don't understand is that this is a fairly straightforward business model.  It's pretty easy to see where you are breaking even, where you are making a profit, and where you are losing money.  You set up courses A, B, and C.  If you get enough enrollment to cover the cost of the teacher plus a bit of your overhead (which in this case would be mainly the tech to deliver the classes and the web site to sell them), then the class runs.  If you don't get enough enrollment, the class doesn't run.  If you get more enrollment than you need to cover expenses + pro-rated overhead, there's your profit.  The budget is pretty well set at the beginning of the fall, as you'll have a pretty good estimate of your overhead for the year and what you need to cover it.  I can see going out of business because you're not making enough profit to make it worth your while, but that's different than what happened here.  

I suppose if the IRS challenges changed the budget mid-year, that would be difficult.  But it seems like the answer would then either be to raise your prices for any new classes accordingly, to cover your teachers' salaries, or to raise the minimum number of students needed to make a class run (and perhaps raise the maximum number of students per class).  What I don't understand is how selling credits for future classes at reduced rates could help - it seems like a recipe for inevitable failure rather than a long-term solution. If you're having to pay teachers more, plus more overhead to cover IRS payments, then you will need more money per student/class in the future, not less.

It's a shame Mr. Landry didn't obtain better financial advice.

That is the Ponzi-like part of this operation. It was not a true Ponzi scheme (many people received wonderful services),

 

I don't know if LA was a Ponzi scheme or not.  BUT, many Ponzi schemes (like Bernie Madoff) do deliver their promised services in the beginning -- they have to, in order to grow the scheme big enough.

 

I do agree with you though, selling credits at 84% discount for classes more than a year in the future seems unsustainable.

[Guest]

I don't know if LA was a Ponzi scheme or not.  BUT, many Ponzi schemes (like Bernie Madoff) do deliver their promised services in the beginning -- they have to, in order to grow the scheme big enough.

 

I do agree with you though, selling credits at 84% discount for classes more than a year in the future seems unsustainable.

 

Wow- I had no idea they were selling them that cheaply. That's a massive red flag. 

[razorbackmama]

Wow- I had no idea they were selling them that cheaply. That's a massive red flag. 

 

Me either. WOW.

[razorbackmama]

I guess the part I don't understand is that this is a fairly straightforward business model.  It's pretty easy to see where you are breaking even, where you are making a profit, and where you are losing money.  You set up courses A, B, and C.  If you get enough enrollment to cover the cost of the teacher plus a bit of your overhead (which in this case would be mainly the tech to deliver the classes and the web site to sell them), then the class runs.  If you don't get enough enrollment, the class doesn't run.  If you get more enrollment than you need to cover expenses + pro-rated overhead, there's your profit.  The budget is pretty well set at the beginning of the fall, as you'll have a pretty good estimate of your overhead for the year and what you need to cover it.  I can see going out of business because you're not making enough profit to make it worth your while, but that's different than what happened here.  

 

I suppose if the IRS challenges changed the budget mid-year, that would be difficult.  But it seems like the answer would then either be to raise your prices for any new classes accordingly, to cover your teachers' salaries, or to raise the minimum number of students needed to make a class run (and perhaps raise the maximum number of students per class).  What I don't understand is how selling credits for future classes at reduced rates could help - it seems like a recipe for inevitable failure rather than a long-term solution. If you're having to pay teachers more, plus more overhead to cover IRS payments, then you will need more money per student/class in the future, not less.

 

It's a shame Mr. Landry didn't obtain better financial advice.

 

I own a bookkeeping practice. I could curl your hair with what people think are sound business practices.

 

I agree...if he had obtained better financial advice, he would not be in this mess. (And I'd bet money he was a sole proprietor, based on the lack of sound financial advice he received, so he is in deep, deep doo-doo.)

 

[Renai]

People have been able to access syllabi and get grades, screenshots of ledger, teacher contact information, etc., at least as of an hour ago. If you weren't able to log in before, you may want to keep trying.

 (And I'd bet money he was a sole proprietor, based on the lack of sound financial advice he received, so he is in deep, deep doo-doo.)

 

 

According to the state of Tennessee corporate search page, it is (was?) an LLC.  

[razorbackmama]

According to the state of Tennessee corporate search page, it is (was?) an LLC.  

 

Whew, at least he won't be personally liable for the debts of the business.

 

Such an awful situation.

[SarahW]

According to the state of Tennessee corporate search page, it is (was?) an LLC.  

 

That likely means that he will not be required to issue refunds for services not provided.

 

Just an fyi for those who have a lot of money tied up there. Unless Landry is super nice (like that restaurant owner upthread) you're probably not getting any money back.

 

Totally stinks all around.

 

 

I get the purpose of LLC's and why it's a good idea to make one if you start a business. But as a consumer, if I see "LLC" after the name of a small business I have little more caution. It stands for "limited liability company" for a reason.

[razorbackmama]

That likely means that he will not be required to issue refunds for services not provided.

 

Just an fyi for those who have a lot of money tied up there. Unless Landry is super nice (like that restaurant owner upthread) you're probably not getting any money back.

 

Totally stinks all around.

 

 

I get the purpose of LLC's and why it's a good idea to make one if you start a business. But as a consumer, if I see "LLC" after the name of a small business I have little more caution. It stands for "limited liability company" for a reason.

 

That actually isn't what it means. Regardless of whether it was an LLC, an S-corp, a C-corp, or a sole proprietorship, he (or the business) most likely would be filing bankruptcy, which would mean the debts would be eliminated. The only one that will ever see any money is the IRS.

 

LLC simply means that he functions tax-wise as a sole proprietor, but in situations like this, his personal finances are protected from any business issues.

[...................]

Nm

Edited December 30, 2016 by Calming Tea

[StephanieZ]

I guess the part I don't understand is that this is a fairly straightforward business model.  It's pretty easy to see where you are breaking even, where you are making a profit, and where you are losing money.  You set up courses A, B, and C.  If you get enough enrollment to cover the cost of the teacher plus a bit of your overhead (which in this case would be mainly the tech to deliver the classes and the web site to sell them), then the class runs.  If you don't get enough enrollment, the class doesn't run.  If you get more enrollment than you need to cover expenses + pro-rated overhead, there's your profit.  The budget is pretty well set at the beginning of the fall, as you'll have a pretty good estimate of your overhead for the year and what you need to cover it.  I can see going out of business because you're not making enough profit to make it worth your while, but that's different than what happened here.  

 

I suppose if the IRS challenges changed the budget mid-year, that would be difficult.  But it seems like the answer would then either be to raise your prices for any new classes accordingly, to cover your teachers' salaries, or to raise the minimum number of students needed to make a class run (and perhaps raise the maximum number of students per class).  What I don't understand is how selling credits for future classes at reduced rates could help - it seems like a recipe for inevitable failure rather than a long-term solution. If you're having to pay teachers more, plus more overhead to cover IRS payments, then you will need more money per student/class in the future, not less.

 

It's a shame Mr. Landry didn't obtain better financial advice.

 

If the rumors about contractor vs employee status are serious . . . and if they are being audited . . . they could easily owe HUGE back taxes & penalties. If an employer messes up status, the employer has huge liability, way beyond the back taxes themselves. Audits can go back many years . . . The catastrophic consequences of mis-categorizing an employee are one of the many very good reasons that I, as an employer, always err towards categorizing someone as an employee. You could save 10k in taxes each year for a few years by mis-categorizing someone . . . and then end up owing 100k+++ a few years later between all the taxes and penalties, let alone CPA and attorney fees.

 

I will repeat: don't mess with the IRS. They scare me, lol.

 

So, THAT's the sort of incident that I could see tipping this sort of business into catastrophic failure. 

[...................]

The credits were always very very sketchy to me. But even I got into the hype and bought one.

 

I'd like to really understand why Landry was selling credits like that. It just seems like such a sketchy business model so I wish I knew the non-sketch reason behind the credits thing. Kwim?

[itsheresomewhere]

He filed for LLC in June of 2014 from what was posted earlier somewhere else.

 

 

One of the former teachers said the IRS case happened a year ago. I do hate to think bad but this is really starting to smell and look like fraud.

 

If you paid by Credit card- this is falling under services not the traditional 90-120 days from purchase. If you call to dispute make sure it is done as services not rendered. Hopefully, this might help someone on here who is our money.

Edited December 30, 2016 by itsheresomewhere

[razorbackmama]

If the rumors about contractor vs employee status are serious . . . and if they are being audited . . . they could easily owe HUGE back taxes & penalties. If an employer messes up status, the employer has huge liability, way beyond the back taxes themselves. Audits can go back many years . . . The catastrophic consequences of mis-categorizing an employee are one of the many very good reasons that I, as an employer, always err towards categorizing someone as an employee. You could save 10k in taxes each year for a few years by mis-categorizing someone . . . and then end up owing 100k+++ a few years later between all the taxes and penalties, let alone CPA and attorney fees.

 

I will repeat: don't mess with the IRS. They scare me, lol.

 

So, THAT's the sort of incident that I could see tipping this sort of business into catastrophic failure. 

 

Exactly. That is what a couple of the teachers are telling us happened. There is a gray area, but IMO it's just safer when it's not clear-cut to classify them as an employee. I'm actually dealing with this with a client, and I may research it more and recommend employee over contractor, just because of the "what if you get audited and lose" scenario.

[razorbackmama]

He filed for LLC in June of 2014 from what was posted earlier somewhere else.

 

 

One of the former teachers said the IRS case happened a year ago. I do hate to think bad but this is really starting to smell and look like fraud.

 

 

Oh yikes. June 2014 is about the right time for him to start getting wind of the IRS situation and for him to register as an LLC instead of losing all of his personal finances.

 

Not good.

[itsheresomewhere]

Oh yikes. June 2014 is about the right time for him to start getting wind of the IRS situation and for him to register as an LLC instead of losing all of his personal finances.

 

Not good.

Yep. And the person who found he LLC info also found out that their farm is up for auction on 1/17/17.

[katilac]

I'd like to really understand why Landry was selling credits like that. 

 

Because he needed an influx of cash. 

 

That's pretty much the only reason to do so. 

[razorbackmama]

Yep. And the person who found he LLC info also found out that their farm is up for auction on 1/17/17.

 

LOL I'm following that same thread. ;-)

[OneStepAtATime]

LOL I'm following that same thread. ;-)

Which thread?  

[...................]

If his personal finances are protected why would he have to sell his farm?

[razorbackmama]

Which thread?  

 

It's on the Landry Academy FB group.

[razorbackmama]

If his personal finances are protected why would he have to sell his farm?

 

It could be that he is selling to raise funds to pay back the business debts. He may not HAVE to sell, but he may be doing it anyway just to get some cash. I've heard that he and his wife are both looking for employment to pay back what they owe.

 

Or it could also be that maybe he mishandled his personal finances just as badly.

[TCB]

I found out from my bank that I can open a dispute for the payments I made at the end of Oct / beginning of Nov. It wasn't for a huge amount of money but not a small  amount for me and my budget. I don't think it will be successful and I feel bad for the owners of Landry. Not sure what to do.

[OneStepAtATime]

I found out from my bank that I can open a dispute for the payments I made at the end of Oct / beginning of Nov. It wasn't for a huge amount of money but not a small  amount for me and my budget. I don't think it will be successful and I feel bad for the owners of Landry. Not sure what to do.

:grouphug:  :grouphug:  :grouphug:

[yvonne]

 their farm is up for auction on 1/17/17.

 

This whole situation is so sad.... for the Landrys who, it sounds like, poured everything into this endeavor and who may lose everything.... for the families who'd planned on spring classes... for the teachers who probably feel tremendous loyalty to the students they've had first semester but who have their own financial needs, ..... and for families who purchased future credits.

 

:(

 

:grouphug: :grouphug:

[Momofeat]

This whole situation is so sad.... for the Landrys who, it sounds like, poured everything into this endeavor and who may lose everything.... for the families who'd planned on spring classes... for the teachers who probably feel tremendous loyalty to the students they've had first semester but who have their own financial needs, ..... and for families who purchased future credits.

 

:(

 

:grouphug: :grouphug:

 

Yes, it's a terrible mess. Nobody wins.

[TechWife]

If his personal finances are protected why would he have to sell his farm?

 

I think he is still personally liable for anything that occurred prior to the start of the LLC. So, if the IRS is going back seven years, he's still on the hook for 2009-2013 (if the LLC started in 2014). In fact, the IRS can seize his property in certain circumstances. 

 

Very sad situation for all involved. He's not a terribly young man, either. This will change so much - not only having to pay money owed to the IRS, but if his farm is up for auction, then it's very possible he's run through any money he had saved for his retirement as well. Not only does it put his daily needs at risk, it puts his future needs at risk as well, it's not easy to rebound from the loss of retirement savings. 

[StephanieZ]

FWIW, I am an owner of two LLCs and an S-Corp. LLCs are crazy easy to set up, very cheap to set up, and offer very limited protection to the owners/members. We only use the LLCs to own commercial/investment real estate, and the S-Corp (a much more involved and expensive corporation to set up and manage) is used for our actual business that has employees/etc. My understanding from our attorneys and CPAs over the years is that LLCs (and even S-Corps) offer some limited protection of our personal assets, but these are very limited protections, not at all bullet proof. For *many*/most acts of business (especially for a new LLC), the owners are very exposed personally . . . Thus, we pay for excessive amounts of insurance ("umbrella" policies") to protect us personally against business errors/liabilities. 

 

Anyway, whether or not the LLC was established in 2014 or earlier or later . . . I would guess that the Landry family is likely exposed legally and financially. Given that their home is for auction in coming weeks, I imagine they are in deep personal financial trouble in any event.

 

I personally wouldn't expect there to be any substantial deep pockets that could make whole those who've pre-purchased credits, etc. I would definitely work though your CC companies, etc, to dispute any/all payments . . . I've read that there are very long term (over a year) protections via VISA/MC, maybe even continuing for years if you've pre-purchased things . . . So, I'd just open disputes with any banks/ccs I'd used, and hope for some remedy that way if possible . . . (All those merchant fees and interest charges for VISA/MC pay for this protection . . . don't discount it!)

 

It is certainly possible that the company and/or Landry family have some large insurance policy (like most responsible business owners) that might cover some of these losses, but I doubt it . . . 

 

This is such a sad situation. 

 

 

[Random]

Wow- I had no idea they were selling them that cheaply. That's a massive red flag. 

 

I'm one who purchased at the 84% off rate.  There are a few reasons it didn't seem like a huge red flag to me. 

 

First, there were a limited number available (so he said).  Second, the regular rate was typical of an online homeschool academy.  I figured Mr. Landry was attempting to be a blessing, offering huge chunks of generics we could split with friends at a discount.  I also assumed that the vast majority of people were paying the standard rate, without discounts, and that was how he could offer the cheaper price in advance.

[AngelaAHLevy]

1. LLC does not protect you from tax debt unless it is an LLC that has elected to be taxed as a corporation, rather than taxed as a partnership.  The former is less common, as it comes with the same kind of complications that other entity types bring. Thus: Any tax owed is owed by the owner.

 

2. If you are collecting fees in advance of performing the service, you essentially have what is called "Unearned Revenue." This is actually a liability.  From a tax perspective, it is possible to not pay taxes on this Unearned Revenue.  When you actually perform the service, the unearned revenue must be reclassified to Earned Revenue, or in accounting parlance -- it gets "recognized."  If Landry Academy never bothered to recognize the revenue when services were actually performed, then they collected cash, never recorded it as revenue, and basically failed to pay income tax on a lot lot lot of revenue. This is called fraud.  And you can be guilty of fraud, even it's just that your records are disorganized. It can be difficult to keep track of unearned revenue and then recognize it at the right time.

 

3. A prepaid model of this type can only last so long as it is growing.  If the amount of prepaids owed exceeds growth, then - imagine this - you have a semester which is 100% comprised of students who paid last year or some other time -- meaning no revenue is coming in and yet you have to still provide the service and incur the costs of doing so. This is when you collapse.  You either collapse because you actually collapsed (as in, used the money and don't have it anymore), or because the government collapses you for collecting prepaids and then failing to keep it in an escrow account or otherwise holding it until recognized.

 

I guarantee you that farm is up for auction and this business is closing not just because of contractor misclassification.  There's a big debt owed to the IRS here and it has to do with income tax/revenue AND/OR the prepaid cash was not held in escrow until recognized and they literally do not have the money to keep operations going.

 

 

 

 

[GoVanGogh]

I'm one who purchased at the 84% off rate. There are a few reasons it didn't seem like a huge red flag to me.

 

First, there were a limited number available (so he said). Second, the regular rate was typical of an online homeschool academy. I figured Mr. Landry was attempting to be a blessing, offering huge chunks of generics we could split with friends at a discount. I also assumed that the vast majority of people were paying the standard rate, without discounts, and that was how he could offer the cheaper price in advance.

I have never purchased anything from Landry, but I have never known anyone IRL to pay full price. I have been offered so many freebies and discounts from Landry the past year - from mom's retreats to intensives to classes. I have always passed because I could never get a good read on how they could offer so much for free or for huge discounts. Maybe that wasn't as visible to others but my local homeschool groups were always offering Landry discounts.

[GoVanGogh]

1. LLC does not protect you from tax debt unless it is an LLC that has elected to be taxed as a corporation, rather than taxed as a partnership. The former is less common, as it comes with the same kind of complications that other entity types bring. Thus: Any tax owed is owed by the owner.

 

2. If you are collecting fees in advance of performing the service, you essentially have what is called "Unearned Revenue." This is actually a liability. From a tax perspective, it is possible to not pay taxes on this Unearned Revenue. When you actually perform the service, the unearned revenue must be reclassified to Earned Revenue, or in accounting parlance -- it gets "recognized." If Landry Academy never bothered to recognize the revenue when services were actually performed, then they collected cash, never recorded it as revenue, and basically failed to pay income tax on a lot lot lot of revenue. This is called fraud. And you can be guilty of fraud, even it's just that your records are disorganized. It can be difficult to keep track of unearned revenue and then recognize it at the right time.

 

3. A prepaid model of this type can only last so long as it is growing. If the amount of prepaids owed exceeds growth, then - imagine this - you have a semester which is 100% comprised of students who paid last year or some other time -- meaning no revenue is coming in and yet you have to still provide the service and incur the costs of doing so. This is when you collapse. You either collapse because you actually collapsed (as in, used the money and don't have it anymore), or because the government collapses you for collecting prepaids and then failing to keep it in an escrow account or otherwise holding it until recognized.

 

I guarantee you that farm is up for auction and this business is closing not just because of contractor misclassification. There's a big debt owed to the IRS here and it has to do with income tax/revenue AND/OR the prepaid cash was not held in escrow until recognized and they literally do not have the money to keep operations going.

Re: 2.)

If I remember correctly, the same goes for gift certificates. I used to work for a small speciality shop that sold tons of gift cards at the holidays and Mother's Day. The owner of the business always complained how gift cards created an accounting nightmare and that gift cards are not considered "profit" at the time of purchase.

[AngelaAHLevy]

I'm one who purchased at the 84% off rate.  There are a few reasons it didn't seem like a huge red flag to me. 

 

First, there were a limited number available (so he said).  Second, the regular rate was typical of an online homeschool academy.  I figured Mr. Landry was attempting to be a blessing, offering huge chunks of generics we could split with friends at a discount.  I also assumed that the vast majority of people were paying the standard rate, without discounts, and that was how he could offer the cheaper price in advance.

 

I am going to explicate a specific phrase in your post which is so very pervasive in our largely faith-based homeschool community. (This is not an attack on you or your choice Random!  I just think this phrase is worth discussing).  

 

Make no mistake folks - these homeschool programs are MULTI-MILLION DOLLAR BUSINESSES and we are the target market.  This is NOT bad, but we cannot allow ourselves to buy into these buzzy phrases about service and being a blessing and sharing our heart, etc.  Businesses.  Run by people who are passionate about their purpose, mission and target market? Sure. But businesses!!!!!

 

Likewise with Veritas last night and their offer to give grace and extend the hand of God to the LA community.  The fact is - we are a target market for VP too, and they offered a discounted service in hopes of gaining significant market share and securing future revenue.  It's the same reason milk is discounted at the grocer!

 

Again - this is not bad, but let's don't be naive about it!  I think it's ok to keep a warm heart and remain faithful in our community while also participating shrewdly in a business transaction as consumers, just as these businesses are doing so.

 

And -- We talk about "taking God's name in vain" and think it refers to using OMG.  But that's doesn't seem all that hard, does it, to not utter God's name casually like that?  I have long felt that we should dig a little deeper and see with clear eyes that taking God's name in vain is a far more insidious practice -- far more tempting, far more potentially gainful.  It is ok for a business to say "these are our values, we'll share them," but we should be wary of any business that positions themselves as a blessing to the community or striving to be one.  Any business' number one goal should be to remain in business (e.g. pay their bills, and keep going for as long as the owners wish to keep going) by serving their customers and stakeholders (owners!) well. And if the owners view God as the primary stakeholder, then great!!!