Soccer Weekly Inc. is a Suspended Corporation in California, But What Does That Mean?

Many have read and/or heard that Steven Cohen & Nick Geber's Soccer Weekly Inc. is listed as a suspended corporation by the California Secretary of State on their website.

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What has been less clear is what exactly this means, so in an attempt to better understand the situation, I’ve investigated and attempted to explain what a suspended business license means.


Why a corporation would be considered suspended in the State of California?

According to the Office of the Secretary of State of California, there are two reasons that a business would be listed as 'suspended':

1. The Secretary of State will suspend a corporation if the corporation fails to timely file the required Statement of Information (of Officers and Directors) with the annual $25 filing fee. Failure to file the Statement of Information on time may also result in a $250 late fee. If the Statement of Information remains unpaid, the FTB may also impose interest.

2. The Franchise Tax Board (FTB) will suspend a California corporation if the corporation: (1) fails to pay the minimum annual franchise tax of $800 or fails to pay any taxes due and owing; (2) fails to file a tax return; or (3) fails to file the Statement of Information with the Secretary of State which resulted in a $250.00 late fee that has accrued interest.


So what's the reason for the suspension? I can only speculate but the likely issue would probably be taxes. Given that Soccer Weekly Inc. has had their business license suspended since March of 2008, it would seem logical that Cohen & Geber are in some sort of a disagreement with the State of California concerning taxes owed by his corporation. Failure to file proper paperwork and pay a $25 filing fee hardly seems like a logical reason to allow your business to be marked suspended. If the issue is taxes, then the time can easily be explained away by the slow moving mechanics of the California bureaucracy and possibly the legal system if the issue has moved to litigation. I want to stress there is no evidence confirming this and I am simply making an educated guess based on the information I have been able to find.


So Soccer Weekly, Inc is a suspended corporation, why should we care?

According to California Corporation Code when a company is listed as suspended it means that said company is disqualified from exercising its corporate powers, rights and privileges. The code also states that a suspended California corporation that provides a service, or goods, to third parties while suspended may not be able to collect payment for such services and goods. A suspended corporation has no power to do anything other than to change its name or apply for tax-exempt status.

Until the corporation corrects its suspended status the corporation will be unable to transact any business, answer a lawsuit filed against it, initiate litigation, or protect and preserve its name. Any contract executed by a suspended corporation is voidable at the demand of the other party. Finally, any person who attempts or purports to use any of its corporate privileges is subject to fines and/or imprisonment. The only exceptions to the loss of corporate privileges upon suspension are that the corporation may (1) change its name by amendment to its articles of incorporation, and (2) apply to the FTB for tax-exempt status. Nevertheless, all suspended corporations are still required to pay all the applicable taxes and to file tax returns (even if no money is earned).

In other words, the corporation cannot legally operate but while the business is technically then required to close its doors and to stop all business related activity, this doesn't generally happen.

I spoke with an associate from a law firm in California and according to my contact, while the code may say a corporation is unable to operate when suspended, there are no regulatory enforcement agencies that will be looking to shut these companies down. The situation is more self-regulatory and on more of an honor system when it comes to suspended corporations. At the very least the situation potentially calls in to question the legality of any contracts (advertising or otherwise) that Soccer Weekly Inc. has signed since their business license was suspended.

My contact identified that the more pressing issue for a corporation dealing with a suspended license is the fact they would not be able to instigate a lawsuit or answer a lawsuit brought against them.

If a suspended corporation is sued, there are potential criminal penalties and/or sanctions for anyone attempting to defend themselves in court and any attorney that attempts to defend the company. In fact, according to California law, it is a misdemeanor for an attorney to defend a company with a suspended business license, so any actions taken on behalf of Soccer Weekly, Inc. by an attorney could also lead to more troubles for Cohen and his legal counsel. If sued, a corporation must ask a judge to case to put over while they resolve their corporate status with the State of California.

This issue of not being able to sue another individual or company and not being able to defend themselves in court creates an interesting issue for Steven Cohen. In the wake of his comments about the Hillsborough tragedy, the Liverpool FC New York Supporters Club's boycott campaign against Cohen and his shows World Soccer Daily and Fox Football Fone-In have led to multiple sponsors dropping and/or not renewing their advertising contracts with Cohen. Any potential lawsuits between Soccer Weekly Inc. and any of the sponsors that have moved on would be further complicated by the legal status of the corporation.


What about the FCC and Sirius Satellite Radio, do they have opinions on Soccer Weekly, Inc. being a suspended corporation?

I contacted the Federal Communications Commission to see if there was any issue with a suspended corporation broadcasting and selling advertising time. An FCC spokesperson told me that the FCC does not get involved in the business side of broadcasting and therefore it would not be an issue for them. Fair enough.

What about Sirius Satellite Radio who broadcast Cohen's World Soccer Daily Show on their service, how do they feel about this situation? I contacted the Media Relations department at Sirius and discussed the suspended status of Cohen's business license with a individual in the department. They declined comment stating that Sirius would need to further investigate the information before deciding if an official comment would be necessary. Any response received from Sirius will be posted here on this blog.


Much of the details we would like to know about what exactly is happening around Steven Cohen and World Soccer Daily are still unavailable. What is clear now is there are much deeper issues beyond just the loss of sponsors and the LFCNY boycott.