Stacey Eastman of Pulse Management
April 15, 2005
[Last Updated: April 17, 2005 ]
Stacey Eastman of Pulse Management's New Scam: Hasn't Paid Pulse Model Scout for Over a Year!
News Clippings and Comments
"Anna Kasper, a Cedarburg resident and UWM freshman, . . . A scout for Pulse Management, an agency based in Oregon . . . Another challenge for Kasper is to convince people that she is a legitimate model scout, something she does by directing potential models to the Pulse Management Web site. After scouting for a year now, Kasper still hasn’t been paid for her efforts, but hopes to cross that first big bridge soon. Her first paycheck will come when one of her candidates actually gets signed up and gets a modeling job, something she hopes will happen soon. She figures she needs to find about 20 more people in addition to the 60 she’s found over the last year in order for, Stacey Eastman, the owner of Pulse Management to make a trip to the Milwaukee area to look over her prospects. Should he sign any of the people and they get work, then Kasper will get paid."
(Heather Dorsey, "A model business model," Greater Milwaukee
Today, Feb. 1, 2005)
Not only is it outrageous that Stacey Eastman has asked a scout to work for him and Pulse Management without paying her for a year, it is also, most likely, illegal.
Eastman has written that there are no employees at Pulse Management, but there are various people working for him, whom he grandly calls "Independent Scouting Directors," so obviously these other workers are independent contractors. There are federal and state laws, however, which make it illegal to misclassify workers as independent contractors when they are employees under the legal definition of an employee.
The reason for this is to prevent tax evasion. An employer must withhold certain state and federal taxes from an employee. Scammers have tried to get around this and evade collecting and paying taxes by calling employees "independent contractors" (for whom taxes are not typically withheld). The IRS investigates and prosecutes companies which misclassify their workers, however, because it is a form of tax evasion.
It is not always clear when a worker can be correctly classified as an "independent contractor." But the IRS allows companies and workers to file an IRS SS-8 form which will be reviewed and then the IRS will issue a determination. If the IRS determination is that the classification of a worker as an independent contractor was valid, then nothing happens; the business continues. But if the IRS determines the company's classification was incorrect, then the company is informed and has to pay back taxes to them and often back taxes to the state, too. They can also impose fines.
There is a related type of fraud where workers are classified as independent contractors in an attempt not only to evade paying taxes to the government but also to avoid paying minimum wages to the worker. Obviously in the reported case of college freshman Anna Kasper, Stacey Eastman has not even paid her minimum wages, since she has not even received a single paycheck.
The IRS has a 20-question test which is a guide to determine if workers are employees or independent contractors (ICs). One of the issues is whether the socalled IC works for another company. For example, if Anna Kasper works only for Pulse, and does not scout for any other modeling agencies (and at this point there is no indication she does or reason to believe she does, especially when she is just a freshman), then that is an indication she should have been classified as an employee and paid at least minimum wages for the last year.
This is because an independent contractor is essentially an independent business owner, and obviously independent business owners do business for a variety of clients, not simply one. Employees, of course, typically work for only one employer; that is why the IRS leans to classifying individuals who work for a single company as employees, not independent contractors.
Anna Kasper isn't the first person who wasn't paid by Stacey Eastman. A lot of people didn't get paid by Eastman after he declared bankruptcy in 2001. He told the bankruptcy court he'd only earned less than 20K for each of the preceding two years; he amassed total liabilities of $409,111.00!!!
See also Pulse Management
Crimes of Persuasionon