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Richard, Attorney
Category: Business Law
Satisfied Customers: 55013
Experience:  32 years of experience practicing law and a businessman.
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In 2004 my brother Stuart and I were talked into investing

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In 2004 my brother Stuart and I were talked into investing in a business soon after our mother's death by Stan a supposed friend of the family and very successful and trustworthy financial adviser. Stan is employed with the the investment bank that was handling my mother's and then our trusts. Stan told us he was investing either 1 or 200,000 personally. I read the business profile, saw a few red flags but thought if he was investing then that was good enough for me. My brother and I each invested 100k. The contract obligated the business to inform the investors on a quarterly basis as to the financial condition and the actions of the business. We've emailed repeatedly requesting info, but to no avail, until today. After calling the Bill the CEO (and I believe only employee) a few weeks ago and pressing him to send detailed financial reports including signed tax returns and balance sheets as well as an employee profile, and current business profile detailing what is going on with the business and more importantly where my 100k went. Today, I got page one of the supposed last 3 years tax returns, unsigned. I have googled this man and have found out he works as a CEO for another business and apparently was indited last year on charges of fraudulent business and writing the IRS a bad check. I uncovered a couple other questionable and what look like shady dealings. There's a lot more detail I could go into but here are my questions.

How do I determine if this is a legitimate company? What specifically should I request?

My sense is that this guy started this company to raise money to pay off other debt. He's kept it "running" to some degree, but has other wise moved on to focus on another business.

What are my legal rights?

Two or three years ago after repeatedly hammering this guy, my brother and I both received a check for 10k. Did this screw us? That's all we've received.

The two obvious red flags btw were that the sales person would receive a 13% commission. The second was that this guy owed back taxes to the IRS. I can't believe we fell for this, but again we never would have had Stan the family friend not told us he was investing. My other brother Mose was also set to invest, but the salesman curiously worked to get his investment back early because Mose was going through a divorce ...and I think mostly because Mose lives in the same town as the bank and near the town of the investment. Both Stuart and I live far away out of the country. So I think he thought there would be little chance of much confrontation, whereas with Mose living in town there would be plenty. Pretty nice 26k commission check for almost no work.

Is there some statue of time limitations that we need to be aware of?

What is the responsibility or liability of Stan in this case? We believed he was working for us and in our best interest. BTW, Stan after the fact never really would let on or answer the question of whether he ever invested. Clearly he did not.

Thank you for your time.

Barker Dalton
Submitted: 6 years ago.
Category: Business Law
Expert:  Richard replied 6 years ago.

Good evening. You have recourse against this guy on a multiple number of levels...i) first, he is guilty of securities fraud due to misrepresenting the investment and not fully disclosing all the risk factors to should contact the Securities Exchange Commission regarding this; ii) you should file a civil suit against him for fraud, usurpation of corporate opportunity, and breach of fiduciary duty...asking for not only actual damages, but also punitive damages; and iii) you should contact the district attorney to pursue criminal charges against him for fraud, theft, and related criminal charges.



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Customer: replied 6 years ago.
To be clear, we were apprised of the risk (that we could lose everything). I understand startup risks. But I don't think that's what is going on here. And are you referring to charging Stan the investment officer or Bill the business owner?

And first off, how do I know for sure this is what it obviously appears to be? What info do I need in your opinion to move forward and hire an attorney?

Is there a time statute of limitations in these cases?

Does acccepting the one time return mean anything? Does it disallow our ability to
bring charges?

Are there attorneys willing to work on these types of cases on a compensation related to verdict? Would you imagine it would be hard to find someone who would want to take this on? Thank you. I truly appreciate your time.
Expert:  Richard replied 6 years ago.

The statute of limitations on fraud in Ky. is 5 years, but you have ongoing fraud here. The statute of limitations on written contracts is 15 years.


I would pursue both Stan and Bill...get them to point fingers at each other.


The first thing you would do which you have already done and been rebuffed is demand all information, financial and otherwise, involving your investment and the company from its inception. Their failure to deliver this information gives rise to your causes of action.


It would be 50/50 on whether an attorney would take this on a contingent fee basis.



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