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How many members are there in the LLC?
What options does the LLC operating agreement have to vote him out as an officer of the LLC?
This is not an easy situation to fix because when you have a 50-50 deadlock between LLC members, you have now go to court and apply for dissolution of the LLC if the two of you cannot come to a workable agreement on your own as to how to proceed. The LLC can also sue the other member for misappropriating funds to recoup them. These are the remedies available.
The consequences are that the honest member will be cheated out of his funds and have to sue the other member for embezzlement if there is proof of that and also, as you say, the possibility to losing limited liability protection.
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In Florida, courts require a showing of three factors in order to pierce the corporate veil: 1) The corporation is dominated and controlled by its shareholder(s) in such a way that it is merely an "alter ego" used for the shareholders' benefit,2) Some sort of improper conduct in either the formation or the use of the corporate form, and 3) The improper conduct imposes an injury on the claimant. A critical issue in determining whether the corporate veil will be pierced for imposition of personal liability is whether the corporate entity was operated for an improper purpose such as:1) to defraud creditors, 2) to evade existing obligations, 3) to conceal a crime
So, if he is just commingling assets to cheat you, personal liability exposure is not such a big concern. However, if he is doing this to evade obligations with respect to third parties, those third parties will have standing to disregard the corporate structure.
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