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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10629
Experience:  30 years of corporate, litigation and international law
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In 2002 I invested money with a company in WA. They gave me

Customer Question

In 2002 I invested money with a company in WA. They gave me a stock certificate for an LLC along with the operating agreement, and that is all I got. I was under the age of 21.
Submitted: 7 years ago.
Category: Business Law
Expert:  J.Hazelbaker replied 7 years ago.

Can you be more specific as to your legal question, please?




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Customer: replied 7 years ago.
Sorry, was not done posting the question. There was a JA glitch. See below:

In 2002 I invested money with a company in WA. They gave me a stock certificate for an LLC along with the operating agreement, and that is all I got. I was under the age of 21. About 6 months later, they formed a new corporation and quietly pretended the LLC didn't exist. This new corporation was exactly the same as the LLC, but it was owned by another corporation of theirs.

They made remarks how I would make lots of money, and being young and naive I went along. Just recently I found out the LLC was never a registered business. They registered a tradename with "LLC" in it (which I don't think you can do), and had it correspond to another business in their tradename filling (which dissolved in 2005). They represented the LLC was freestanding and never disclosed any information in regards XXXXX XXXXX The stock was issued in the tradname.

In 2005 they handed me a stock certificate for the parent corporation (which owned the Corp identical to the LLC) and told me that would take care of my investment from 2002 and not to worry about anything. Again, this is all I got and I never received any notices or got to attend shareholder meetings etc.

Years later they have sold the parent corp and subsidiary corp. I received less than half my money back, since the parent corp had a small redemption in the sale. The subsidiary corp (which again was identical to the original LLC I invested in, where I should have got stock) had a much larger redemption and I would have made money instead of losing money had I been give stock here.

Is this securities fraud? What other claims might I have?

Have the statue of limitations expired for me to bring action? 21.20.430(4)(b)

Most of this information I have just recently found out about within the past year. Not only do I want my money back (and more) but I would like to see some justice, since these companies conned a lot of investors and creditors.
Expert:  J.Hazelbaker replied 7 years ago.
I'm going to have to opt out as I don't have experience in securities law. I will forward your question to an expert who does.
Customer: replied 7 years ago.
Great! Thank you. I will still keep in in mind if further assistance is needed.
Expert:  Richard - Bizlaw replied 7 years ago.
What information did you find out within the last year? When did you find out about the LLC not being in operation? When did you get the stock in the corporation? What was told to you when you got the stock in the corporation?
Customer: replied 7 years ago.
Within the last year I found out that the LLC I originally received a stock certificate in, was just a trade name with LLC in it. The trade name did correspond to another LLC that was dissolved in 2005. But I don't think you can represent a company as a free standing LLC, and issue stock under a trade name.

I know the supposed LLC that I got stock in, basically ceased to exist in 2005, because that is when I received a stock certificate in the parent corp and was told to not worry about anything. With all the outlandish promises that were made, I went along with it. But also within the last year, I found out that 6 months after I invested money in the LLC, they formed a new corporation to do exactly the same thing. So the supposed LLC I invested in, basically never did any business or operated as a business, and was basically insolvent from day one.

I have the stock certificate in the new crop since 2005. When I got the stock, I was just handed a stock certificate and was told that will take care of my investment from 2002. I did not receive bylaws or any company docs and never received notice or got to participate in a shareholder meeting.
Expert:  Richard - Bizlaw replied 7 years ago.
My concern about a claim is the statute of limitations. Where I think you are based served is a suit for breach of fiduciary duty and for fraudulent misrepresentation about where your funds were being imvested. It sounds as though they arranged things so that the bulk of the value was in a subsidiary. I suggest you look to retain an attorney who is familiar with corporate law. You should also contact other investors who find themselves in a similar situation as I suspect many of you have similar claims.

There are a lot of details that have to be developed. For example, if the subsidary had a redemption, then the parent should have received most of it since a subsidiary implies majority owned by the parent.

In summary you have claims. I think the most recent events involving the redemption is where your claim will primarily lie. You have earlier claims but I am concerned they may have been lost on the statute of limitations.

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