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My business partner and I are splitting up. We started an…

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My business partner and I...
My business partner and I are splitting up. We started an LLC together for TV production and have not made any money yet. However, I’ve put in a total of $167k… prior to this LLC he started a music library company where most of his money went towards. Initially we both put in $50k (which is stated in the operating agreement).We have been seeking investors for the TV production LLC. He has been seeking out investors for percentages of music publishing for his other LLC (I am not a member of this). Recently I found out he altered some numbers that were sent out to investors. He showed the last 2 quarters at roughly $40k when it was more like $30k. He is claiming it was a mistake and unintentional but I’m not quite sure I believe him. He had one investor put in $15k… which was handed over to the TV production LLC we are both a part of. The investor is his childhood friend who he called and spoke to, seemingly he’s moving forward.Additionally I found out that one of our employees is a woman he has been having an affair with prior to hiring her. She is an average employee, has a good resume and working for half her rate for the last few months. What is frustrating is she is getting paid from the money I put into the company. More so, my partner has been paid around $60k of the $167k I put in. He has brought in an investor for our LLC at $50k and given me a music royalty check for $13k since we created this company.I resigned, sending in a resignation letter, recently. I do not want to be partnered up with someone of this nature. I would like him to pay me back some of the investment money (the $167k I put in to the company) despite what the operating agreement says. Given his actions with the music entity, altering numbers, and his relationship with one of our employees how would i be able to be paid back some of my investment by him?I can prove he altered and forged the investment numbers.
Submitted: 7 months ago.Category: Business Law
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11/16/2017
Business Lawyer: Phillips Esq., Attorney-at-Law replied 7 months ago
Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Business Law
Satisfied Customers: 22,004
Experience: B.A.; M.B.A.; J.D.
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Hello: This is Phillipsesq. Welcome to JustAnswer! I am reviewing your post, and I will post my response very shortly. Thank you for your patience.

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Business Lawyer: Phillips Esq., Attorney-at-Law replied 7 months ago

I am sorry, but I am having trouble understanding your post.

Kindly edit, properly identity your issues, and resubmit.

Thank you for your cooperation.

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Customer reply replied 7 months ago
I have sent in my resignation letter to my business partner recently. I have invested $167k into the company. Initially we both invested $50k which is stated in our operating agreement.He owns another company. An llc which I'm not a member of. He altered investment documents stating the company made 40k over a period of time when it was really 30k. His good friend invested $15k into the co which he then put into our co. Feels like he committed fraud.Additionally he is having an affair with an employee who was being paid through my investment.I want to sue him so he has to pay me back 50 percent of my investment.
Business Lawyer: Phillips Esq., Attorney-at-Law replied 7 months ago

Thank you for the information.

What does your Operating Agreement say as to reimbursement of the capital contribution or buyout?

Thank you for your cooperation.

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Customer reply replied 7 months ago
It says we both put in $50k initially. Nothing regarding more money being invested into the company by members.The company hasn't brought in any money yet.
Business Lawyer: Phillips Esq., Attorney-at-Law replied 7 months ago

Thank you for the information.

If your Operating Agreement is silent on percentage of reimbursement or buyout, then you would have to file lawsuit against your partner and let the Court decide whether you should get 50% of your investment back. The lawsuit would be filed at your local Courthouse. You should attach a copy of your Operating Agreement to the Complaint so that the Court would get a better idea of what is at stake.

You can obtain complaint forms online.

Goodluck with your case,

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Customer reply replied 7 months ago
There are 2 LLC's.
One is for TV PRODUCTION, this is the company I am a partner / member of.
The other LLC is music licensing... this is a company he started prior to our partnership. We shop the music library as we try and sell shows and TV production services. I am NOT a member of this LLC.He altered an investment document stating they made $40k over two quarters when they only made $30k. He says it was a mistake but it looks like he was trying to show the company made more for investors. The company had one investor, his childhood friend, who put in $15k. This money was then given to the TV Production LLC. Did he commit fraud by changing these numbers?As for the operating agreement... this is what it says. It also says that we put in $50k each for our initial contribution... nothing else.This is what it says;B. Initial Contribution. Each Member shall make an Initial Contribution to the Company. The Initial Contributions of each shall be as described in Attachment A, Initial Contributions of the Members.
No Member shall be entitled to interest on their Initial Contribution. Except as expressly provided by this Agreement, or as required by law, no Member shall have any right to demand or receive the return of their Initial Contribution.
C. Limited Liability of the Members. Except as otherwise provided for in this Agreement or otherwise required by California law, no Member shall be personally liable for any acts, debts, liabilities or obligations of the Company beyond their respective Initial Contribution. The Members shall look solely to the Company property for the return of their Initial Contribution, or value thereof, and if the Company property remaining after payment or discharge of the debts, liabilities or obligations of the Company is insufficient to return such Initial Contributions, or value thereof, no Member shall have any recourse against any other Member except as is expressly provided for by this Agreement.
Business Lawyer: Phillips Esq., Attorney-at-Law replied 7 months ago

I will opt out to give another Attorney the opportunity to further assist you.

Best wishes,

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Business Lawyer: Law Educator, Esq., Attorney replied 7 months ago
Law Educator, Esq.
Category: Business Law
Satisfied Customers: 125,207
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

I am a DIFFERENT CONTRIBUTOR as your previous contributor has left.

Unfortunately, investing is a risk. This means when partners put money into a company there is no guarantee of money being refunded to them in the event of a dispute. Unless your agreement said you could recover your investment upon resignation from the company, you are not automatically entitled to anything at all.

If you want to argue that his mistake caused damage to the company, you can sue (using an attorney to represent you as this type of suit requires an attorney) for breach of duty to the company and return to the company for any losses.

If he has been sexually harassing any employee of the company, had you not resigned you could have sought to remove him from working for the company.

The problem is once you resigned from the company, as long as there was no agreement in your operating agreement for reimbursement of any funds you put into the company, I am sorry to say you are not automatically entitled to anything from the company.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

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