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We are at what seems to be the tail end here. We have

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Hey Roy,We are at what...
Hey Roy,We are at what seems to be the tail end here. We have answered all of our investors questions. However she is hung up on the $7500 that the we the managers paid ourselves. She is upset because we cannot find any documentation stating that we would be paid that much or paid at all.I tried explaining to her that her investment was not like a mutual fund or other investments. Instead this was a private placement into a private company and that her money went to all business expenses.I believe she is hung up on the term “management fee” because that’s how our accountant wrote it in. I tried to explain that what we were paid was not a fee to her (Or I-Strategy LLC who she actually invested in and I-Strategy LLC invested in us. She became directly invested with us a a little over a year later when I-Strategy LLC transferred her directly to us). We were a real estate flipping business but her investment was not into any one property, instead it was into the company for a 2 year term and that the her money could be used for all business expenses. We as the managers of the company paid ourselves that $7500 to run the company at the beginning before she was directly invested with us. We have the amount documented in our accounting. This is how she knows about it. Not only that, when the business began to experience trouble, we as the managers put $12k+ back into the company which supersedes the amount we were paid in the beginning by thousands of dollars.She acknowledges that we put the money back but says she doesn’t care. She says whatever we were paid had to be agreed upon by us and I-Strategy LLC and had to be in writing or we are at breach of contract. It seems as if she is saying that she doesn’t mind that we paid ourselves but wants to know that I-Strategy LLC knew what we paid ourselves, even if it was just a verbal communication.We can’t find any written documentation and I-Strategy can’t either. However we did talk about it in the beginning and I believe we had documentation but we just can’t seem to find it.Either way, here is my questions -We were a start up company when her money came into our company through I-Strategy LLC, and one of our first expenses was the management of the company. It wasn’t an investment fee. It wasn’t charged to any investor. We had money invested into our company and was then able to pay ourselves to run the company. In a private placement agreement, does every dollar amount that the people who work for the company get paid need to be mentioned in the agreement? Would she have a legal claim with merit here?Does the fact that we reinvested the amount we were paid, plus thousands of dollars more (which she acknowledges) cancel out any claim she could pursue?At the end of the day, I don’t think she has a leg to stand on. It’s not as if we are hiding anything, we shared it all. I’m looking forward to your response.
Submitted: 7 months ago.Category: Business Law
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Answered in 1 hour by:
12/15/2017
Business Lawyer: Roy Hadavi,
 replied 7 months ago
Roy Hadavi
Category: Business Law
Satisfied Customers: 1,385
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified

Thank you for requesting that I continue to help you with this matter.

While it is preferable to have the salaries of the members/managers approved in Minutes it is not an absolute necessity. Her claim has no merit, because she invested in a company and the managers of that company have the right to receive a salary for their work. Neither of your salaries were unreasonable and the fact that you paid back into the company almost all of that money makes her claim moot. What would her claim even be? Had that money been in the company the company would have been more successful? This is highly speculative and she would have a hard time proving that this is true.

Like you said, she has no claim here. I think she is just trying to find something.

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