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Tina, Lawyer
Category: Legal
Satisfied Customers: 33167
Experience:  JD, BBA Over 25 years legal and business experience.
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I started a S corp in Minnesota last year. I made a sale and

Customer Question

I started a S corp in Minnesota last year. I made a sale and arranged funding for my customer through a leasing company. I received the full contract amount in advance. Around 7800 dollars. I got very sick and was unable to continue. I lost my distributorship with a London based company. I was unable to fulfill the contract.. I spent the money on personal living expenses and am unable to pay it back. The customer service division of the Atty General from Minnesota is now trying to reach me through letters and calls. Please advise what I should do? Am I at risk of personal criminal charges or is the S corp?
Submitted: 5 years ago.
Category: Legal
Expert:  Tina replied 5 years ago.
Hello and welcome,

The Attorney General's office is likely attempting to investigate whether you engaged in fraud, for which you could be personally prosecuted. However, since you became ill after entering into the contract, that would indicate circumstances beyond your control and you did originally intend to fulfill your obligations under the contract.

Fraud typically requires an intent not to fulfill your promises and if your conduct reveals that you did intend to but were unable to because of extenuating circumstances, then fraud would not typically be properly charges. However, it is best to retain a local criminal law attorney to communicate this to the AG's office on your behalf rather than risk making a statement that may incriminate you.

The buyer may sue you for breach of contract and obtain a judgment against you/the corporation for the amount owed, so it is best to attempt to negotiate a settlement to repay the amount owed to avoid a lawsuit/judgment.

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Expert:  Tina replied 5 years ago.
Please let me know if you need additional information.

Thank you and take care.