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Ely, Counselor at Law
Category: Legal
Satisfied Customers: 102496
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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I was involved in a private company start-up and "signed-off"

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I was involved in a private company start-up and "signed-off" on a party joining us that now appears to have been grossly misrepresented financially.
How do I start to legally navigate this situation?
Hello, my name is Ely. I am here to help you. Please note: (1) this is general information only, not legal advice; and (2) my function is to give you honest information and not to tell you what you necessarily wish to hear. There may be a slight delay between your follow ups and my replies as I type out a thorough reply for you.

I am very sorry for your situation. Can you please elaborate a little bit on what happened:

1) did you sign off on a contract?
2) for what?
3) how did they misrepresent the matter?

Whatever else you can tell me would be helpful.

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. I look forward to helping you.

Customer: replied 4 years ago.

Multiple contracts have been signed and the one that brought the public company in as a minor partner stated there no further agreements between the parties, even though there were agreements internally in regard to future earnings, etc. Basically, a few people got golden parachutes, it seems. However, we all had the same level stock. We are now being asked to sign off on the top guy's retirement package and it looks like when he is gone, all bets will be off. What choices do I have now? When we started this 15 years ago (we now have annual sales over 50 million) we were told we could retire in 5 years with a million dollars. I am wondering if the stock I currently have will be worth anything. Please guide me!

Thank you for this information.

So, to sum up, you invested into a company a few years ago on the chance that a certain individual will be leading the company, but have found out that this individual mismanaged your money and is now attempting to leave with a massive pension, and the promises have fallen through - correct?
Customer: replied 4 years ago.

Started with the company as an original stockholder. Believe that the corporate officers have negotiated golden parachutes for themselves and we few others are going to be left as employees for someone else. They now have multiple homes, millions, etc. Ours has yet to emerge and the retirement has just been announced. The public company installed a "vp"into ours a year ago. We distribute their product.

Otherwise, correct.

Thank you for your reply and apologies for the wait.

First of all, understand that here, this all depends on what was in your contract. Did they promise something that they did not do? Do you believe that they swindled you out of money in some way? As a shareholder, you typically do not have much power from telling the company what to do except in your vote.

Let us assume that they lied/misinformed you in some way. If so, then you may have a case against the company for fraud. The tort of fraud has five elements: a false representation by a defendant, knowledge of this falsity, intention to induce you to act a certain way, justifiable reliance by you on the falsity, and damage to you stemming from the falsity. Hardy v. Gordon, 146 Ga. App. 656 (247 SE2d 166) (1978).

Aside from a monetary judgment for your loss, punitive damages may be available under Ga. Code Ann. § 51-12-5.1 for fraud.

You may wish to file a suit against them, after speaking with an attorney. However, the onus is on you to file the matter yourself, I am afraid, or together with other shareholders who were taken.

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