Legal Question in Business Law in Alabama

Knowingly selling an illegally operated business

A business owner (H.), and this business owner's business broker (B.), both knew that H.'s business was being operated illegally. (Depositions have dislosed this fact.)The business owner H. contracts with this business broker B. to sell this illegally operated business. The illegal aspects of the business are not discussed with prospective buyers. After purchasing this business and operating it for a couple of months, the new business owner determines that the business is being operated illegally, seeks for ways to correct the problem but ultimately closes the business, losing substantial capital in doing so. What are the legal ramifications to the original business owner H., and to the business broker B., and the brokerage firm in which he operates, for knowing that the business was being operated illegally yet advertising for sale, selling, and receiving large sums of money for selling this illegally operated business in light of this knowledge?


Asked on 2/04/03, 3:00 pm

1 Answer from Attorneys
Bobby Lott, Jr. Attorney at Law

Re: Knowingly selling an illegally operated business

When you say the business is operated "illegally", do you mean there was criminal activities going on? If so, the first step is to contact the District Attorney in your area and alert him to this fact.

Even if the business was operating within the law technically, the broker and the previous owner could be liable for fraud. As such, they might be liable for monetary damages.

To discuss this situation more, contact my office.

Thanks.

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Answered on 2/04/03, 3:40 pm


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