Legal Question in Business Law in California

Re: Should I go to the Feds?

didn't you guys learn your lesson the first time that you didn't hire a good business attorney with lots, lots of experience to help you review this obvious fraud --- well to compound matters you stil haven't hired a good litagation attorney ---- what shoud you do --- connect the dots -- I have been practicing law in the San Francisco Bay area for approximately 35 years and expert in the area in the category in which your question is placed. I feel I can help you in this matter and if you wish to consult with me please contact me at 925-945- 6000.

Re: Should I go to the Feds?

I suggest you obtain an attorney to file a lawsuit and obtain a pre judgement attachment to secure funds that have been taken from you. Our firm handles cases such as these throughout California. We would need to review your documentation. Please call us at 714 363 0220.

Re: Should I go to the Feds?

It isn't clear to me that any federal laws are being broken, though with more facts I might find quite a few. If the defendants are in California and are wrongfully taking money out of a California corporation, you might want to seek a temporary restraining order (TRO) from a California court. The court might even be willing to freeze the company's assets while the case is being resolved. Such an order isn't easy to get, but if you succeed the company will have a very strong incentive to negotiate with you.

You really can't seek only a TRO. Instead, you can only seek one as part of a larger lawsuit. I would need to know many more facts before I could say what sort of lawsuit you should bring.

One of the first things you should probably do is to write a formal demand letter to the board insisting that it prevent this man from taking funds out of the company, that it account to you for all of the money you have put in, and that it sue him to recover the funds he has already taken. Even if the directors ignore your letter (which is likely if your "friend" is running the business), making the demand will preserve your rights to bring certain types of lawsuits.

You also need to retain counsel ASAP to advise you on your rights, to draft the appropriate demands and to conduct whatever litigation may be necessary. This is not the type of lawsuit you want to bring in pro per unless you have no other options.

Feel free to contact me directly if you want to discuss this further.

Re: Should I go to the Feds?

Some friend. Well, for starters, you need to consult with an attorney experienced in these matters, spend the time necessary to fully discuss all the facts and circumstances. In general, if the individuals really have nothing, no income, no property, you will never see a dime back from them, leaving you to trace and go after the money from the companies involved. If you are dealing with foreign companies, it is difficult. If they have a business operation here, they can be sued. Yes, I would also get law enforcement involved to put pressure on. Contact me if interested in doing this right.

Re: Should I go to the Feds?

You should not be filing a $500k lawsuit without the help of a lawyer. Also, with $500k at stake, much can be done to obtain a judgment and initiate collection. There are various weapons to recover payment, even from those who don't appear to have any money. If you think a fraud has been perpetrated, you can encourage the FBI to get involved. They have the power to freeze assets and the threat of criminal sanction may result in the defendants' correcting their actions. If the transfers are still ongoing, you should obviously remove the money from the account if you can, or otherwise seek a court injunction immediately.

Re: Should I go to the Feds?

With questions like these, misunderstood facts can result in bad advice, so I usually start out by restating the question as I read it:

You and others ("we") invested $500,000 cash in a California corporation on the premise that you were acquiring a 20% interest in it. The corporation, or at least some of its promoters, officers, directors, employees, etc. have, however, wired some or all of the $500k to China, where the California corporation supposedly has an affiliate.

OK, on the face of it, there are both civil and criminal wrongs, some of a state (California) nature, some falling under Federal jurisdiction.

The civil wrongs could include breach of contract, breach of fiduciary duty, conversion and fraud. The company and its principals may also have civil securities-laws liability to you.

Criminal charges should be explored for a theft crime (depending upon the facts, could be larceny, embezzlement, or obtaining money under false pretenses -- all are forms of theft). There are perhaps state and federal securities-law crimes as well.

If I were handling this case (and I'd like to!), my starting point would be to review the investment disclosures, placement memorandum, etc. or other representations the promoters gave you to induce you to part with $500k. If they gave themselves sufficient latitude in their disclosures to encompass using your money to fund an overseas affiliate, they have a partial defense and your case is weaker in some respects.

Then, I would pursue adding a request for a TRO and injunction to the present lawsuit, or, more likely, in a new filing supplementing or replacing the initial suit, depending upon its completeness, professionalism and procedural posture. This plus chats with the county and Federal prosecuters would help plug the leak.

Finally, I would put an investigator to work. China is no longer a rogue nation; it has modern laws and business standards, and although it will be harder to trace and recover the money, it's certainly not impossible.