Legal Question in Business Law in California

Last question first: you certainly have jurisdiction over him in California. Depending on how the creation of the debt was handled, there is a possibility Illinois would have jurisdiction too, but getting him before an Illinois court and then enforcing a judgment against CA assets via an IL court would probably be more costly in the long run than handling the case in CA. Because the amount in controversy is enough for Federal subject-matter jurisdiction, and because there is diversity of state citizenship between you and the debtor, the Federal courts would also have concurrent jurisdiction. A Federal District Court would be the place to bring an action if you went the Federal route. Which district depends on where he lives in California. Federal courts are slower and generally more expensive, though, so unless you think being from Illinois while he is "local" would put you at a disadvantage in state court, there's little point in going the Federal route. Again, where he lives in California would determine whether he is likely to have a home-town advantage. In Plumas County I have been "home-towned" just being from another county. In Los Angeles or San Francisco, it wouldn't matter if you were from Mars.

It is definitely a civil violation not to repay a debt. If you can establish proof of fraud there may be criminal violations too. Non-specific "back off" intimidation, without specific threats probably won't get you very far in civil or criminal court, but would depend on the details.

As for options, this seems like a pretty straight forward situation in which a law suit to enforce and collect the debt is needed. Please let me know if I can assist you.

Failure to pay on a money debt, such as a promissory note or instruments having the same effect, is a garden-variety civil suit, most likely involving few if any significant legal questions and, if the facts show the amount of the debt and that it is past due, there probably won't be much in the way of factual questions. What kind of defenses do you think the borrower will be able to raise?

You are clearly not obliged to accept stock in a start-up business in lieu of real money.

Under California Family Code section 910, the community property (of a married couple) can be tapped for the individually-incurred debts of either spouse incurred before or during their marriage.

I see nothing in the facts that clearly shows a criminal violation, nor would encouraging a prosecution halp your chances of recovery.

I think the more difficult part of this case will be enforcing and collecting your judgment, as opposed to going into court and winning. Is there an arbitration clause in your deal, or an attorney-fee clause?

As to jurisdiction, the first question must be whether the deal documents contain any jurisdiction-election or choice-of-law language. If so, these are likely to be controlling. Such clauses aren't common in deal documents written by non-lawyers, however.

You can have federal jurisdiction if you wish, as the threshold amount in controversy (over $75,000) is handily met, and so is the diversity-of-citizenship test,

Next, one looks at the following factors to see whether state jurisdiction (or federal venue) would be in California, Illinois, or perhaps either at your election: (1) residence of the defendant(s); (2) where the contract was negotiated; and (3) where the contract was to be performed. There are a few other minor factors that could influence jurisdiction/venue, but these are the main ones in this case. You could have jurisdiction/vanue in California for sure, unless the documents require otherwise, and you might be able to sue in Illinois, but that could be challenged and cost you more than filing in California in the first instance.

Finally, as to whether federal or California would be preferable, I would vote for federal. In my experience, the federal judges run tight ships, documents are filed electronically, the rules are clear (and enforced), and unlike the California courts, they are not closed periodically due to budget problems. I think the suit would move ahead faster and cost less in federal vs. California courts.

Criminal? No. File your civil suit for recovery and get it going. State court is clearly the appropriate one, where attorneys control the process, not the federal judge. If serious about doing so, and if they are in SoCal, feel free to contact me for the legal help you'll need here.