Legal Question in Business Law in Kansas

Partnership Gone Bad

In June of 2002 a friend and I agreed to purchase a percentage of an exsisting business. We are located in Kansas and the business is located in another state. The transaction took place through the mail and physically in Kansas. We remained in Kansas and worked from here.

In September we discovered the books and numbers had been cooked. The gentleman was also running an illegal raffle nationwide on the internet under the company name in addition to various other issues.

We confronted him in September and in early October he agreed to re-pay us our money on November 1st. We never received payment. Today we received a letter stating he was now sueing us for slander.

Do we need to pursue the matter in the state the business is located or can we handle in Kansas? Do we need to notify the Attorney General about the raffle we have discovered is illegal? Can we freeze the company assets until the issue is resolved? Any other suggestions?

I have kept documentation of almost everything.

Thanks


Asked on 11/04/02, 7:09 pm

1 Answer from Attorneys
Mark Reiter

Re: Partnership Gone Bad

Based on the facts you have provided, you could likely pursue an action in Kansas. However, part of the legal analysis of that question depends upon what type of business entity you are dealing with. Is this a partnership? an LLC? a corporation? Depending upon the answer, your situation will vary as to what is the best course of action. As far as the raffle, there are some strategic reasons to wait to notify the attorney general about the raffle, in terms of getting the situation resolved, but ultimately that is up to you. "Freezing the company's assets" is something that would be governed by the documents that govern the business entity and I would be hesitant to do anything until you make sure you understand such documents. (Partnership Agreement/Operating Agreement/ByLaws) The fact that you have kept good documentation is helpful. Given that he has threatened a slander suit and you still have not been paid, I would highly recommend that you hire an experienced attorney that can review and advise you about the entire situation. You are better off spending $300-500 now to analyze the situation and attempt to resolve it, rather than letting it escalate into a full blown lawsuit that could cost 5 or 10 times as much. If you'd like assistance in this matter, feel free to contact me at (816)444-1172.

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Answered on 11/04/02, 7:27 pm


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