Legal Question in Business Law in Massachusetts
Back in November of 2010 my brother decided to purchase a business. The cost of the business estimated at 500,000 dollars. He put upfront 150,000 dollars and decided to take a 350,000 dollars loan. I told him instead of taking a loan from a bank I will be his lender. He replied ��let me think it over and will let you know tomorrow��. The following day when I saw him, he said�� I thought about what we spoke yesterday, it is better if I take the money from you rather than the bank. Withdrawl for me 350,000 dollars from your account, and go back where you are living and working now (at that time I was living and working in the pursian gulf) , and if things don�t work out for you there, you come back to xyz town and have a business to rely on��. I said good. We did not discuss anything else like monthly income from the business, or loan rates, or 50/50, etc. I took it as he wants me a partner not a lender. I gave him power of attorney. To make the long story short, here are the most important issues to mention:
1- He placed the property in my name. Withdraw 11,000 dollars from my account to cover the cost of closing.
2- He kept paying the previous owner loan. Make monthly payment to the previous business owner lender. Never knew about this.
3- April of 2011 withdraw 242,000 dollars for the purchase of a home. Never knew about this.
4- September of 2014 I signed for him quitclaim deed of the property claiming wants to take out a loan on the property and the bank will not give him the loan using my power of attorney. Also said he is forming corporation to help us with the tax.
5- March 2013 withdraw 87,000 dollars from my account for the purchase of forclosure residential property. He never told me about it.
6- Extra cash/profit from the business invested in real estate and some cash placed in his trust.
Now he is telling me I only get one house value at 280,000 dollars. Take it or leave it.
How can I sue this crook? He abused my power of attorney. All these years I thought I am investing in a business with him and dealing with a loyal man. Your response is greatly appreciated.
1 Answer from Attorneys
Yes, you can sue him for fraud, fraud in the inducement, breach of fiduciary duty, unjust enrichment, and this is just a few claims that come immediately to mind. You cannot sue him under MGL c 93A because you cannot generally sue family under that statute.
It would appear he has taken at least $340,000 from you over the last few years. By your own admission it was unclear from the beginning whether you were partners or he was taking a loan. By placing the first property in your name, you could argue you were partners. But let us for the moment assume it was a demand loan and it was intended to be paid based on the long term AFR rate, then interest would be between 3.5% and 4.4% per annum.
At a minimum you are entitled to all of your money back plus interest. You have learned an important lesson even with family, put your agreement in writing.
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