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Said The Sun
03-01-2011, 08:22 PM
(I'm sorry if this thread is out of place, I seriously went through each forum topic and couldn’t find a law related one; if there is one, by all means, switch it there. Thanks!)


Friends, I need legal advice on this extremely hypothetical situation…

Take Rich, Jack, and Larry.

Jack and Larry are foster brothers and they own a company with Rich; each own 33.3333% of the company, and are equal officers/presidents.

Jack dies and leaves his 33.3333% to his foster brother, Larry.
But let’s say Larry had signed all the contracts pertaining to said company, using a fake identity and naturally, a fake name...

If Rich finds out that Larry’s identity is fraudulent, can he legally take both the percentages of the company (Larry’s and the deceased’s)—if, say, somewhere in the contract was specified that in the event the company’s legitimacy was threatened (fraudulent partners), partners’ assets could be revoked and distributed among the remaining partners—or bought back monetarily (from the bank? government? Jesus?)

I guess what I'm really trying to figure out is with the given circumstances, is there a way Rich can legally obtain the other 66.6666% of the company solely because of the contract and Larry's sham?

And, lastly, does this make any sense at all?

I apologize. I'm rambling. I'm in a pickle. I’m completely clueless to laws and stuff like this, but I'm stubborn and persistent, and by God, I will finish this book. If you can lend me a hand, I will be forever indebted to you. And remember, when you help a fellow struggling author, you’re indulging in your own intellect and somewhere in the future, a great classic is written.

With many thanks,

Sunny

PinkAmy
03-01-2011, 08:52 PM
I am not a lawyer, but I believe this is not only a civil matter, but also a criminal one as signing legal papers under a false name is a crime (fraud: the state vs. Joe Smith) and can be a federal offense if the papers are governmental--like filing for social security. If your fake-guy paid taxes or had payments withheld from his salary for taxes under that assumed name, you've got fraud. I believe that contracts signed fraudulently are null and void. If the case ended up in civil court, surely the plaintiff's lawyer as an officer of the court would report this fraud to state and federal court. Wouldn't want to be him :D.

Smish
03-01-2011, 09:21 PM
I am not a lawyer, but I believe this is not only a civil matter, but also a criminal one as signing legal papers under a false name is a crime (fraud: the state vs. Joe Smith) and can be a federal offense if the papers are governmental--like filing for social security. If your fake-guy paid taxes or had payments withheld from his salary for taxes under that assumed name, you've got fraud. I believe that contracts signed fraudulently are null and void. If the case ended up in civil court, surely the plaintiff's lawyer as an officer of the court would report this fraud to state and federal court. Wouldn't want to be him :D.

Yes, Larry could possibly be charged with a crime. But that's not what the OP seems to be asking. She seems concerned with the civil side of things - the contracts issues, partnership issues, etc. The Rich vs Larry stuff, not the State vs. Larry stuff. :)

Said The Sun
03-01-2011, 09:48 PM
Well, given the abundance of replies, I guess the little predicament in my MC's life is a little too complex hehe.

Yes, Amy, Larry will definitely be facing serious charges for his fake identity situation, and thanks for reminding me of the criminal side of this and to what extent it can apply federally.

Like Smish said, what I'm trying to find out is if the lines of the contract will still apply and can still be followed, given that it was signed fraudulently, and would this ultimately put the remaining 66% of the company in Rich's hands.

Ugh. I guess I'm just gonna have to cough up the 25 bucks and post this question on a "free" law advice site.

Thanks for your help my fine ladies!

backslashbaby
03-01-2011, 10:40 PM
Was it just a fraudulent identity, or did it include credentials, etc? Did he perform services and for how long? Could he prove he provided profit, etc? Just facts that might help in the explanation of the problem.

The estate part of it may be the answer by itself. Obviously, you can leave things to charlatans if you feel like it. And if he just names names, there's not any kind of good-person check of his choices. But I got ya, the fraud may make it obvious that the will could be contested (or whtever the procedure would be).

I have no answers, but I'd probably ask the estate lawyers first, if that helps any :)

eta: I'm afraid it gets even more complicated if you're talking about who gets to make decisions for the company now, btw. If you are just talking assets and stock (etc) by themselves, the estate stuff is where to look first, imho.

jclarkdawe
03-01-2011, 10:42 PM
(I'm sorry if this thread is out of place, I seriously went through each forum topic and couldn’t find a law related one; if there is one, by all means, switch it there. Thanks!)


Friends, I need legal advice on this extremely hypothetical situation… Ever think about becoming a law professor. This thing is like one of their questions, and usually have no real answer.

Take Rich, Jack, and Larry. Ah, the three stooges.

Jack and Larry are foster brothers and they own a company with Rich; each own 33.3333% of the company, and are equal officers/presidents. Is this a partnership, a Limited Liability Company, or a corporation? Did they just set it up, did they register it with the State, or did an attorney set it up? What does the ??? agreement call for? Do their bank accounts require two signatures? Can one of the officers bind the others?

The starting point for answering your question is going to be how the business operates with all three of them around.

Jack dies and leaves his 33.3333% to his foster brother, Larry. By the ??? agreement or through probate? Question is whether there is a will or not, and then whether foster brother would inherit under the statute if there is no will.

But let’s say Larry had signed all the contracts pertaining to said company, using a fake identity and naturally, a fake name... Ignoring the fact that I don't know how Jack wouldn't have known this ...

First off, did Larry have a purpose to defraud, and to defraud who? It is not illegal to have a fake identity without a purpose to defraud. In other words, if you changed your name, and started using that name, that would be legal (absent identification issues pertaining to the Patriot Act and connected statutes).

Second question would be whether Rich relied on Larry's fake identification to Rich's detriment. Rich would probably have to show some level of harm before this becomes an issue.

If Rich finds out that Larry’s identity is fraudulent, can he legally take both the percentages of the company (Larry’s and the deceased’s)—if, say, somewhere in the contract was specified that in the event the company’s legitimacy was threatened (fraudulent partners), partners’ assets could be revoked and distributed among the remaining partners—or bought back monetarily (from the bank? government? Jesus?) It's called a Petition to Partition and basically asks the court to divide up the company's assets. Standard provisions of most business organizations include some form of buy-out provision. This would be regardless of whether the company is in trouble or not.

Who is threatening the legitimacy of the company? If the government is going after the company, I can't imagine anybody wanting anything to do with the thing.

What's the assets of the company? Any lien holders on the property? I doubt that the third he got from his brother would be effected by the fraud, but I don't know. My guess, unless Rich could show that the fraud had effected him, is that two-thirds of the company would go to Larry and one-third to Rich.

I guess what I'm really trying to figure out is with the given circumstances, is there a way Rich can legally obtain the other 66.6666% of the company solely because of the contract and Larry's sham? Only if somehow the fraud effected Rich's interest in the company. If the fraud was(is) immaterial to the company, I doubt it.

And, lastly, does this make any sense at all? Not especially, but there are a lot of idiots in the world. It's impressive how badly people can screw this stuff up.

I apologize. I'm rambling. I'm in a pickle. I’m completely clueless to laws and stuff like this, but I'm stubborn and persistent, and by God, I will finish this book. If you can lend me a hand, I will be forever indebted to you. And remember, when you help a fellow struggling author, you’re indulging in your own intellect and somewhere in the future, a great classic is written.

With many thanks,

Sunny

What does your book need? Tell us what it needs and we can tell you how to get there. (I think, this thing is so convoluted it's hard to be sure how much anyone can make it work.)

Best of luck,

Jim Clark-Dawe

Said The Sun
03-02-2011, 12:17 AM
Friends, I need legal advice on this extremely hypothetical situation… Ever think about becoming a law professor. This thing is like one of their questions, and usually have no real answer. haha! As much as I love fucking with peoples' minds, I really doubt I'd have any chances with anything law-related.

Take Rich, Jack, and Larry. Ah, the three stooges.

Jack and Larry are foster brothers and they own a company with Rich; each own 33.3333% of the company, and are equal officers/presidents. Is this a partnership, a Limited Liability Company, or a corporation? Did they just set it up, did they register it with the State, or did an attorney set it up? What does the ??? agreement call for? Do their bank accounts require two signatures? Can one of the officers bind the others?
Yes, it was set up by an attorney and they registered the company with the state. Their bank accounts do NOT require two signatures. It is a partnership.

The starting point for answering your question is going to be how the business operates with all three of them around.
Yes, they're pretty much three hot-shot assholes.
The company was originally Rich’s, and was heading to the gutter, but when Jack and Larry bought their respective parts (for personal reasons) the net worth skyrocketed and the business improved and is doing fine at the time of the story.

Jack dies and leaves his 33.3333% to his foster brother, Larry. By the ??? agreement or through probate? Question is whether there is a will or not, and then whether foster brother would inherit under the statute if there is no will.
Jack’s part is left to Larry under the silly contract. Not an actual will.

But let’s say Larry had signed all the contracts pertaining to said company, using a fake identity and naturally, a fake name... Ignoring the fact that I don't know how Jack wouldn't have known this ... Jack knew!

First off, did Larry have a purpose to defraud, and to defraud who? It is not illegal to have a fake identity without a purpose to defraud. In other words, if you changed your name, and started using that name, that would be legal (absent identification issues pertaining to the Patriot Act and connected statutes).
Seriously, man, thanks. This is exactly one of the points I was trying to figure out. Larry did NOT have intent to defraud anyone, (he simply couldn’t use his real name because of past issues associated to his real name...) So does this mean that he cannot be charged of fraud, if he had no purpose of swindling anyone? In his defense, will it stand in court?

Second question would be whether Rich relied on Larry's fake identification to Rich's detriment. Rich would probably have to show some level of harm before this becomes an issue.
Yes. Rich finds out about Larry’s fake identity, and then proceeds to try and use this to get his part(s) from him. He's a greedy bastard.

If Rich finds out that Larry’s identity is fraudulent, can he legally take both the percentages of the company (Larry’s and the deceased’s)—if, say, somewhere in the contract was specified that in the event the company’s legitimacy was threatened (fraudulent partners), partners’ assets could be revoked and distributed among the remaining partners—or bought back monetarily (from the bank? government? Jesus?) It's called a Petition to Partition and basically asks the court to divide up the company's assets. Standard provisions of most business organizations include some form of buy-out provision. This would be regardless of whether the company is in trouble or not.
Who is threatening the legitimacy of the company? If the government is going after the company, I can't imagine anybody wanting anything to do with the thing.
The legitimacy of the company is threatened by Larry’s fraudulent identity (it’s implausible, I know, but it's a family business that's been open for decades and implies clients' trust, and other shenanigans.) But could Rich use this excuse in court?

What's the assets of the company? Any lien holders on the property? I doubt that the third he got from his brother would be effected by the fraud, but I don't know. My guess, unless Rich could show that the fraud had effected him, is that two-thirds of the company would go to Larry and one-third to Rich.
Ah-ha! THIS IS EXACTLY what I was trying to find out. Thank you!

I guess what I'm really trying to figure out is with the given circumstances, is there a way Rich can legally obtain the other 66.6666% of the company solely because of the contract and Larry's sham? Only if somehow the fraud effected Rich's interest in the company. If the fraud was(is) immaterial to the company, I doubt it.
OK, so I take it Richie is screwed and there’s no way he could get his hands on Larry’s percentages, at least by means of Larry’s faux pas...

And, lastly, does this make any sense at all? Not especially, but there are a lot of idiots in the world. It's impressive how badly people can screw this stuff up.

I apologize. I'm rambling. I'm in a pickle. I’m completely clueless to laws and stuff like this, but I'm stubborn and persistent, and by God, I will finish this book. If you can lend me a hand, I will be forever indebted to you. And remember, when you help a fellow struggling author, you’re indulging in your own intellect and somewhere in the future, a great classic is written.

With many thanks,

Sunny


What does your book need? Tell us what it needs and we can tell you how to get there. (I think, this thing is so convoluted it's hard to be sure how much anyone can make it work.) My book is fine, actually, other than the above crisis. It’s not about laws, or criminals, or court, and this whole situation is really just a mentioning in the book; it isn't the actual plot, and I'm certainly not going into trifling details with it, but still, I like to be accurate even with the "little facts", and that is why I asked. Thank you very much for your help. Your insight was extremely helpful!

Best of luck,

Jim Clark-Dawe



Thanks again everyone!
I guess I'm not coughing up the 25 bucks after all! :D

jclarkdawe
03-02-2011, 07:25 AM
Originally Posted by jclarkdawe http://www.absolutewrite.com/forums/images/buttons/viewpost.gif (http://www.absolutewrite.com/forums/showthread.php?p=5879196#post5879196)

Friends, I need legal advice on this extremely hypothetical situation… Ever think about becoming a law professor. This thing is like one of their questions, and usually have no real answer. haha! As much as I love fucking with peoples' minds, I really doubt I'd have any chances with anything law-related.

Take Rich, Jack, and Larry. Ah, the three stooges.

Jack and Larry are foster brothers and they own a company with Rich; each own 33.3333% of the company, and are equal officers/presidents. Is this a partnership, a Limited Liability Company, or a corporation? Did they just set it up, did they register it with the State, or did an attorney set it up? What does the ??? agreement call for? Do their bank accounts require two signatures? Can one of the officers bind the others?
Yes, it was set up by an attorney and they registered the company with the state. Their bank accounts do NOT require two signatures. It is a partnership.
Based on your next answer, the ratio might be a bit different, but normally an attorney would set this up as 33% to each partner, with one partner getting 34%. Amazingly enough, people will bitch about trying to divide things into thirds, which can be difficult. Partnerships would normally require two signatures in this case to bind the partnership. Otherwise, one partner could bind the other two and you don't want that to happen.

The starting point for answering your question is going to be how the business operates with all three of them around.
Yes, they're pretty much three hot-shot assholes.
The company was originally Rich’s, and was heading to the gutter, but when Jack and Larry bought their respective parts (for personal reasons) the net worth skyrocketed and the business improved and is doing fine at the time of the story.
It seems more likely that this would be set up 40% Rich and 30% the brothers. I could even see it going to 50% Rich with the brothers getting 25% each. Remember that net worth in a company increases when you infuse capital into the company, so make sure you discount that effect of the two brothers going into it. If this is investment capital, normally you would set up a limited partnership (or an LLC) so that the brothers would be able to limit their downside in their investment.

Jack dies and leaves his 33.3333% to his foster brother, Larry. By the ??? agreement or through probate? Question is whether there is a will or not, and then whether foster brother would inherit under the statute if there is no will.
Jack’s part is left to Larry under the silly contract. Not an actual will.
Not an unusual provision. If I was drafting the partnership agreement, I'd probably be thinking of changing the management provision to a 50/50 arrangement, otherwise the surviving brother has control. This wouldn't effect the financial valuation, but would remove the control issue.

But let’s say Larry had signed all the contracts pertaining to said company, using a fake identity and naturally, a fake name... Ignoring the fact that I don't know how Jack wouldn't have known this ... Jack knew!

First off, did Larry have a purpose to defraud, and to defraud who? It is not illegal to have a fake identity without a purpose to defraud. In other words, if you changed your name, and started using that name, that would be legal (absent identification issues pertaining to the Patriot Act and connected statutes).
Seriously, man, thanks. This is exactly one of the points I was trying to figure out. Larry did NOT have intent to defraud anyone, (he simply couldn’t use his real name because of past issues associated to his real name...) So does this mean that he cannot be charged of fraud, if he had no purpose of swindling anyone? In his defense, will it stand in court?
That could be fraud or maybe not. For example, if Bernie Madoff was released from prison and wanted to come up with a new name, it would probably be reasonable to assume there was an intention to defraud. On the other hand, if it was because he had done something stupid, like being labeled the guy who drove a twelve foot truck under a nine foot bridge, then yeah, probably there's no intent to defraud.

Bottom line is you can make this swing either way with minor changes in fact.

Second question would be whether Rich relied on Larry's fake identification to Rich's detriment. Rich would probably have to show some level of harm before this becomes an issue.
Yes. Rich finds out about Larry’s fake identity, and then proceeds to try and use this to get his part(s) from him. He's a greedy bastard.
Definitely a leverage point. And disclosing Larry's real identity is a danger that Larry needs to face. But if business improved after Larry and his brother joined the company, then it's going to be hard to prove that Larry's fake identification was a problem.

If Rich finds out that Larry’s identity is fraudulent, can he legally take both the percentages of the company (Larry’s and the deceased’s)—if, say, somewhere in the contract was specified that in the event the company’s legitimacy was threatened (fraudulent partners), partners’ assets could be revoked and distributed among the remaining partners—or bought back monetarily (from the bank? government? Jesus?) It's called a Petition to Partition and basically asks the court to divide up the company's assets. Standard provisions of most business organizations include some form of buy-out provision. This would be regardless of whether the company is in trouble or not.
Who is threatening the legitimacy of the company? If the government is going after the company, I can't imagine anybody wanting anything to do with the thing.
The legitimacy of the company is threatened by Larry’s fraudulent identity (it’s implausible, I know, but it's a family business that's been open for decades and implies clients' trust, and other shenanigans.) But could Rich use this excuse in court?
If Larry's fraudulent identity was released by someone other than Rich, causing a downturn in business, then that would have been a risk that Rich wasn't aware of when he accepted Larry as a partner. It would become complicated though even if Rich prevailed. Let's run some numbers

Rich has a business worth $100k. Each brother invests $100k into the business, making the net worth $300k. In the next three years, the business explodes, becoming worth $1 million.

Larry's past comes out and Rich sues. Business has tanked to the point where it is worth $450k. One third of that is $150. That means Rich has gained $50k more than he invested, in the course of three years. That's about a 15% return on investment, which isn't too bad. I'm not sure in this situation Rich would be able to proof any damages.

However, let's say the business tanks even more and has a value of $150k. Rich's share would be $50k, a loss of $50k. If Rich could convince a judge/jury that the reason for the business tanking was Larry's fraudulent identity, then he could be liable for the loss.

What's the assets of the company? Any lien holders on the property? I doubt that the third he got from his brother would be effected by the fraud, but I don't know. My guess, unless Rich could show that the fraud had effected him, is that two-thirds of the company would go to Larry and one-third to Rich.
Ah-ha! THIS IS EXACTLY what I was trying to find out. Thank you!

I guess what I'm really trying to figure out is with the given circumstances, is there a way Rich can legally obtain the other 66.6666% of the company solely because of the contract and Larry's sham? Only if somehow the fraud effected Rich's interest in the company. If the fraud was(is) immaterial to the company, I doubt it.
OK, so I take it Richie is screwed and there’s no way he could get his hands on Larry’s percentages, at least by means of Larry’s faux pas...

And, lastly, does this make any sense at all? Not especially, but there are a lot of idiots in the world. It's impressive how badly people can screw this stuff up.

I apologize. I'm rambling. I'm in a pickle. I’m completely clueless to laws and stuff like this, but I'm stubborn and persistent, and by God, I will finish this book. If you can lend me a hand, I will be forever indebted to you. And remember, when you help a fellow struggling author, you’re indulging in your own intellect and somewhere in the future, a great classic is written.

With many thanks,

Sunny


What does your book need? Tell us what it needs and we can tell you how to get there. (I think, this thing is so convoluted it's hard to be sure how much anyone can make it work.) My book is fine, actually, other than the above crisis. It’s not about laws, or criminals, or court, and this whole situation is really just a mentioning in the book; it isn't the actual plot, and I'm certainly not going into trifling details with it, but still, I like to be accurate even with the "little facts", and that is why I asked. Thank you very much for your help. Your insight was extremely helpful!
The reason I said this is because with little twists of the "facts," we can make this come out a bunch of different ways.

Best of luck,

Jim Clark-DaweBest of luck,

Jim Clark-Dawe

Said The Sun
03-02-2011, 04:39 PM
Jim Clark-Dawe for king!!!! Thank you! :)