Ownership disputes occur in a number of different forms in closely held businesses. These businesses are owned by a small number of owners which will include minority interest holders and majority interest holders. They are generally organized as a joint venture, a form of partnership, or corporation. Business ownership disputes include but are not limited to the following:
- Breach of contract
- Breach of fiduciary duty
- Violation of Non-compete agreements
- Embezzlement or misuse of business funds
- Unfair treatment of minority owners
- Forced buy-out
- Any other issue that involves the investigation of the actions of a partner or shareholder, to determine what happened to business funds
Within these disputes a forensic accountant or a forensic accountant certified in business valuation may assist an attorney by calculating actual damages, valuing the minority interest or calculating the damages resulting from acts unfulfilled.
As an example, a minority shareholder of a very successful, closely-held business filed a lawsuit against the majority shareholders claiming he was treated unfairly and requested he be bought out. The attorneys representing the majority shareholders retained the services of a forensic accountant to investigate the plaintiff. The investigation revealed the plaintiff had a history of investing in successful, closely-held businesses, making claims of unfair treatment and filing lawsuits requesting to be bought out. The investigation also revealed that there was no basis for most of the claims. The use of a forensic account with experience as an investigator proved very helpful to the attorneys.
Recently, in a small corporation, a minority shareholder sued the majority shareholder as part of a shareholder derivative lawsuit. A forensic accountant was hired and found the majority shareholder was using the company credit card, incurring personal expenditures, and recording them on the company books as business expenses. The majority shareholder was manipulating the income on the books and reducing the value of the minority shareholders interest. With a proper analysis and business valuation the majority shareholder settled the case.
In a small corporation a corporate officer and main shareholder agreed to a contract in Texas with a real estate broker to legally allow real estate agents to buy and sell properties under his license. The main shareholder diverted the commissions from properties purchased and sold and from property management fees, therefore breaching the contract. The case went to trial and after testimony by the forensic accounting expert, the jury found in favor of the plaintiff and awarded damages and punitive damages. The case decision was appealed and was settled for all the damages and a large portion of the punitive damages.
Sage Investigations, LLC is a leader in forensic accounting and financial investigations and has propriety technology that can be of benefit to corporations facing vendor fraud, embezzlement, and theft. With over 40 years of experience following money, Sage uses proprietary technology (DIO) to help develop the full picture of the financial aspects of the fraud. Sage strives to help clients structure a better future for their companies. Learn more about assisting your corporation or your clients by contacting retired Internal Revenue Service Special Agent Edmond J. Martin, Chief Investigator at Sage Investigations, LLC. Email firstname.lastname@example.org website: www.sageinvestigations.com or call 512-659-3179.