Lawsuit in Florida - alleged fraud in sale of Fabrege - Case settled - post #340

[DownYonder]

Wasn’t there a news blurb some years back that CR’s father had dropped support of her? I seem to recall seeing something that said he had never really been on board with her career choice and was hoping she would do something more productive with her life. How does the timing of that decision coincide with this sale (or others)? Was it around the same time frame?

[DownYonder]

@Virginia Horse Mom

I brought up the tax issue because the LLC either had to record the profits the made on this transaction and pay applicable taxes… Thus documenting the fraud… Or, they didn’t record the profits and pay applicable taxes… which is problematic as well. Maybe they have a slick accounting trick to work around this… But bottom line, you either did or didn’t make $600,000 in pure profit… That’s not easy to hide if you’re a small LLC run essentially by one person. If you don’t hide it… You owe taxes.
​​.

Yeah, the tax angle is quite intriguing. I wonder if Lionshare has ever been audited by IRS?

[Equibrit]

Lionshare LLC ;
http://search.sunbiz.org/Inquiry/Cor…0L080000363660

Lionshare Dressage LLC ;
http://search.sunbiz.org/Inquiry/Cor…0L130000380730

People use LLCs to avoid personal liability;

https://www.nolo.com/legal-encyclope…ate-guide.html
[h=2]Personal Liability for Your Own Actions[/h]
There is one extremely significant exception to the limited liability provided by LLCs. This exception exists in all states. If you form an LLC, you will remain personally liable for any wrongdoing you commit during the course of your LLC business. For example, LLC owners can be held personally liable if they:

• personally and directly injure someone during the course of business due to their negligence
• fail to deposit taxes withheld from employees' wages
• intentionally do something fraudulent, illegal, or reckless during the course of business that causes harm to the company or to someone else, or
• treat the LLC as an extension of their personal affairs, rather than as a separate legal entity.

Thus, forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business. If both you and your LLC are found liable for an act you commit, then the LLC's assets and your personal assets could be taken by creditors to satisfy the judgment. This is why LLCs and their owners should always have liability insurance.

[Virginia_Horse_Mom]

^ that’s informative. So presuming the sale itself is found to be fraudulent… It looks like it might be challenging for CR to say “My LLC is responsible”… and then have the LLC declare bankruptcy in the event it doesn’t have enough assets to satisfy the judgement, and CR walks away from it all… Regardless of whether or not they pierce the corporate veil.

[keysfins]

AT wants a trial, and asks for damages.

“The suit seeks a jury trial of nine counts including fraud, breach of contract, unjust enrichment and violations of Florida’s Unfair and Deceptive Trade Practices Act. Alice is seeking $500,000 in damages for each of eight counts.”

$500K for each of eight counts, if awarded by the court, would be a cool $4M.

In some ways, this case will shine the light on practices and “norms” that no one has wanted to make public, whether seller, buyer or agent. Hopefully this will put all parties on notice that shady deals and greedy agents will not be tolerated. Almost like the equine version of “#MeToo”. #NoMore ?

Will be interesting to see how this proceeds.

[Joanne]

AT has a fabulous lawyer: http://www.foxrothschild.com/amy-s-rubin/

[frugalannie]

@keysfins

"In some ways, this case will shine the light on practices and “norms” that no one has wanted to make public, whether seller, buyer or agent. Hopefully this will put all parties on notice that shady deals and greedy agents will not be tolerated. Almost like the equine version of “#MeToo”. #NoMore ?

Will be interesting to see how this proceeds.

Indeed. I have heard from several people who await this outcome.

[SnicklefritzG]

If the courts find in Alice Tarjan’s favor and this really did happen, i.e. that she got bilked out of $600k, then I feel bad for her.

HOWEVER, I don’t agree with her trying to get $4M. If it did happen I think it would be fair to ask for the $600k that she got duped out of plus attorney fees, but not substantially more than that. Alice is wealthy in her own right. She can do just fine without another $3M that has nothing to do with the original transaction.

If she wants to make a point, she has already done that by suing in the first place. Much more than that and she’s going to start looking bad herself.

Question for attorneys on COTH: If this goes to trial, who determines the amount Alice would get IF the jury finds in her favor?

On the other hand, if it does go to a settlement out of court, what is the likely outcome in terms of how much Lionshare would have to pay if it comes to that?

[BigMama1]

@SnicklefritzG

If the courts find in Alice Tarjan’s favor and this really did happen, i.e. that she got bilked out of $600k, then I feel bad for her.

HOWEVER, I don’t agree with her trying to get $4M. If it did happen I think it would be fair to ask for the $600k that she got duped out of plus attorney fees, but not substantially more than that. Alice is wealthy in her own right. She can do just fine without another $3M that has nothing to do with the original transaction.

If she wants to make a point, she has already done that by suing in the first place. Much more than that and she’s going to start looking bad herself.

Question for attorneys on COTH: If this goes to trial, who determines the amount Alice would get IF the jury finds in her favor?

On the other hand, if it does go to a settlement out of court, what is the likely outcome in terms of how much Lionshare would have to pay if it comes to that?

The plaintiff’s wealth should not be a factor in assessing damages. They are meant to be punitive - ie a punishment to the guilty party and hopefully a deterrent to them and others in the future. Even if a sum like $4 million was awarded and upheld in the inevitable appeal, we have no idea what AT would do with it. She may buy 10 new horses or she may donate the whole thing to charity. But assuming her motive is greed simply because she may not need the money seems a bit presumptuous, no?

[SnicklefritzG]

I didn’t say it was greed or that wealth is a factor in the eyes of the law.

in general terms I do think it is silly. Alice Tarjan is an attorney and should know better than most how to protect herself in a transaction. That she’s had prior business with Roffman shouldn’t be an excuse for not being careful. There are many things people can do to protect themselves and it doesn’t appear those things happened in this sale.

She believes she got duped and is upset. That much is clear but asking for $4M to make a point seems excessive.

@BigMama1

The plaintiff’s wealth should not be a factor in assessing damages. They are meant to be punitive - ie a punishment to the guilty party and hopefully a deterrent to them and others in the future. Even if a sum like $4 million was awarded and upheld in the inevitable appeal, we have no idea what AT would do with it. She may buy 10 new horses or she may donate the whole thing to charity. But assuming her motive is greed simply because she may not need the money seems a bit presumptuous, no?

[soloudinhere]

@SnicklefritzG

I didn’t say it was greed or that wealth is a factor in the eyes of the law.

in general terms I do think it is silly. Alice Tarjan is an attorney and should know better than most how to protect herself in a transaction. That she’s had prior business with Roffman shouldn’t be an excuse for not being careful. There are many things people can do to protect themselves and it doesn’t appear those things happened in this sale.

She believes she got duped and is upset. That much is clear but asking for $4M to make a point seems excessive.

$4m seems like it would be punitive to someone who allegedly took $600,000 without much of a thought.

[clanter]

. If you form an LLC, you will remain personally liable for any wrongdoing you commit during the course of your LLC business

yeah and that is one of the major reasons our fam was set up as a C Corp, we were just shareholders then

[keysfins]

It would be interesting to know if AT was paid for the sale of the horse from CR’s own account, or Lionshare’s. Can CR show where the sale proceeds came from, which account it landed in (personal vs. LLC), and from which account payment to AT from the sale was disbursed?

There is that odd part in the court filing about CR paying AT herself because of some delay in funds transferred by the (alleged) buyer. Again, from which entity was AT paid? Personal, or LLC?

As always, “Follow The Money”.

Question for the attorneys here, just in general: can the court request bank records? Or is it up to the parties’ attorneys to make that request?

[Equibrit]

@clanter

yeah and that is one of the major reasons our fam was set up as a C Corp, we were just shareholders then

If you are going to commit fraud etc, that is no protection either.
https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html

[Equibrit]

@keysfins

It would be interesting to know if AT was paid for the sale of the horse from CR’s own account, or Lionshare’s. Can CR show where the sale proceeds came from, which account it landed in (personal vs. LLC), and from which account payment to AT from the sale was disbursed?

There is that odd part in the court filing about CR paying AT herself because of some delay in funds transferred by the (alleged) buyer. Again, from which entity was AT paid? Personal, or LLC?

As always, “Follow The Money”.

Question for the attorneys here, just in general: can the court request bank records? Or is it up to the parties’ attorneys to make that request?

Co-mingling of funds is a major consideration;

“Commingling assets. Small business owners may be more likely than their larger counterparts to commingle their personal assets with those of the corporation or LLC. For example, some small business owners divert corporate assets for their own personal use by writing a check from the company account to make a payment on a personal mortgage – or by depositing a check made payable to the corporation into the owner’s personal bank account. This is called “commingling of assets.” To avoid trouble, the corporation should maintain its own bank account and the owner should never use the company account for personal use or deposit checks payable to the company in a personal account.”
https://www.nolo.com/legal-encyclope…eil-33006.html

It seems that CR would lose if she is trying to seperate herself from the LLC.

[Gestalt]

I don’t think asking for 4m is too much. You have to account for AT’s time and hassle ,not just the bottom dollar she has paid out.

These dirty deals need their own hashtag.

[hoopoe]

QUOTE
She believes she got duped and is upset. That much is clear but asking for $4M to make a point seems excessive.

I don’t think so. I think she may wish to set precedent and , in reality, does a great favor to the horse industry to shine a light on these practices.

the likelihood of actually being awarded this amount well I am no legal eagle so the judge may have its say and the actual money may be quite different.

zTo the legal folks. Does the amount claimed by the suit elevate it to a higher level of court,particularly if there is interstate transaction ? Local state federal…

[Palm_Beach]

@Equibrit

Thus, forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business. If both you and your LLC are found liable for an act you commit, then the LLC’s assets and your personal assets could be taken by creditors to satisfy the judgment. This is why LLCs and their owners should always have liability insurance.

Insurance won’t cover deliberate acts and has a limit.

[Virginia_Horse_Mom]

@Equibrit

Co-mingling of funds is a major consideration;

“Commingling assets. Small business owners may be more likely than their larger counterparts to commingle their personal assets with those of the corporation or LLC. For example, some small business owners divert corporate assets for their own personal use by writing a check from the company account to make a payment on a personal mortgage – or by depositing a check made payable to the corporation into the owner’s personal bank account. This is called “commingling of assets.” To avoid trouble, the corporation should maintain its own bank account and the owner should never use the company account for personal use or deposit checks payable to the company in a personal account.”
https://www.nolo.com/legal-encyclope…eil-33006.html

It seems that CR would lose if she is trying to seperate herself from the LLC.

ABSOLUTELY. And if indeed financial matters have been commingled betwixt CRs personal accounts, and that of the LLC… again… I strongly suspect there is an underlying tax problem lurking too. People who pull off a $600,000 scam probably aren’t inclined to be scrupulous about their taxes.

I think AT is wise to start out at the $4m in damages mark. Let the judge/jury decide to reduce the award in the event she prevails, if they see fit. Otherwise… it puts some serious pressure on CR to come to the negotiating table… the $4m is all about pressure. Right now, it looks like CRs attorney is just demanding a bunch of peripherally relevant records to make this a headache for AT to pursue further.

If I were in ATs shoes, I would talk to that law firm about having a good forensic accountant as part of the “team” on this lawsuit… then get some good advice on specific financial information to request during the discovery phase.

[Denali6298]

@hoopoe

QUOTE
She believes she got duped and is upset. That much is clear but asking for $4M to make a point seems excessive.

I don’t think so. I think she may wish to set precedent and , in reality, does a great favor to the horse industry to shine a light on these practices.

the likelihood of actually being awarded this amount well I am no legal eagle so the judge may have its say and the actual money may be quite different.

zTo the legal folks. Does the amount claimed by the suit elevate it to a higher level of court,particularly if there is interstate transaction ? Local state federal…

I am not an attorney. I am not sure if the amount of damages has an effect on the level of the court, but, if I am remembering correctly, if the case is between parties that reside in different states, one can choose to file in the state courts or federal courts.