What if I told you that there was a non-profit business that you know and respect that was misrepresenting their financial report and in the process of doing so continually have gotten investors to place hard earned money into their company? What if I told you that the same company presented a list of employees on their financial reports and most of those employees were either no longer in the industry or actually working for a competitor of said company and this was done to make the company look bigger than it actually was? Here comes the spoiler alert…. I cannot tell you of the company…yet, but the research would absolutely shock you. While I cannot tell you the name of the “institution” involved, what I can tell you is that your money is at risk. Let’s break down what exactly is transpiring in this potential litigation:
To start, the first thing that the company(s) is doing is displaying false profits. Here is a hypothetical situation: Company A creates widgets. In 2006 widgets (a fictional product) was in demand. Company A could not sell enough widgets but in 2015 widgets were no longer carrying the same demand and the company that made a tremendous about of money in 2006 is now faced with not being able to sell enough widgets to keep their lights on. With the knowledge that they do not have enough widgets to keep the boat floating, they turn to the open market and hire a writer to talk up their new product line that is essence is really more of the same. They make these presentations to investors by displaying a 10-year graph of their profits. The investor is seduced with the 10-year range without the realization that the party is truly over. To make things even more intriguing, the company offers a strong interest rate with the date of maturity 15 years out. What stands behind curtain number 2 is a bankruptcy that will occur anytime from year 3 to 5.
How can this be right? Can I sue?
There is no question that you have a cause of action that you can win. But… here’s the catch: The non-profit that you invested in at this juncture may be what we call in the field, “Judgment Proof” which means that while you can win a great deal of money on paper, the paper will be one of black ink on a white page as opposed to the green stuff that you can utilize to make purchases.
Can you explain that English please?
In the clearest way that I can explain, a victory in court does not mean a victory to your bank account. While you are victorious in the eyes of the law, you cannot actually collect from a company that no longer has assets to pay a judgment. But have no fear, the CEO and Board of Directors that play a role in stealing your money will have most likely received some form of immunity to keep their assets and either serve time in a minimum security prison for 1 year where they will be forced to play tennis before retiring to their home with your profits.
What should you do?
Before making any such investment you need to do the research because it is easy to be legally right and practically wrong. Following are a list of attorneys and financial professionals that can make the path to investment much safer:
Andy Kellogg of Raymond James.
Matthew McManus-Michigan Attorney.
Ravi Gurumurthy-Michigan Practicioner.
Eddie Woolard-Indiana Attorney
Ihab Ibrahim-New Jersey attorney.
Brian Largey-New Jersey attorney.
In addition to the parties mentioned, there are an array of strong lawyers and financial professionals that can guide you in the process across the country. To not seek assistance prior to the endeavor would be the equivalent of going into a battle without proper training. The outcome could be tragic.
Bill Amadeo is a partner at McManus PLLC in Ann Arbor, Michigan. In addition to his duties at the firm, he owns and operates BAT Tutoring with his business partner Ashley Johnson in Lansing, Michigan. Prior to his legal career Bill worked as a professional journalist. He can be reached at: Amadeo@McManuspllc.com.