St James, MN asked in Business Law for California

Q: I invested in a start up Co. but have never received signed receipts or share cert.. Do I have a case for recission?

I invested in a start up Co. 2 yrs. ago. and signed a memoradum. After repeatedly asking for them, I have never received the Co. signed memorandum back,a welcome pack,or even my share cert.. Isn't this illegal business? It involves a lot of money and the Co. is in CA.and I'm in MN.. The persons main Co. came under Govt. investigation shortly after I invested and they decided not to grow the start up until the legal matters were resolved. There has been no resolution yet and they have not pursued the new venture either. I've been promised a recission by the CEO and his Atty. but they claim there is no money. I believe something unlawful or criminal is going on. They're still in business and have started another one. I have given them a deadline for the recission but that has passed. I also stated that I had been advised to forward this matter to the Atty. Gen. or FBI. Do you think I have a case for recission, some leverage and should they be concerned about the consequences?

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1 Lawyer Answer
Robert Douglas Kane Jr
Robert Douglas Kane Jr
  • Orange, CA
  • Licensed in California

A: Thank you for you question.

Q:Isn't this illegal business? Not at the onset, but it can become illegal.

Upon a request, every shareholder is entitled to a certificate certifying his/her number of shares and class or series. (There is an exception if the company makes other arrangments (i.e. electronic shares), but that does not appear to be the situation in your case.) Once the company has refused it is in violation of California law. This law does not, however, provide how this is to be enforceed. You may be entitled to several remedies, including the value of your investment and perhaps more. Depending on additional facts you may be able to go after the other companies, the directors, officers or even shareholders. Further, you may be able to secure pre-trial attachments to certain property.

I am unable to comment on the criminal allegations without additional information.

Obviously, you are not going to be able to comprehensive legal opinion in this forum

I am interested in speaking to you regarding this matter. I practice in California and Minnesota. Thus, I can provide you personal services that most attorneys may not.

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