QUESTION
Invested Money With No Return and Little Communication
Asked on Dec 30th, 2015 on Breach of Contract - Minnesota
More details to this question:
I invested 30,000 USD with a company in early 2014. I have not had anything returned and the communication has been sparse. All I want is the money returned at this point. However, a lawyer that I spoke with (a friend of my financial advisor) said "don't throw good money after bad" indicating that the amount I'd "lost" on the investment was not worth going after due to potential legal fees. Yet, I'm of the mind that the case is pretty shut and dry (not that simple, I'm sure). I have a document promising payments based on company net profits and I have yet to receive a single payment. Thus, if the company has had net profits, and I haven't been paid anything, they should be in violation of the agreement. Is this worthwhile to pursue? Or are the legal fees going to be too problematic for the amount initially invested? Thanks.
1 ANSWER
I can't tell from your email whether you have a good case or not, but certainly it is not "open and shut."
If the company has had profits and hasn't paid you, it appears that you would have a claim. But if the company had no profits, it is not required to pay you anything. Nobody is guaranteed that an investment will succeed.
However, if the company made factual misrepresentations which induced you to invest (e.g. "We had $500 net profit last year" when actually net profit was $100, but not "I think we'll lave $500 net profit next year") you might have a claim for fraud.
Regardless of whether you have a valid claim or not, you have to keep in mind that the company may have no money, and thus no way to satisfy any judgment you might obtain against it. You not only have to win, you have to be able to collect.
Answered on Jan 05th, 2016 at 11:27 AM