What to do about possible fraud regarding the formation of an LLC?

UPDATED: Oct 1, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Oct 1, 2022Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

What to do about possible fraud regarding the formation of an LLC?

My husband and I opened a company. After a while, we partnered with another person and divided the shares between the 3 of us. This was all on a verbal agreement; no document was signed. The company was in my husband’s name as sole proprietor. When we decided to incorporate, the third person did all of the paperwork and added a 4th person as owner. I never got to be on the LLC papers. No documents were signed by either my husband or I. Can our partner open the LLC for company that’s not in his name without any signature from the legal owner of the company, my husband? He refuses to show us any paperwork.

Asked on November 24, 2018 under Business Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You can't stop him from opening an LLC: but you don't have to be part of it. You did not agree to be part of this 4-person company; he cannot make you be part of it, and your husband will still have his sole proprietorship. Do not transfer any money or assets to this new LLC; and explain to him that unless he agrees to cooperate in removing you from this LLC, you will sue him based on fraud for a court order requiring him to do so and for monetary compensation (e.g. your legal expenses).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption