[Family Court, California] Lawyer gave advice to do something. We did it. Now the judge is saying it might be fraud. What's the best course of action?
posted by MexicanYenta to law & government (11 answers total)
(Sorry for the length. I tried to keep it to just a recitation of facts, with no special snoflake details.)
Asking for family members: Man and woman are married. They take out a loan from man's parents to buy a business, which woman is going to run. Woman soon shows little interest in running business - she opens late, closes early, starts not opening on Saturdays (the only day most working people can get there.) Business drops off severely. After 6 months, she just doesn't show up at all, and runs off with another man. Man's brother agrees to run business for 3 months until divorce is settled. Woman goes to bank and cleans out business accounts, more than once. An additional loan is taken from man's parents to enable business to pay its accounts and keep it afloat.
However, business is still in limbo after divorce is final, and brother is still running it two years later. During this time, many court dates are set and postponed. Several times it's because the judge is sick, or is too busy. During this time, brother works hard to build business back up, in order to protect loan parents made to man and woman. Brother didn’t take a salary at all for about 6 months, and took a very small salary for quite a while after that. (He has never taken much money at all from it – most of it was put back into the business.) Man, brother and father remodel business. At the time the woman cleaned out the bank accounts, the lawyer advised them to close all bank accounts and accounts with vendors, and reopen them in a new business name. This is to keep woman from taking money, and to establish this as a completely different business from the one that woman was running. Months later, lawyer advises them to shut down and move to a new location with another set of new accounts and a new business name, all registered to the brother. Again, this is to establish it as an entirely different business. They do this - the brother opens the whole nine yards under his already-existing LLC, and lawyer send woman a letter saying they can no longer run the original business, and are turning it over to her at the end of the month. She can either run it, or they can sell it. (Woman has been insisting all along that it can be sold for an inflated price that is more than 3 times what they paid for it - and that was before she ran all the customers off with bad service and by not being open. And before the current recession.) Man and father help remodel new location, but other than that, are not involved with new business. New business belongs entirely to brother. Brother spends a lot of time and money on remodeling, and equipment and supplies. End of the month passes, woman does nothing with old business, and an eviction notice is served on it by the old landlord.
Suddenly, lawyer sends letter to man saying judge decides that by opening the new business, maybe fraud has been committed, and has scheduled an evidentiary hearing. Lawyer, who advised them to open new business, now says that judge can award custody of both old and new business to woman, and lawyer thinks they should go to mediation. Lawyer is also saying that business would stay under brother’s name, which would then enable woman to ruin brother’s credit rating if she chose to run off with all the money again.
So now they are at a loss as to what to do. Go with mediation? Find a new lawyer? (There’s not really any money left for that.) Sue the current lawyer? Turn the whole thing over to woman and consider it a hard lesson learned? Have brother declare bankruptcy?
Can a Family Court judge take a business away from someone and award it to a woman he was never married to?
This is in southern California, in Family Court. YANAL. YANML. YANAcaliforniaL. The court date, which has been postponed 6 months at a time on multiple occasions, is now suddenly scheduled for October 21.
Business is primarily a service business, with little product inventory, similar to a shoe repair business: shoe repair businesses primarily repair shoes, but they also sell a little polish and shoelaces. And they have inventory of new soles and heels, and the equipment to do the repair work. This business is not shoe repair, but functions in a similar manner.
Thank you in advance for any help! It’s incredibly frustrating to think of all the hard work and money that’s been put into this just being turned over to her, while brother would then have to start from scratch and try to find a job in this economy.