Fact Pattern –
Jerry was the president of VCNV, Inc. (“VCNV”), a venture capitalist company that provided funding primarily for real property development. Jerry’s daughter, Gina, was the vice president and his personal trust was the sole shareholder of the company. Essentially, VCNV received money from investors and provided loans to various entities and individuals for the development of real property.
Jerry was also the majority owner of Real Construction, Inc., a company that specialized in real property construction and development. Jerry did not disclose to the VCNV investors that he was a majority owner in this company, which received several loans from VCNV throughout the years.
Unfortunately, many of VCNV’s investments were recently “lost” and written off as bad debt. Jerry also recently acquired a 100 percent ownership interest in VCNV through an alleged purchase from his personal trust. Jerry is now listed as VCNV’s President, Director, Secretary, and Treasurer on the corporate paperwork.
Several of the investors in VCNV have filed a complaint against VCNV, Real Construction, Inc., Jerry, Gina, Kelly (Jerry’s wife), and Jerry’s personal trust. The VCNV investors are alleging that VCNV entered into several investments without performing adequate due diligence, that VCNV failed to properly inspect the properties/ investments, that VCNV failed to disclose material facts when obtaining funds from investors, and that VCNV used investor funds to purchase certain property without the knowledge and consent of the VCNV investors. The VCNV investors are also claiming that Jerry, his other companies, and his family are alter egos of Jerry and should be held jointly responsible for the actions of VCNV.
Important Considerations –
In a situation such as this one, an economic damages expert could assist in understanding the corporate structure of the various entities involved, evaluate the extent to which the parties involved interacted in ways that are indicative of alter ego, analyze the extent to which the corporate formalities were (or were not) maintained and how the corporate veils may be pierced, evaluate damages associated with the claims alleged against the defendants, and assist in evaluating the “lost” investments.
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