Foreign Investment Gone Bad

[deckscrew]

What is the name of your state (only U.S. law)? CA

About 4 years ago I invested $50,000 with a friend and his cousin, an American, in the food manufacturing business. Other people were also involved. The venture was to start a food company in Russia. We had a Russian partner, and the cousin already had a plant in Moscow. The product was well received and they needed money to expand. I was told that they would incorporate in Russia and that I would be a 5% owner and receive stock certificates. I wrote a personal check to my friend's cousin for my investment.

Needless to say the investment has not worked out. I knew the risk going in, being that we were investing in a foreign country, and not all investments work out. What upsets me is the lack of concern or effort on the part of the cousin. I considered him like a General Partner who would try to look after our interests. Instead he seems to have lost interest in the project. In over 4 years time he has taken only one trip over to Russia to have look at what is going on. When I press him about taking a more active role in the venture he says he can't because he has a business to run in the US, and there is nothing he can do about it anyway.

I gave my money to this person in good faith and was told, in front of others, the structure of the investment. We have received no stock certificates, nor any communications regarding the progress or lack of it regarding our investment.

I am considering suing this individual, not for making a bad investment but for lack seeing the project through. I feel he has some fiduciary responsibility to the investors.

I handed him a personal check which he deposited in his bank in the US. I think at the very least he should be arrested for fraud.

My question is do I have case that is worth pursuing? Even if it is slight, I could use the threat to make the person act on our behalf

Thanks in advance for any comments or advice.What is the name of your state (only U.S. law)?

[seniorjudge]

You may sue anyone at any time for any reason anywhere.

[HomeGuru]

Originally Posted by seniorjudge

You may sue anyone at any time for any reason anywhere.

**A: but I would not recommend suing in Russia.

[Dandy Don]

Don't expect to win a lawsuit unless you have something IN WRITING to verify their promise of the 5% ownership and the stock certificates (is there a partnership agreement or shares of stock or a business credit report?)?. What due diligence did you do to or documentation did you ask for (BEFORE handing over the money) to verify that they ever incorporated the business?

You should have had your own attorney review the documented corporate information and checked the business background and done a background check in Russia and the US on the partner and cousin.

DANDY DON IN OKLAHOMA (tiekh@yahoo.com)

[deckscrew]

This was pretty much a brain f_rt on my part. I went in on the recommendation two of my friends (who by the way are still my friends, they've lost much more than I have).

I knew this was a risky venture going in. Whats really upsets me is the cousin, who set up the partnership, essentially gave our money to his Russian partner, and never followed up on anything.

I'm going to talk to the DA to see if a fraud case if possible.

[Zigner]

So, you INVESTED in an existing company and you lost your INVESTMENT because that company didn't do so well. You do know that an INVESTMENT isn't a guarantee, right?

Yes, review this with a lawyer...but I'm sure you will get the same answer(s) that you've received in this thread. Basically - yes, you can sue, but your case is very weak (dare I say, non-existent?)

[deckscrew]

I understand that there is risk in any investment. Some more than others. I've invested in real estate and the stock market. Some do well, others not so well, that's investing.

This venture was essentially a start up. A two man operation was selling a product in Russia. The product was well received. A company was formed to begin distribution on a broader level. We were to invest our money and a corporation was to be formed, with stock certificates issued to the investors. There was a meeting among friends at a local restaurant where the whole venture was laid out. Yes, there was nothing in writing, except for some spread sheet projections. This was all done amongst friends (and former friends) with the same understanding of what we were getting into. Risky, yes, but potentially very profitable.

My gripe is that the "General Partner" essentially took our money and never followed through on any promises. Furthermore, he seems to have lost interest in the project, telling me that there is nothing he can really do (which is about what he has done to date).

I have no illusions about recouping my investment. A lawsuit would probably be pointless and expensive. But, I do feel that I have been defrauded and would like to take some course of action to address the situation, whether through a lawsuit or contacting the DA.

Thanks for all your responses

[Dandy Don]

If you would be able to get access to a printed copy of the spreadsheets (who prepared them and is there anything on the spreadsheet that would show who prepared it, the company names, the date it was prepared, etc.) that may help your case in court.

[>Charlotte<]

Bumping to displace the porn title. Disregard.