Legal Question in Business Law in Florida

We bought a business and we can now prove 13 counts of deliberate fraud

We bought a bagel restaurant and we looked over carefully the financials of it. After purchasing it, we realized that the owners went through great lengths falsifying the financials. For one thing on the income statement, they claimed $32,000 rent, we have all of their deposit slips for rent and it totaled $38,000. They also deposited their own money into the business account and claimed all of these deposits were sales. We have proof that they weren't. Also, their bookkeeper told us that their employee tax was $8,000 higher than what they claimed on the income statement they gave us. We have proof and documents of all of this, plus at closing they signed papers saying that they new of the criminal penalties for misrepresenting the truth. We have 13 counts of misrepresentation. What is our next step? What chance do we have of getting out of this business? We were told that we would make $92,000 and we have proof that the business only made -$6,000 under their ownership.


Asked on 12/26/00, 4:46 pm

1 Answer from Attorneys
Stephen Verbit Stephen R. Verbit, P.A.

Re: We bought a business and we can now prove 13 counts of deliberate fraud

This is a very serious legal problem and warrants you hiring an attorney to help you. Assuming the sellers will not agree volutarily to rectify this situation, your best available alternative is to file a lawsuit. If the sellers sold you the business under fraudulent pretenses, there are many legal remedies that may be available to you. One of these remedies is what is called rescission. This would allow you to, in essence, unwind the transaction by which you purchased the business and allow you to get out of it and make the sellers give you your money back. In addition, the sellers may be required to pay you compensatory money damages to restore you to the position you would have been had you not purchased the business. In a situation such as you are describing, it is vital that you act quickly. The longer you wait to take action on this, the more you increase the risk of a ruling that you accepted the business despite the fraud committed by the sellers.

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Answered on 12/29/00, 7:16 am


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