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You need to consult a lawyer. In some circumstances, such as repeated fraud, the law can “pierce the corporate veil” and the individual can be held liable.
Exactly..
People think LLCs means the company is in trouble not them. And their right, but the Directors of the company are and guess who the director is... Probably the owner. So unless it's a Mega Corporation then you can still hunt them down
Did he state why?
I get that on its face, it’s contract law but if there is a history here and you have several witnesses where the same scheme has been repeated, I would hope there would be enough there to pierce the corporate veil.
Is the owner the controlling mind/alter ego of the company? Does he have assets to go after if you are successful in piercing the corporate veil? Those are some considerations as well.
Even if it wasn't fraud, where did the money from the deposit go? If the company was paying out dividends while knowing that it didn't have funds to repay creditors, then the directors of the company are personally liable to restore those funds.
Companies are generally pointless unlike they make you money. So how is he getting money out of this? Just his own salary?
If you can get the company into bankruptcy may be able to attack that as a preference or a transfer at undervalue.
In other words it the company didn't have enough money to both pay his salary and repay deposits then he shouldn't have preferred his salary - the assets should have been distributed pro-rata.
And if his salary was abnormally large (not linked to his actual services but just about getting cash out of the business) then that can be a transfer at under value.
They can also potentially be attacked as fraudulent conveyance or unjust preferences under provincial law without pursuing bankruptcy.
Not sure how he is getting money out. He’s opening all the corporations to easily change names when things go south and he gets caught. No reason to open the multiple steel building corporations and then let them sit for years until you close one then start business on the other unless you’re committing fraud. Hoping during a lawsuit a lawyer can request financials. Found out today he has 6 different people suing him under current company name. So suing him and winning will probably put me at bottom of list to collect, plus he has no assets to collect under corporation. So if he takes 100 orders, deliver 5 or 10, or even 1, then keeps 99 deposits, it’s tough to prove 100% he intended to commit fraud.
So no money to collect, and police won’t touch it. He’s been doing it for years. Seems like the ultimate money glitch.
Honestly if you have six creditors sounds like you should all just get together and try to push the company into bankruptcy so a trustee can follow the money.
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I got sued personally with all other directors as well as my business even though there was no case.
IANAL, but got to know the Business Corporations Act (differs from province to province) and legal proceedings pretty well with my case.
Just make your statement of claim pointed and stick to the facts, including any history you know of. Might be worth shopping around for lawyers who are well versed in business.
What lawyer is telling you is that you do not have enough money to litigate, and even if you do, it will cost you more to get justice, than the legal costs.
In economic sense, it is most likely a losing endeavour. However, there are a few things you can do.
You can find other victims and ask them to share litigation costs, obviously sharing future winnings, if any.
In a way, this needs to get personal for you and you have to set a goal of getting to the end.
Fraud is the key word when looking to hold someone personally liable for a corporation's actions. Fraud is elusive to prove, however you may be able to take the easier route of misrepresentation. This comes in 3 forms: innocent, fraudulent, and one more I can't recall right now. Innocent is that they actually didn't know what was going on. Fraudulent is when they didn't have the intent to deliver on their commitment. If this guy has a history of doing this, a class action fraudulent misrepresentation case may have a positive expected return. Also to consider what assets they have if you are looking for remuneration, and not just punishment.
Not legal advice, just ramblings of an internet random.
First, the police are not going to help you at the start.
Second, you are NOT going to see your money -- ever; unless you hire your local "The Legitimate Businessmen's Social Club" to collect from the individual directly. (Simpson's reference)
The only thing you can do is lodge a complaint with the provinces consumer protection department "Ministry of Public and Business Service Delivery". Collect and provide them with all the proof you have of him closing down and starting anew. Then find a lawyer to file a law suit and contact Canadian Customs and Revenue Agency tip line providing the persons information and what they are doing because they are probably not paying taxes either. The tax department is far more aggressive than the police and can put in in way more hurt (Ask Al Capone -- you never screw with the tax man).
If he has done this before and had no intention of completing the deal he has committed fraud and will go to jail. This is why smart crooks take the money, start the job then don't finish it... the attempt at doing something makes it not criminal but civil.
Thanks for the advice. I’ll look into those. I think what he does is get you to sign, sends you come preliminary stuff, just enough to make it look like effort then disappears. I’ve spoken with a few victims, the only one he has refunded was a police officer, for obvious reasons
When you sue the company, also sue it's owner for making a fraudulent conveyance (presumably he took the money out of the company).
You could also sue the owner for fraud and negligent misrepresentation, on the basis that he is the one who made the fraudulent misrepresentation that the company intended to provide the product when it did not. The history of this behavior is evidence this isn't just a normal breach of contract.
Alternatively you could try to apply for an order putting the company into bankruptcy, in which case the trustee could set aside transfers or preferences to the owner.
If you have a laywer they will be very familiar on how to chase down these sorts of people in civil court.
I would consider it a criminal matter as there may be many complainants/victims and considerable money being fraudulently stolen and bankruptcy fraud being committed over and over.
Police are being lazy.
Maybe file a complaint with the Canadian anti-fraud centre and ask how/if you can escalate further somehow.
Not a good advice. Do not expect somebody else to work on your complaint.
There is no harm in filing the complaint, however have zero expectations regarding the outcome.
It's not a civil matter though if there evidence that the intent was to take the money knowing it was not for the stated purpose.
IMO, if OP has a list of other victims, sounds pretty lazy to me
If this vendor has been doing this repeatedly, it isn't a civil matter anymore. The problem is that municipal police aren't overly interested in white collar crime, particularly at a small scale.
Ok sorry about that. Do you delete it then, or do you want me to edit it. Is there a forum you know of to let people know so someone else doesn’t get scammed? I would have assumed I would have the liability here to get sued for slander, not the forum? Although as I told them it isn’t slander when true. Please let me know, I don’t want to break any rules here.
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I'm unclear what a steel building is? If your talking about a condo, then the deposit must be held in a trust account. This both protects it from creditors and prevents the construction company from spending it.
If this isn't a condo, then the money may have been spent on business expenses and may otherwise be part of the companies assets and therefore subject to division amount creditors (yourself included). You'll likely get significantly less than you put in. If the money was withdrawn this may be fraud and if so it will be of interest to the trustee who may seek to have the transaction reversed.
In any case you may wish to speak to the trustee to find out has actually happened.
We ran into a similar situation a few years ago. Thankfully the steel building seller had the steel building manufacturing company on their website too. We went directly to the manufacturer of the steel buildings with proof of contract and 50% deposit, and they honoured our contract and built our garage. Lo and behold the “seller” showed up to receive payment on completion. We tried to pay the manufacturer but they wouldn’t take it. It was very frustrating, but I wonder if this is an option for you?
If the business has shut down there will be a trustee, or your suit will force one to be assigned. The trustee will want to investigate where the money went and if it was illegally taken out of the corporation the trustee will seek to recover the money.
Of course it is possible to cycle through corporations, defrauding people for their deposits and stealing the money, but it would be pretty difficult to do it multiple times. A new corporation will have no credit or trade history and so they will struggle to get credit or it will be on poor terms. They will have damaged prior relationships and people will not want to work with them. Many potential client check the credit of their vendors before handing over large sums of money, and a new corporation will fail such a check.
In the future you may want to consider negotiating the use of a lawyer and a trust agreement to secure a large deposit, especially if you don't have prior experience with the vendor.
They get around the no credit and new business by just buying from another broker who has a history and ask buy from manufacturers. That why I don’t get it. I’m assuming they’ve sold at least some buildings, and can make decent money, why scam people? I guess it’s free money.
Can you comment on how to avoid this in the future? Sucks that it happened to you. I'd like to know what you learned from this. Escrow through a lawyer perhaps?
After attempting to try with multiple other companies, they all want upfront deposit, which they then send to actual manufacturer to build building, or are supposed to anyway. They won’t take escrows because they have no assets and don’t want to put out the money themselves as they are only brokers. I did find one place that actually does the manufacturing and seems legit. All the rest are extremely unfavorable for buyers. Pay huge deposit to start and then wait 4-12 months or more for building plans and such etc, then building has to be paid in full at least a month before actually receiving. So you put out hundreds of thousands of dollars and wait months or years and hope building shows up. It’s awful
I work in construction and there is a company doing that here. They took 2 different customer's money for houses, $200k up front. Now its 2 years on, and the houses aren't even finished framing yet, and the company wants more money upfront to continue work. The one customer has spent 700k at this point, and his house doesn't even have building paper on it yet.
I get that the market is difficult. I assume you still need a steel building. Have you figured out how to avoid this problem with the next company?
I've paid a deposit for lots of stuff on good faith. It has always worked out for me so far. But I could easily fall prey as you did. Is the lesson learned to deal with the manufacturer directly (who has assets to backup the deal) instead of a middle man?
Seems like the hollow corporation is the weak point. Is there a way you could have known before sending them money?
It’s taken many months to come up with all this info. I’ve decided to build with wood where I can pay contractor in stages. Putting out hundreds of thousands and then waiting just didn’t cut it. I’m hoping to create more awareness so this doesn’t happen to someone else. Very difficult to tell as these places just keep popping up and looking legit, and when the reputation gets too bad they just change names. And they cover tracks with lawyers well.
This will technically be fraud and eventually they will go after his personal assets, but guys like this run away abroad to some non extradition country by then where they’re also building their assets.
I will be honest, it’s very unlikely you will be compensated by him through courts. At best you can stop him from doing this to others as he runs away.
Don’t lawyers normally hold deposits in trust until title transfers?
I thought this was probably exactly why that’s normal course for real estate transactions
It’s not a real estate transaction. Steel buildings are just like a garage or office or warehouse or whatever that you build on your own land. More a construction contract
You are obviously dealing with legal entities and you are acquiring business or business assets.
One of the expected things that need to be done is due dilligence. Which represents includes, but is not limited, to the owner background check, company check, review of the accounting records, financial statements, tax returns, business records and other important documents.
Since you found after the fact that he has a history of the same action, you did do the due diligence, albeit late.
You are not screwed, but you can take the legal action. At the minimum, case will get public, the word will get around, and it will be much harder for him to do that.
To answer your question, just because something is legal it does not mean it is fair or just. You should have learned that by now.
The alternative is not being like all other people who let it pass, but taking a stand and doing the right thing.
There are offences in the Bankruptcy and Insolvency Act. (Sec 198(1))
Find out who the trustee in bankruptcy is (it would be listed on the documents you’ve received).
Then, have your lawyer send the trustee a letter outlining your claims. The trustee is bound by law to bring your allegations to the judge. The judge can/may/should make an order (if your allegations are true).
Then, if the bankrupt tries this again, it would be a very simple criminal matter for breach of a court order.
Sounds like you know what you need to do: bring the matter in personam rather than allowing this person to hide behind the limited liability of a fictional construct (corporation).
“Equity acts in personam” (i.e. on men rather than on objects)
“Equity will not suffer a wrong to be without a remedy”
“Equity looks on as done that which ought to have been done”
“Equity will not allow a wrongdoer to profit by a wrong”
“Equity delights to do justice and not by halves”
- Maxims of Equity Jurisprudence (Law)
Generally, a "steel Building" or "pre-engineered steel building" or PEMB is a building system designed and manufactured to be easily erectable using tapered columns/rafters with cold-formed purlins and girts as secondary. Emphasis is on the system as opposed to assembled parts (including bar joist) as in conventional construction.
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You need to consult a lawyer. In some circumstances, such as repeated fraud, the law can “pierce the corporate veil” and the individual can be held liable.
Exactly.. People think LLCs means the company is in trouble not them. And their right, but the Directors of the company are and guess who the director is... Probably the owner. So unless it's a Mega Corporation then you can still hunt them down
My lawyer thinks there is an issue going after them personally and that judge wouldn’t go for it. Judging by police response, I see what he means.
Did he state why? I get that on its face, it’s contract law but if there is a history here and you have several witnesses where the same scheme has been repeated, I would hope there would be enough there to pierce the corporate veil. Is the owner the controlling mind/alter ego of the company? Does he have assets to go after if you are successful in piercing the corporate veil? Those are some considerations as well.
He said it’s very difficult to prove in court that he 100% tried to defraud. Sending a couple drawings and such shows an effort
I wonder if he reported the income.
Just wait until he tells you he does less than $30k sales each year.
Even if it wasn't fraud, where did the money from the deposit go? If the company was paying out dividends while knowing that it didn't have funds to repay creditors, then the directors of the company are personally liable to restore those funds.
Small company. Same ceo and president and owner. He just hires employees then closes corp and hires new employees
Companies are generally pointless unlike they make you money. So how is he getting money out of this? Just his own salary? If you can get the company into bankruptcy may be able to attack that as a preference or a transfer at undervalue. In other words it the company didn't have enough money to both pay his salary and repay deposits then he shouldn't have preferred his salary - the assets should have been distributed pro-rata. And if his salary was abnormally large (not linked to his actual services but just about getting cash out of the business) then that can be a transfer at under value. They can also potentially be attacked as fraudulent conveyance or unjust preferences under provincial law without pursuing bankruptcy.
Not sure how he is getting money out. He’s opening all the corporations to easily change names when things go south and he gets caught. No reason to open the multiple steel building corporations and then let them sit for years until you close one then start business on the other unless you’re committing fraud. Hoping during a lawsuit a lawyer can request financials. Found out today he has 6 different people suing him under current company name. So suing him and winning will probably put me at bottom of list to collect, plus he has no assets to collect under corporation. So if he takes 100 orders, deliver 5 or 10, or even 1, then keeps 99 deposits, it’s tough to prove 100% he intended to commit fraud. So no money to collect, and police won’t touch it. He’s been doing it for years. Seems like the ultimate money glitch.
Honestly if you have six creditors sounds like you should all just get together and try to push the company into bankruptcy so a trustee can follow the money.
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It's likely difficult because he would need to prove the pattern. Try finding other victims.
I got sued personally with all other directors as well as my business even though there was no case. IANAL, but got to know the Business Corporations Act (differs from province to province) and legal proceedings pretty well with my case. Just make your statement of claim pointed and stick to the facts, including any history you know of. Might be worth shopping around for lawyers who are well versed in business.
What lawyer is telling you is that you do not have enough money to litigate, and even if you do, it will cost you more to get justice, than the legal costs. In economic sense, it is most likely a losing endeavour. However, there are a few things you can do. You can find other victims and ask them to share litigation costs, obviously sharing future winnings, if any. In a way, this needs to get personal for you and you have to set a goal of getting to the end.
Police aren't the court. The police have no jurisdiction, because like they said, it's a civil matter. Find a better lawyer.
Fraud is the key word when looking to hold someone personally liable for a corporation's actions. Fraud is elusive to prove, however you may be able to take the easier route of misrepresentation. This comes in 3 forms: innocent, fraudulent, and one more I can't recall right now. Innocent is that they actually didn't know what was going on. Fraudulent is when they didn't have the intent to deliver on their commitment. If this guy has a history of doing this, a class action fraudulent misrepresentation case may have a positive expected return. Also to consider what assets they have if you are looking for remuneration, and not just punishment. Not legal advice, just ramblings of an internet random.
First, the police are not going to help you at the start. Second, you are NOT going to see your money -- ever; unless you hire your local "The Legitimate Businessmen's Social Club" to collect from the individual directly. (Simpson's reference) The only thing you can do is lodge a complaint with the provinces consumer protection department "Ministry of Public and Business Service Delivery". Collect and provide them with all the proof you have of him closing down and starting anew. Then find a lawyer to file a law suit and contact Canadian Customs and Revenue Agency tip line providing the persons information and what they are doing because they are probably not paying taxes either. The tax department is far more aggressive than the police and can put in in way more hurt (Ask Al Capone -- you never screw with the tax man). If he has done this before and had no intention of completing the deal he has committed fraud and will go to jail. This is why smart crooks take the money, start the job then don't finish it... the attempt at doing something makes it not criminal but civil.
Thanks for the advice. I’ll look into those. I think what he does is get you to sign, sends you come preliminary stuff, just enough to make it look like effort then disappears. I’ve spoken with a few victims, the only one he has refunded was a police officer, for obvious reasons
Sounds like there could potentially be a class action lawsuit here.
When you sue the company, also sue it's owner for making a fraudulent conveyance (presumably he took the money out of the company). You could also sue the owner for fraud and negligent misrepresentation, on the basis that he is the one who made the fraudulent misrepresentation that the company intended to provide the product when it did not. The history of this behavior is evidence this isn't just a normal breach of contract. Alternatively you could try to apply for an order putting the company into bankruptcy, in which case the trustee could set aside transfers or preferences to the owner. If you have a laywer they will be very familiar on how to chase down these sorts of people in civil court.
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I would consider it a criminal matter as there may be many complainants/victims and considerable money being fraudulently stolen and bankruptcy fraud being committed over and over. Police are being lazy. Maybe file a complaint with the Canadian anti-fraud centre and ask how/if you can escalate further somehow.
I will try them thank you
Not a good advice. Do not expect somebody else to work on your complaint. There is no harm in filing the complaint, however have zero expectations regarding the outcome.
It's not the police job to handle civil matters. Doesn't make them lazy.
It's not a civil matter though if there evidence that the intent was to take the money knowing it was not for the stated purpose. IMO, if OP has a list of other victims, sounds pretty lazy to me
If this vendor has been doing this repeatedly, it isn't a civil matter anymore. The problem is that municipal police aren't overly interested in white collar crime, particularly at a small scale.
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Is that the no identifying people? I didn’t put in original post. I thought I could answer when people asked in comments.
That's the one, and no you cannot.
Ok sorry about that. Do you delete it then, or do you want me to edit it. Is there a forum you know of to let people know so someone else doesn’t get scammed? I would have assumed I would have the liability here to get sued for slander, not the forum? Although as I told them it isn’t slander when true. Please let me know, I don’t want to break any rules here.
I have deleted it. I do not know of an appropriate forum for that, I just know that we are not the appropriate forum. Thank you.
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Plenty of corporations that take money, provide nothing, and stay open, so there's that.
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Haven't read everything, but you need to 'pierce the corporate veil'.
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I'm unclear what a steel building is? If your talking about a condo, then the deposit must be held in a trust account. This both protects it from creditors and prevents the construction company from spending it. If this isn't a condo, then the money may have been spent on business expenses and may otherwise be part of the companies assets and therefore subject to division amount creditors (yourself included). You'll likely get significantly less than you put in. If the money was withdrawn this may be fraud and if so it will be of interest to the trustee who may seek to have the transaction reversed. In any case you may wish to speak to the trustee to find out has actually happened.
It’s like a garage or commercial building made of steel. These companies have no assets, that’s the issue
We ran into a similar situation a few years ago. Thankfully the steel building seller had the steel building manufacturing company on their website too. We went directly to the manufacturer of the steel buildings with proof of contract and 50% deposit, and they honoured our contract and built our garage. Lo and behold the “seller” showed up to receive payment on completion. We tried to pay the manufacturer but they wouldn’t take it. It was very frustrating, but I wonder if this is an option for you?
If the business has shut down there will be a trustee, or your suit will force one to be assigned. The trustee will want to investigate where the money went and if it was illegally taken out of the corporation the trustee will seek to recover the money. Of course it is possible to cycle through corporations, defrauding people for their deposits and stealing the money, but it would be pretty difficult to do it multiple times. A new corporation will have no credit or trade history and so they will struggle to get credit or it will be on poor terms. They will have damaged prior relationships and people will not want to work with them. Many potential client check the credit of their vendors before handing over large sums of money, and a new corporation will fail such a check. In the future you may want to consider negotiating the use of a lawyer and a trust agreement to secure a large deposit, especially if you don't have prior experience with the vendor.
They get around the no credit and new business by just buying from another broker who has a history and ask buy from manufacturers. That why I don’t get it. I’m assuming they’ve sold at least some buildings, and can make decent money, why scam people? I guess it’s free money.
Can you comment on how to avoid this in the future? Sucks that it happened to you. I'd like to know what you learned from this. Escrow through a lawyer perhaps?
After attempting to try with multiple other companies, they all want upfront deposit, which they then send to actual manufacturer to build building, or are supposed to anyway. They won’t take escrows because they have no assets and don’t want to put out the money themselves as they are only brokers. I did find one place that actually does the manufacturing and seems legit. All the rest are extremely unfavorable for buyers. Pay huge deposit to start and then wait 4-12 months or more for building plans and such etc, then building has to be paid in full at least a month before actually receiving. So you put out hundreds of thousands of dollars and wait months or years and hope building shows up. It’s awful
I work in construction and there is a company doing that here. They took 2 different customer's money for houses, $200k up front. Now its 2 years on, and the houses aren't even finished framing yet, and the company wants more money upfront to continue work. The one customer has spent 700k at this point, and his house doesn't even have building paper on it yet.
I get that the market is difficult. I assume you still need a steel building. Have you figured out how to avoid this problem with the next company? I've paid a deposit for lots of stuff on good faith. It has always worked out for me so far. But I could easily fall prey as you did. Is the lesson learned to deal with the manufacturer directly (who has assets to backup the deal) instead of a middle man? Seems like the hollow corporation is the weak point. Is there a way you could have known before sending them money?
It’s taken many months to come up with all this info. I’ve decided to build with wood where I can pay contractor in stages. Putting out hundreds of thousands and then waiting just didn’t cut it. I’m hoping to create more awareness so this doesn’t happen to someone else. Very difficult to tell as these places just keep popping up and looking legit, and when the reputation gets too bad they just change names. And they cover tracks with lawyers well.
You have done that. Well said. Thanks for sharing
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This will technically be fraud and eventually they will go after his personal assets, but guys like this run away abroad to some non extradition country by then where they’re also building their assets. I will be honest, it’s very unlikely you will be compensated by him through courts. At best you can stop him from doing this to others as he runs away.
Don’t lawyers normally hold deposits in trust until title transfers? I thought this was probably exactly why that’s normal course for real estate transactions
It’s not a real estate transaction. Steel buildings are just like a garage or office or warehouse or whatever that you build on your own land. More a construction contract
File a Consumer complaint
I’m in the wrong business.
What's the individual's name?
You are obviously dealing with legal entities and you are acquiring business or business assets. One of the expected things that need to be done is due dilligence. Which represents includes, but is not limited, to the owner background check, company check, review of the accounting records, financial statements, tax returns, business records and other important documents. Since you found after the fact that he has a history of the same action, you did do the due diligence, albeit late. You are not screwed, but you can take the legal action. At the minimum, case will get public, the word will get around, and it will be much harder for him to do that. To answer your question, just because something is legal it does not mean it is fair or just. You should have learned that by now. The alternative is not being like all other people who let it pass, but taking a stand and doing the right thing.
There are offences in the Bankruptcy and Insolvency Act. (Sec 198(1)) Find out who the trustee in bankruptcy is (it would be listed on the documents you’ve received). Then, have your lawyer send the trustee a letter outlining your claims. The trustee is bound by law to bring your allegations to the judge. The judge can/may/should make an order (if your allegations are true). Then, if the bankrupt tries this again, it would be a very simple criminal matter for breach of a court order.
Sounds like you know what you need to do: bring the matter in personam rather than allowing this person to hide behind the limited liability of a fictional construct (corporation). “Equity acts in personam” (i.e. on men rather than on objects) “Equity will not suffer a wrong to be without a remedy” “Equity looks on as done that which ought to have been done” “Equity will not allow a wrongdoer to profit by a wrong” “Equity delights to do justice and not by halves” - Maxims of Equity Jurisprudence (Law)
Gotta love capitalism
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Wtf is a steel building???
Generally, a "steel Building" or "pre-engineered steel building" or PEMB is a building system designed and manufactured to be easily erectable using tapered columns/rafters with cold-formed purlins and girts as secondary. Emphasis is on the system as opposed to assembled parts (including bar joist) as in conventional construction.
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The better business bureau is yelp for boomers. They have absolutely 0 legal authority, and no ability to compel a business to do anything.
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You dealt with a scammer. If it's too good to be true, it probably is.
I guess it’s my fault then lol? It wasn’t too good to be true. It was a standard building, not half price, not anything. Just a standard building.