Location: Illinois
I'm a 21% owner of a closely held S-Corp. There are two other minority owners (11% and 1%). We all own non-voting shares. The fourth person owns ~66% of all shares (some non-voting and all voting shares). This person is "chairman of the board" (that never actually meets), a director and the acting CEO.
We were all "gifted" shares in 2006 as part of an estate plan. Since that date, none of the minority shareholders have received any "owners draws" (distributions), other than those which are required to pay taxes - and only in the case where the company sends the money directly to the taxing body. ZERO dollars go through personal bank accounts. During this time, the primary shareholder (CEO) has taken well in excess of $2,000,000 in additional distributions (spent on houses, vacations, shopping, art, etc).
In addition, the company has a president (non-related 3rd part) who knows of these actions. When confronted and asked about them, he claims that he either has no knowledge of the actions or he says that he can not talk about them. The president is listed as a director on our 1120S tax forms, but not in our corporate meeting minutes book. (odd, huh?)
I KNOW that these actions are a violation of his fiduciary duty as a shareholder, fiduciary duty as an officer/director, our shareholder agreement, etc. The problem I have is that these are all civil issues. The primary shareholder has the power and money of the business behind him and therefore has an unlimited bank roll. If we were to attempt to take any action to reclaim what is legally ours, he would bury us in litigation and we would run out of money fighting him long before he would run out of money.
Is there any CRIMINAL aspect to these actions?
if possible, please cite specific Illinois or federal laws...
THANK YOU!!!!!
I'm a 21% owner of a closely held S-Corp. There are two other minority owners (11% and 1%). We all own non-voting shares. The fourth person owns ~66% of all shares (some non-voting and all voting shares). This person is "chairman of the board" (that never actually meets), a director and the acting CEO.
We were all "gifted" shares in 2006 as part of an estate plan. Since that date, none of the minority shareholders have received any "owners draws" (distributions), other than those which are required to pay taxes - and only in the case where the company sends the money directly to the taxing body. ZERO dollars go through personal bank accounts. During this time, the primary shareholder (CEO) has taken well in excess of $2,000,000 in additional distributions (spent on houses, vacations, shopping, art, etc).
In addition, the company has a president (non-related 3rd part) who knows of these actions. When confronted and asked about them, he claims that he either has no knowledge of the actions or he says that he can not talk about them. The president is listed as a director on our 1120S tax forms, but not in our corporate meeting minutes book. (odd, huh?)
I KNOW that these actions are a violation of his fiduciary duty as a shareholder, fiduciary duty as an officer/director, our shareholder agreement, etc. The problem I have is that these are all civil issues. The primary shareholder has the power and money of the business behind him and therefore has an unlimited bank roll. If we were to attempt to take any action to reclaim what is legally ours, he would bury us in litigation and we would run out of money fighting him long before he would run out of money.
Is there any CRIMINAL aspect to these actions?
if possible, please cite specific Illinois or federal laws...
THANK YOU!!!!!
