real estate small business fraud?
Couple months ago, my family purchased a small yogurt shop in California. It was the first business purchase in the U.S. and we bought this business through a realtor who her husband is the previous owner of this yogurt shop.
During the process of it, we asked the previous owner and the realtor if there will be other yogurt shop coming, and their answer was ‘no.’
We purchased the business, trusting them 100%. We increased the sale for the next three months. That is, until a bigger/cheaper yogurt shop opens few blocks away from our store. Our sales dramatically decreased exactly from the day that store opened.
We contacted the previous owner and the realtor (because they are husband and a wife) to demand for an explanation.
They kept saying ‘honest God’ that they did not know, and actually accused us of killing the business (remind you that we increased the sales for three months).
We tried to resolve this matter in amicable way possible, but the realtor and previous owner refused to cooperate in any matter.
So, we did our own investigation.
We found:
- the bigger yogurt store started construction on two months before our purchase of the business.
- the manager of the yogurt shop (who also worked for the previous owner) told that other yogurt shop was coming.
- the bigger yogurt shop was using billboard to advertise its coming and we have material evidences and witness that the previous owner did know that the other yogurt shop was coming.
- recently found out that this couple had fraud history in another state (NV).
Their reaction:
- they have indirectly accused me by publishing an article of the bad management kills the business.
- they are false advertising that our store earns a lot to sell other yogurt franchise (the previous owner has the license to sell franchise in the location we live).
- they are telling other people that this does not affect because the flavor of our yogurt is different from the bigger/cheaper yogurt store.
- they are going to the court if we are going to the court.
We have sent a letter for an investigation to DRE to suspend realtor’s license.
We are also seeking an attorney help to unwind the deal and filing for a fraud, but we also want to receive some of your professional comments and suggestions of what we should do.
Our biggest concern is that they have previous fraud history and they may run away again. Attorney fee is also very high. We believe that they may know all these and may use it for their advantage that not many people really pursue the case to the court. Also, if they hide their assets, we heard it’s difficult to recover the fees.
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bud68 said,
May 26, 2010 @ 8:41 am
You should have done your own due diligence in investigating possible competition. Instead you took the word of a realtor and now you think you’re owed something.
L H said,
May 26, 2010 @ 9:01 am
I don’t have an answer for you but, I can make a suggestion. If you have the financial means I would hired a private investigator to do a thorough search of all of their real estate transactions over the years. This could help significantly in court should you find that in fact they have committed fraud before. Good luck!
Landlord said,
May 26, 2010 @ 9:32 am
Are you sure they were legally bound to disclose the business plans of others, who they had no contract with?
Also, if this billboard was so evident how did you manage to miss it? I know I could easily miss one, I do not drive every street around.
I do not think the DRE will suspend the brokers license without a conviction, not based on your word, especially since there does not seem to be any fraud related to the contract you signed.
Alterfemego said,
May 26, 2010 @ 10:13 am
It sounds as if you are doing the right things by hiring an attorney. And yes I agree that they may get away again with this type of fraud. I do agree that the license of the Realtor should be revoked. And they should be fined heavily. You might want to ask your attorney if the state will pay damages due to the Realtors actions.
I am sorry this happened to you and your family. There are laws to protect a buyer from such things, unfortunately, sometimes the law’s can not catch them in the act of doing the damage.
I wish you the best of luck.
gafpromise said,
May 26, 2010 @ 10:45 am
Honestly, I’m not sure you have a case. All this was public knowledge, surely you should have been able to find out about it on your own and not just taken their word for it. That is what a judge will say, that you bear some of the responsibility here. If they are misrepresenting the financial state of the business, that is another issue and you can certainly testify to that. Hire an attorney if you want; if you feel there is enough money at stake, that will justify whatever you have to pay the attorney. but you’ll have to brace yourself for a long legal battle from the sound of it. You also have to clarify what satisfaction you are seeking – do you want money? Want out of the lease and the business? What is your ultimate goal here?