One of the most common strategies to recover losses against a corporation involves piercing the corporate veil. This essentially challenges the corporation’s existence as a protective entity for its principals. If a corporation lacks assets or hides them, recovering money directly from its owners becomes challenging. Piercing the corporate veil is complex, often requiring a high legal bar to cross.
Fraud as a Path to Liability
However, an alternate legal avenue exists. Instead of solely relying on piercing the corporate veil, demonstrating fraudulent actions by corporate officers or directors can establish individual liability. If these individuals participated in fraudulent activities, they can be held accountable without the need to dissolve the corporate entity.
The Case for Individual Responsibility
Attorney Kevin Schlosser highlights a significant case from 2022, emphasizing that a corporate officer engaging in fraud can be held personally liable, irrespective of the corporate veil being pierced. This means if a corporation defrauded you, connecting an individual to the fraudulent activity can lead to direct recovery from that person.
Necessary Components for Legal Pursuit
To pursue this legal theory effectively, you’ll need competent legal representation capable of navigating this approach. Additionally, evidence linking an individual to fraudulent or tortious conduct is crucial. This evidence might include emails, documents, or witness interviews, substantiating the individual’s involvement in the damaging activity.
Timing and Approach to Pursuing Legal Action
Deciding when to conduct the investigation and involve an attorney varies. Some prefer securing evidence beforehand, ensuring alignment with an attorney’s strategy. Others enlist legal guidance first, then gather evidence as directed. The decision often hinges on an attorney’s preference and the client’s readiness with evidence.
Presenting Evidence: A Crucial Factor
When seeking legal representation, merely narrating your story may not suffice. Attorneys, exposed to numerous claims, approach new cases cautiously. Providing evidence upfront strengthens your case’s credibility and the likelihood of the attorney pursuing your desired legal strategy.
Advantages of This Approach
Opting for this alternate route might be cost-effective and less time-consuming compared to piercing the corporate veil. Directly connecting an individual to fraudulent activities can circumvent the complexities involved in challenging a corporation’s legitimacy.
Leveraging legal strategies for recovery
While proving a corporation’s lack of viability can be challenging, demonstrating an individual’s involvement in detrimental actions can lead to liable parties being held accountable. This legal approach offers a promising avenue for broader recoveries from those affiliated with the owing entity.
Attorney Kevin Schlosser’s approach underscores the significance of considering alternate legal theories to enhance the recoverability of losses, judgments, or claims. By focusing on individuals involved in harmful actions rather than solely targeting the corporation, this strategy offers a pragmatic and potentially more feasible route for seeking compensation.
