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ARTICLE ID 195495

$________ – BREACH OF CONTRACT – FAILURE TO PAY BUSINESS LOAN – CONSTRUCTIVE FRAUD – UNJUST ENRICHMENT – BUSINESS ASSETS IMPROPERLY TRANSFERRED – FEDERAL RICO VIOLATIONS.

Miami-Dade County, FL

This action was brought by a profitable private equity firm against several food distribution companies and their principal. The plaintiff alleged that the defendants breached a contract by failing to repay a business loan and committed fraud by transferring business assets to another company. The plaintiff’s complaint also included counts of unjust enrichment, breach of fiduciary duty, tortious interference with business relationships, and violation of the Federal Racketeering Influenced and Corrupt Organizations Act (“RICO”). The defendants denied the allegations, and maintained that they simply operated a business in competition with the plaintiff, which was permitted by an agreement between them.

The plaintiff showed that it lent $________ to the defendants’ cheese distributing company, Latin Dairy Foods LLC, in ________. The agreement called for the defendant to repay the loan with interest within two years, or to convert the outstanding debt to stock in the company.

However, when the debt became due, the plaintiff alleged that the defendant had stripped the company and moved the assets to another company, Latin Food Group, Inc. The plaintiff contended that the new company was using the same phone number, e-mail address, website, accounting software, employees, vendors, office equipment, and furniture at a new address. The plaintiff also alleged that the individual defendant wrongfully used most of the loan for personal debt, and not for investment in the business.

The defendants argued that a non-compete agreement was signed between the plaintiff and the individual defendants; but that contract was rescinded by agreement of the parties. The defendant then opened a new business in competition with the plaintiff, according to defense arguments.The jury found for the plaintiff on all counts, and awarded damages totaling $________. The award included $________ under the RICO Act, which may be trebled by the court. The court also determined that the defendant created an alter ego business, so as to pierce the corporate veil.

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