Forged in Lies: When Majority Owners Fabricate Signatures
In my April 2023 blog, "What to Do When You Suspect Falsified Documents by Majority Shareholders," I discussed in detail the issue of a business partner forging documents. With this happening more than ever before, I wanted to delve deeper into one aspect of this issue: forged signatures.
Minority business owners often think all is lost when the majority owners fabricate a document. The false document could be something where the complaining minority owner purportedly signed a document giving away certain rights, or it could be “evidence” that the minority owner knew all about – or worse, was involved in – the very thing he is now suing over. Many times, business owners falsify a document not realizing just how high the stakes can be, or that they may be “doing you a favor.”
It is undeniable that forgery is difficult to pull off. If the signature is not genuine, a handwriting expert can undermine its authenticity. In many cases, though, an expert is hardly needed, as the signatures do not even come close. In one recent case, the signature on a personal guarantee looked as if it were signed not only by a different person, but by a different species. In other cases, the signature is lifted from another document – meaning it is your signature, but not one you volunteered to sign.
If this happens, there are other ways to prove a forgery not involving a handwriting expert: metadata on documents, contemporaneous emails, forgetting that you were in Asia on the date you supposedly signed the document – there are many ways the lie can come crashing down. And when that happens, the other side may be in an incredible amount of trouble.
As I mentioned in my previous post, a majority owner facing potential criminal charges may have to invoke his Fifth Amendment privilege. Many people don’t understand exactly what that means for a civil litigation. Everyone knows from television that if you refuse to answer questions, your silence can’t be held against you. But that is only in a criminal case. In a civil case – like shareholder dispute litigation – refusing to answer will very much be held against you. On a question such as, “did you pay yourself money that you didn’t share with your business partner,” or, “was your bonus really justified, or was it a way to get money to you that you didn’t have to share with your partner,” if he refuses to answer, the court is likely to create an adverse inference that the answer was “yes.”
Litigation sometimes gets short-circuited because someone who thought they were smarter than everyone else, cranking out fake documents as if they had just invented the printing press, was humbled in the end – literally unable to defend a case for fear of going to jail.
If you know – or fear – that you will be up against fake documents if you take on your business partner, don’t take the issue lightly. But don’t back down, either, until you discuss the issue with an experienced shareholder dispute attorney. All may not be lost.
For inquiries and questions related to Business Divorce litigation and potential shareholder fraud, feel free to reach out to me at dcroberts@norris-law.com.