If my father owns a small company and I am a member of the company through an LLC, am I liable for any legal charges that may be brought against him or the company?
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If my father owns a small company and I am a member of the company through an LLC, am I liable for any legal charges that may be brought against him or the company?
I made a minimal investment of $500 in the company to become a part of the LLC. I just found out that my father may have committed credit fraud in the operation of the business.
Asked on August 8, 2014 under Business Law, Tennessee
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
Generally, members of an LLC are NOT liable for the debts of, or judgments against, or crimes of the LLC simply because they are members (and/or employees of) the LLC--they must have personally done something tortious or wrong to incur liability. And similarly, one person is NOT liable for the crimes or torts of another adult, even if they are related and/or work together, barring some wrongdoing on their part (i.e. that they were an accomplice or conspirator). Therefore, legally, if you did nothing wrong, you should not face criminal or civil (lawsuit) liability.
Practically, the issue will be what do the circumstances and evidence show? If from the circumstances or evidence, it appears that you did aid or abet your father in the fraud (e.g. you worked in a bookkeeping or financial capacity, so it would normally appear that you likely collaborated in the crime), then you could face charges or a lawsuit, since it takes much less evidence to charge somone, or initiat a lawsuit against a person, then it does to convict them or get a judgment against them. Whether you could ultimately face liabiltiy would then depend on the strength of any evidence tying you to the wrongful act.
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