Company at risk?
When the company finds that a dishonest investor in the company is being investigated or prosecuted for fraud or some other crime where confiscation could follow conviction the impact on the business can be very significant. Not only will the company suffer as customers become aware of the issue and try to distance themselves but there is the extra problem that sometime down the road the Authorities will come looking for the investment to confiscate it for the State.
It is tempting for criminals who have acquired a large amount of cash to seek to launder their criminal proceeds by buying into an honest company looking to expand.
The sooner you take specialist advice on this problem the better you can protect the company, its business and its employees. Without any prior warning the Authorities might look to freeze the assets of the investor which will affect the company if suddenly its banking facilities are taken away from it and all its stock-in-trade is impossible to trade without breaching a court order.
If no restraint is taken out that does not mean you can breathe deeply and stop worrying. If your investor is convicted of an acquisitive crime then the Authorities will come eventually. The business may have taken a big hit in profits due to the investor’s connection but you and your company’s employees managed to secure matters and manage to pull the company around. Then you find all your hard work has simply increased the value of the tainted investment so that more needs to be found when the Authorities come looking.
In the meantime you have found the bank is not quite so helpful anymore. Did they find out about the investor? The chances are that the Authorities had already been in touch with your bank to obtain information on the company and its business. Perhaps the bank has already been in touch with you about the company’s loans or overdraft? In any event if you have to find a significant capital sum to pay off the Authorities for the investor’s share of the business, the bank may not be so helpful if a loan is needed to fund it. It is a fact of modern business life that banks are now very risk averse especially where crime might be alleged.
Rather than hope the problem goes away (it rarely does) the correct decision for the company and its business is to take early legal advice from the experts in this area of law. If you take no steps you will either be kept in the dark by all involved in any criminal proceedings or you will be given information that is meant to put you at your ease – but beware of this.