Lobbying Affiliate: MML&K Government Solutions
{ Banner Image }

Corporate Law Blog

Keeping Business "Open for Business."

Contact Us

* Indicates a required field.

McBrayer Blogs

Shareholders bring lawsuit against the company president

A Kentucky politician has been accused by shareholders of using company money to fund his campaign activities. The shareholders of Liberty Rehabilitation claim that over $30,000 of the funds were used for campaign activities. The shareholders were concerned about the expenses and claim to have verified that improprieties were occurring.

The politician in question also happens to be the company's president. The lawmaker was said to have diverted company money towards a trip to St. Louis with his wife. It is also claimed he used the money for massages. Finally, it is asserted that he took advantage of travel reimbursements that were charged to Liberty.

Shareholders obviously have in interest in how the company performs and therefore will on occasion bring such a lawsuit when directors or officers are not running the company in what they believe to be the correct manner. A breach of fiduciary duty by one of these individuals can result in money being diverted from the company. It can also lead to internal squabbles and distract those running the company from doing what is in the best interest of the business.  This is especially true if the company is a family run venture, a closely held business or otherwise small in nature.

In some circumstances companies would prefer to avoid litigation if it could lead to negative publicity. In such situations, negotiations between all parties may lead to the most positive solution as litigation could prove to be counter-productive. However, there are times when litigation cannot be avoided. In either case, it's always a good idea to speak to an experienced business partner to make certain that any course of action is a productive one.

Source: WFPL, "Lawsuit Claims Western Kentucky Lawmaker Misused Company Funds for Campaign," Jonathan Meador, Jan. 6, 2014

Lexington, KYLouisville, KYFrankfort, KY: MML&KFrankfort, KY LawGreenup, KYAshland, KYWashington, D.C.