Employer made me use personal credit card & they didn't pay

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dearx2
 
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Employer made me use personal credit card & they didn't pay

Postby dearx2 » Sat Mar 10, 2012 3:10 pm

Company charged expenses to personally guaranteed cards and then didn't pay! So... any thoughts here? I had two "business cards" that had my name on them. While the cards were paid for by the business, I had to provide my ss # and a personal guaranty when applying for the cards. They have both my name and the company's name on them.

I sold the company (for almost nothing) and continued working for them. I never cancelled the cards (yeah, I know). Apparently, a few months after I sold the company, the controller of the company charged a significant amount of business expenses to them (around $60k). Also, apparently, various automatic billings were continued on them (like cell phone bills for the company). They stopped paying the bills and the credit card companies worked on collecting them from both myself and the company (AmEx and Citi).

They were eventually transferred to collections, and then the larger one (AmEx) eventually filed a suit against myself and the company. They also did a charge off against my personal credit.

I never authorized the charges. I didn't even know about them until I started getting collections calls. The company is pretty much out of business at this point and refuses to pay them (I filed my own suit against them at this point).

Does anyone know whether the original charges could be considered fraud? Once again... I didn't authorize them, my name is on the account, I personally guaranteed the cards. On the other hand, the business name is on them too. My lawyers don't practice criminal law or deal with fraud like this very often - they are mostly into contract law.

And if the charges are considered fraud, who do I go to? This is a ton of money... but I didn't immediately claim fraud since it didn't hit me until recently that it might be considered that.

Any thoughts? Help! I'm getting refused credit for buying a car that I desperately need!


Celestine
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Postby Celestine » Sat Mar 10, 2012 11:25 pm

First off, what type of business structure did your business have? Sole Proprietorship? Partnership? LLC? Corporation?
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Crashem
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Postby Crashem » Wed Mar 28, 2012 12:49 pm

1) I think you will be on the hook for this money. You have to review the cardholder agreement for more specifics. Think of it as an authorized user using a card. You are responsible for the payments even though you didn't

2) I guess you can try to argue that the company had no right to use the card (ie you didn't authorize the charges) that had your name on it. Again, you need to review the card holder agreement to see if you have any case.

3) You obviously have a case to sue a non existent company. You might be able to pierce the corporate veil (if there is one) to sue the company executives directly. But remember while you have a case against the company, the credit card companies still have a case against you.

4) There are potentially criminal charges here that can be filed which might put pressure on the executives to pay personally.
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dearx2
 
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Postby dearx2 » Mon Apr 02, 2012 12:02 am

Thanks for the info. Sorry about the delay in responding - I got an error from this site when I first posted so I didn't think the thread actually went up.

With regards to the corporate structure - the company was/is a C corporation.

I asked in the past for a copy of the cardholder agreements from the credit card companies and they could never provide them. However, I'm going to assume that there is a personal guaranty on them and that, yes, I'm ultimately responsible for the payment IF THE CHARGES ARE NOT CONSIDERED FRAUDULENT.

I guess the big question that nobody can answer for me (I've spoken to several lawyers on a paid basis) is whether the company using the cards with my name on them is actually considered an act of fraud. The cards all read "My Name" on the first line and "Company Name" on the second line. The address for billing was the corporate address. The cards, I'm assuming, were personally guaranteed by me. So... if a company uses them without my express authorization, is it fraudulently using the card?

I guess I have to compare this to our other supplier lines of credit. I may sign a personal guaranty on a line of credit with a supplier, but the company has the right to use it. HOWEVER, these lines of credit are expressly made to the business - not to me - and do not have my name on them except for the filed paperwork. In this case, my name is specifically on the card.

The credit card companies aren't interested in talking to me about filing fraud claims as the accounts were already moved to not just collections, but lawsuits were filed. I'm wondering if I should contact a local, county, state or federal DA to talk about fraud charges.

Any additional thoughts would be greatly appreciated!

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Postby JCarter » Fri Apr 13, 2012 4:03 am

I've been delaying in my response as I am unsure about where to properly direct you. I need a bit of further detail on where in NY you are, if the C Corp is a NY Corp, or an out of state registration (eg: Delaware, Wyoming, Nevada). Do you reside in the same county as the corporate HQ? Did the purchases only take place in NY or were they out of state as well?

Do you have a contractual agreement from the sale upon where you severed all ties to this business or did you remain on contract for services for a period of time?

How large is this company employee and revenue wise? This makes a large difference in local/federal charges. What is the charge off amount and what is the total debt owed amount? This also makes a difference as the Feds do have a "threshold" of which they will begin prosecution at, it varies from district to district. (SDNY and EDNY are busier than say District of Montana)

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Pete838
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Postby Pete838 » Sat Apr 14, 2012 8:34 am

Dude. Get a lawyer. A good one.
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JCarter
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Postby JCarter » Sun Apr 15, 2012 6:08 pm

Pete838 wrote:Dude. Get a lawyer. A good one.


He really doesn't need one. He hasn't laid out everything to be given an opinion on the facts/merits of any civil action and if is best persued as a criminal act with civil recovery via restitution.

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Postby MemberSince99 » Wed May 23, 2012 9:54 pm

Moral of the story and lesson for the rest of us: in a similar situation IMMEDIATELY cancel the card, in fact do it BEFORE you sell just to be sure.



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