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When Majority Owners Turn on Their Partners

In closely held corporations and limited-liability companies, majority owners sometimes forget that they owe duties to their partners. We see the same pattern again and again: a founder who built a business is gradually cut out of key decisions, denied access to financial information, removed from management, and eventually offered a take-it-or-leave-it buyout at a fraction of what the stake is actually worth.

These “squeeze-out” and “freeze-out” tactics can be subtle—changing compensation structures, diverting opportunities to new entities, or refusing to declare dividends while insiders pay themselves oversized salaries. In more extreme cases, they involve outright fraud: phony invoices to related companies, off-the-books revenue, or manipulated financial statements designed to hide the business’s true value.

We also regularly defend owners wrongfully accused on using freeze-out tactics.

Combining Oppression, Fraud, and Consumer-Fraud Theories

Our firm regularly represents minority owners who have been frozen out of the businesses they helped build controlling owners who allegedly have done that. Depending on the facts, we may bring claims for shareholder oppression, breach of fiduciary duty, common-law fraud, unjust enrichment, and, where appropriate, claims under statutes such as the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, when deceptive tactics are used to induce an unfair buyout. We also are experienced at litigating affirmative defenses to these types of claims.

The same kinds of deceptive practices we see in consumer transactions—omitting material facts, presenting misleading financials, and papering over obvious discrepancies—often appear in freeze-out cases. When majority owners present inflated or deflated numbers to justify squeezing out a partner, we treat that as serious misconduct, not “hard bargaining.”

The Role of Forensic Accountants in Freeze-Out Cases

In many freeze-out disputes, the key question is simple to ask but hard to answer: what is the company really worth, and how much value has been diverted? To answer that, we bring in forensic accountants who are experienced in partner and shareholder litigation. They can:

  • Analyze financial statements, tax returns, and bank records to identify hidden income and excessive insider compensation;
  • Reconstruct the economic value of the business at key points in time; and
  • Quantify damages from diverted opportunities, self-dealing, and other fiduciary breaches.

We have worked with experts whose prior cases resulted in courts awarding tens of millions of dollars in compensatory and punitive damages to defrauded business owners after proving that they were induced into or kept in unfair deals by false financial information. That experience informs how we structure our own freeze-out and squeeze-out cases.

Remedies: More Than Just a Buyout

In some situations, the right remedy is a fair-value buyout of the minority owner’s interest, supervised by the court and informed by independent valuation. In others, injunctive relief to stop ongoing diversion of assets or to restore a client to management is critical. Where fraud or willful misconduct is involved, we also seek punitive damages to deter similar conduct in the future.

Because freeze-out tactics can overlap with libel—such as when majority owners make false accusations about a partner to justify their removal—we are prepared to add defamation claims when warranted. Our experience protecting reputations in offline and online settings gives us additional tools when smear campaigns accompany financial misconduct.

What Sets Our Freeze-Out Practice Apart

Our work in squeeze-out and freeze-out cases stands out because we:

  • Combine corporate, commercial, and tort theories to put maximum pressure on wrongdoers;
  • Use forensic accounting early to understand where the money has gone and what the business is truly worth;
  • Are comfortable litigating cases that involve complex deal documents, multi-entity structures, and overlapping personal and business relationships; and
  • Understand that for many clients, these cases are about more than money—they are about vindication and the ability to move forward.

That mix of legal and financial sophistication is especially important in closely held businesses, where personal relationships and family dynamics often collide with corporate governance. Continue reading ›

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The Dream of Owning a Business — and the Nightmare That Followed

Some of our business clients come to us after realizing that the dream business they purchased is nothing like what they were sold. One of our current matters involves a small investor who purchased a business after reviewing glossy marketing materials, tax returns, and financial statements provided by the seller and a business broker.

On paper, the business appeared to be thriving: strong revenue, steady growth, and attractive profit margins. The buyer agreed to pay a substantial price based on those numbers and on the seller’s written warranties in an asset purchase agreement that the financials were “accurate” when provided and at closing.

Shortly after the sale, the new owner began comparing the point-of-sale (POS) data to the historic financials. The numbers did not come close to matching. The prior owner had used numerous no-tax transactions or other sleights of hand o inflate apparent sales. A later reconciliation showed the alleged inflated sales figures.

Our lawsuit in that matter alleged common-law fraud, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, and breach of contract. The theory is straightforward: the seller and broker supplied false financial statements and a misleading sales materials, failed to disclose critical POS discrepancies, and then warranted in the purchase agreement that the financials were accurate.

815 ILCS 505/2 declares it unlawful to use deception, misrepresentation, or the concealment of material facts in trade or commerce. By overstating revenues and hiding expenses, the seller engaged in precisely the sort of conduct the statute is designed to prevent. Those statutory claims complement our common-law fraud counts> In cases like this and other consumer fraud cases, we seek both rescission and damages, including punitive damages where the conduct is willful and part of a pattern. If the plaintiff is an individual we also seek aggravation inconvenience and stress damages.

The Role of Forensic Accounting and POS Analysis

In many business-fraud and corporate freeze out and breach of fiduciary duty matters, our ability to tell a compelling story depends on the numbers. We work closely with forensic accountants who examine POS data, bank records, tax returns, and internal spreadsheets. They quantify how much the revenues were inflated and how that inflation translated into an overpayment for the business or in case of corporate freeze otu cases excessive paymetns to the controlling managers through expense account or other types of over compensation..

Because we regularly collaborate with forensic accountants in fraud and breach-of-fiduciary-duty cases, we know how to translate technical accounting conclusions into plain language that judges and juries can understand.

Strategic Remedies: Damages, Rescission, or Both

Buyers who are defrauded into purchasing a business often have a choice: seek rescission and unwind the transaction, or affirm the deal and sue for the difference between what they paid and what the business was actually worth. In our cases, we often preserve both options, making clear in our pleadings that our client may elect rescission before trial.

We also pursue punitive damages based on the willful nature of the misconduct: the seller and broker did not simply make a mistake, they allegedly used fake sales entries and omitted sales tax on numerous transactions to pump up the numbers in a way that would be obvious to any experienced industry player. That type of conduct often justifies a substantial punitive award on top of actual damages and also sets the stage for stress and aggravation damages.

What Makes Our Firm Effective in Deal-Fraud Litigation

Our practice combines commercial litigation, consumer-fraud work, and a deep bench of relationships with forensic experts. In deal-fraud cases like this, we typically:

  • Obtain and analyze POS data, merchant statements, and bank records;
  • Compare tax returns and internal financials against source data;
  • Depose brokers, accountants, and sellers about what they knew and when; and
  • Use consumer-fraud statutes like 815 ILCS 505/2 to pursue fee-shifting.

Because we also handle business squeeze-out and freeze-out cases, we are familiar with disputes among partners and shareholders that often arise when one owner discovers that another brought them into a business based on false numbers. Continue reading ›

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The New Reality: Accusations Before Investigation

In the modern environment, a single social-media post can trigger a storm of attention, formal investigations, and sometimes a lawsuit. We have dealt with this type of situtation in many of our lible and business control cases.

Our firm represents pleaintiffs and defendants in these highly chargds cases that sit at the intersection of social causes and modern defamation or business control law.

Discovery Battles Over PR Firm Documents

A major battleground in these case can be obtaining through discovery outside public relations firm documents  and communciations when the opposing side has relied on such a firm. Those documents can matter if for instance they show whether the lawsuit is a genuine attempt to vindicate a reputation—or part of a broader public-relations campaign and lawfare as opposed to legitimate libel or business control suit

Illinois law treats discovery as broadly relevant if it has any tendency to make a fact in issue more or less probable. A 2019 appellate decision reported at 2019 IL App (1st) 182354, ¶ 35, and another at 2017 IL App (1st) 161918, ¶ 14, emphasize that discovery is not limited to what will be admissible at trial, but also includes what may lead to admissible evidence. That principle supports our effort to obtain communications with the public relations firm that helped craft talking points, draft emails to classmates, and shape threats to witnesses.

Courts have also recognized that public-relations work is generally not protected as attorney work product, even if it touches on litigation strategy. Decisions reported at 265 Ill. App. 3d 654 (1st Dist. 1994), 329 F.R.D. 628 (N.D. Cal. 2019), and 290 F.R.D. 421 (S.D.N.Y. 2013) hold that communications with outside consultants like publicists are ordinarily discoverable. We rely on that authority to argue that the PR firm documents must be produced.

Defamation in the Age of Anonymous Accounts

Because the original accusations in some of cases were posted through social-media accounts that sometimes hid the poster’s identity, we also deal with the cutting edge of online defamation. We regularly work with subpoenas to platforms such as Yelp, Google and SnapChat, IP and device information, and cross-referencing of screenshots, deletion logs, and metadata to tie anonymous statements back to real people.

Our role is not to silence legitimate speech about misconduct, but to defend people who tell the truth and to prosecute peole who libel our clients.

What Sets Our Firm Apart in Defamation Work and Business Dispute Work

Our lawyers have handled complex  libel and business control suits that blend:

  • High-profile media coverage, social-media and PR campaigns;
  • Aggressive discovery disputes over expert witnesses, PR firms, and internal investigations.

Because we routinely litigate both defamation and business torts, we are comfortable with large-scale document collections, forensic email and text discovery, and cross-border issues when the parties and witnesses are in different states. Continue reading ›

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Why Forensic Accounting Matters in Complex Business Fraud

Civil RICO and serious breach-of-fiduciary-duty cases live and die by the numbers. It is not enough to allege that a business partner or investment promoter “took money”; you have to show how funds moved, which entities were involved, and how those transactions fit into a pattern of racketeering activity such as wire fraud or mail fraud under 18 U.S.C. §1962.

In several of our current matters, we represent investors and entrepreneurs in disputes involving digital assets, closely held companies, and high-risk ventures where the financial records are a maze of limited-liability companies, internal transfers, and shifting balance sheets. In those cases, we partner with seasoned forensic accountants to reconstruct what really happened.

Examples from Our Current and Recent Matters

In one ongoing dispute involving a internet marketing venture, a member was told that affiliated companies were profitable and well-capitalized. A forensic review of balance sheets and income statements, however, showed that one entity reported net income in one year but then sustained significant losses the next and was insolvent within months, with liabilities exceeding assets by millions of dollars. Those findings undercut the fraud narrative.

We have also worked with forensic experts whose prior engagements include uncovering a nationwide investment schemes and hundreds of millions in fiduciary fraud or execessive fess and compensation all masked as loans of legitimate fees and services.  That level of real-world experience matters when your case involves serious allegations and high stakes.

How We Integrate Forensic Accounting into Civil RICO Theories

Civil RICO claims require proof of an enterprise, a pattern of racketeering activity, and injury to business or property. Forensic accountants help us tie those elements together by:

  • Mapping flows of funds between entities and individuals;
  • Identifying sham invoices, circular transfers, and unexplained withdrawals;
  • Testing whether financial statements fairly reflect underlying transactions; and
  • Quantifying investor losses and unjust enrichment.

When those analyses show, for example, that new investor money was consistently used to pay earlier investors, or that insiders siphoned funds through related-party contracts, we can frame those facts as predicate acts of wire or mail fraud. That can support a civil RICO claim alongside more traditional causes of action like common-law fraud, breach of fiduciary duty, and unjust enrichment.

Translating Complex Numbers for Judges and Juries

A good forensic report is only half the battle. The other half is turning spreadsheets and accounting jargon into a compelling trial story. Our lawyers are used to working hand-in-hand with forensic experts to prepare clear exhibits—timelines of transfers, simplified charts of related entities, and before-and-after net-worth analyses—that judges and jurors can understand at a glance.

Because we handle both business-tort cases and libel matters arising out of fraud accusations, we are sensitive to the reputational consequences of alleging racketeering. We carefully vet the evidence before including a civil RICO count, ensuring that our pleadings are supported by detailed, defensible forensic work rather than speculation.

What Makes Our Team Unique

Our firm’s approach to complex financial cases is different in several ways:

  • We involve forensic accountants early, often before suit is filed, so that we can shape the complaint around hard data rather than guesswork;
  • We are comfortable litigating in both state and federal courts, and we understand the procedural nuances of civil RICO and related claims;
  • We treat forensic experts as true partners in strategy, not just witnesses to be dropped in at the end of a case; and
  • We never lose sight of the human stakes—clients whose businesses, investments, and reputations are on the line.

Whether your dispute involves a digital-asset startup, a distressed operating company, or a complex web of related entities, this blend of legal and forensic expertise can be decisive.

 

Continue reading ›

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Overview

Few things are more devastating than being falsely accused of abusing a family member or former partner. We have represented libel clients on both sides of these disputes as plaintiffs or defendants. Often, the accusations did not go to law enforcement; instead, they spread through social media or phone calls, texts, and conversations among relatives, friends and community members. The results are a reputational firestorm and give rise to profound personal crisis.

How We Frame the Case Legally

Under Illinois law, statements that falsely accuse someone of serious sexual crimes are classic defamation per se: the law presumes damage because the accusation itself is so serious. In the cases we have litigated, we have pled or defended defamation per se, defamation per quod, and false-light invasion of privacy claims, along with a requests for injunctive relief to stop the ongoing smear campaign.

Illinois courts recognize that accusing someone of a felony, particularly a sexual felony, is inherently reputation-destroying. One leading decision, reported at 174 Ill.2d 77 (1996), confirms that imputing the commission of a crime fits squarely within the traditional categories of defamation per se. We rely on that framework to seek both compensatory and punitive damages when the facts support it.

Exposing a Pattern of Fabrication

In defending or prosecuting libel claims we often work with private investigators and obtain  witness statements, we developed evidence that the plaintiff is in fact a sexual predator or the accuser has a history of storytelling and retaliating with lies and smears.

By the time we file suit, we try to be well prepared which is critical to properly preparing case and then persuading a court or jury that the accusation is false and malicious, not simply a misunderstanding or poor wording or that our client was telling the truth about a former lover, friend or relative.

Damages Beyond Dollars

In cases like this, the harm is not limited to economic losses. We are experienced in defending or briing claims for emotional distress and have objected substantial stress damages awards for plaintiff clients.

What Makes Our Approach Different

Cases involving intra-family or fallen out lover allegations of sexual misconduct require a blend of compassion and toughness. We spend extensive time preparing our clients for the emotional realities of litigation while aggressively pursuing discovery that can test the truthfulness of the allegations.

Our litigation strategy in these matters typically includes:

  • Targeted written discovery that forces the accuser to lock into specific dates, locations, and alleged acts.
  • Subpoenas to therapists and treatment providers, where appropriate and lawful, to see whether the therapy narrative matches what is being said to the family or ex-friend or lover.
  • Investigative work to uncover prior instances where the accuser made other serious accusations or fabricated crises or engaged in similar misconduct.
  • Motions for injunctive relief to stop further publication of the false accusations while the case is pending.

Because we also regularly litigate internet and social-media defamation, we are adept at tracking down who said what, where, and when—even when the smear campaign plays out primarily in group chats, private messages, and closed online communities. Continue reading ›

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Summary: After a founder dies, survivors often pivot from “we have a buy‑sell” to “we can force a redemption under the articles.” Courts care about doing it right—and about protecting the estate’s reasonable expectations.

Start with the contract you actually signed.
A written buy‑sell controls if it exists and is enforceable. Many set a fixed price (or formula), a target closing window, and a note if cash isn’t available—plus interim limits on dividends/comp and inspection rights for the estate until paid. If the company refuses to close or withholds life‑insurance proceeds tagged to the buy‑sell, specific performance is often the cleanest remedy.

If you rely on the Articles, follow the Articles.
Articles that restrict transfers typically require a written election within a set period, dueling appraisals (and sometimes a third), and a closing sequence tied to price determination and insurance proceeds. Skipping these steps risks having a “redemption” declared void ab initio.

Continue reading ›

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Summary: Law firms and professional companies are businesses too. When lawyer‑owners divert funds, freeze out a co‑owner, or weaponize firm control, a derivative suit or oppression claim can be the right tool—if you respect both corporate law and the professional‑ethics overlay.

Typical patterns we see:

  • Unilateral transfers disguised as “distributions” or “draws.” Bank statements and ACH histories are the first stop; courts expect contemporaneous paper (or pixels) to back up allegations.

  • Access choke‑points. Changing login credentials to trust accounts, practice‑management billing, or accounting software is a hallmark of a freeze‑out. Immediate injunctions can restore access and stop dissipation.

  • Mixing direct and derivative claims. A lawyer‑member’s “personal” grievance is often the company’s harm in disguise. Keep the derivative and individual lanes clean to survive motions to dismiss.

  • What to plead and prove:

  • Derivative standing (and demand/futility). Say who controls the firm, why a demand would be futile, and what records you sought before filing.

  • Statutory backbone. For LLC law practices, cite 805 ILCS 180/40‑1 (derivative actions) and the LLC Act’s fiduciary duties and information rights (15‑1, 15‑3, 15‑5). For PC/corporate forms, remember the oppression statute (12.56) and corporate records rights.

  • Remedies that actually help. Courts can impose constructive trusts on misdirected funds, order real‑time access to trust‑accounting and billing systems, and enjoin further unilateral withdrawals while the case proceeds.

Continue reading ›

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Summary: Derivative suits let owners enforce the company’s rights when insiders won’t. Done right, they’re powerful. Done wrong, they’re dismissed. Here’s a field guide for LLCs and closely held corporations.

Who can sue and when?

LLCs: Members may sue derivatively under 805 ILCS 180/40‑1 when managers/members harm the company. Relief can include restitution, constructive trusts, injunctions, and fees—plus orders to stop unilateral withdrawals or restore records access.

Corporations: Shareholders proceed derivatively; the entity is the real party in interest. Oppression claims (for corporations) are addressed separately under 805 ILCS 5/12.56.

Pleading essentials (don’t get 2‑615’ed):

  • State your demand (or futility) with facts. If you didn’t ask the company to act, plead why demand would be futile with concrete details, not speculation. Judges read this closely on a motion to dismiss.

  • Name the company as a nominal defendant. It’s indispensable. Forget this and the case can’t proceed.

  • Mind “information and belief.” If you use it, plead the specific facts that support that belief and what you did to obtain records (or why you couldn’t). Courts reject fishing expeditions.

  • Don’t double‑count damages. Separate derivative (company) harms from individual claims; if your “personal” count just repackages company damages, expect dismissal.

  • Use the records statutes before you sue.

Continue reading ›

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Summary: When a co‑member changes the banking logins, blocks your access to the general ledger, or tells employees not to speak with you, it’s not just bad behavior—it’s a legal emergency. Here’s what to do right now.

1) Treat it like a TRO/Preliminary‑Injunction case.
Illinois courts can order interim relief that restores online banking, general‑ledger access, and on‑site access; prevents dissipation of assets; and preserves the status quo ante. To obtain a preliminary injunction, plead a clearly ascertainable right, irreparable harm, a likelihood of success, and a balance of equities that favors you. In member‑managed LLCs, the Illinois LLC Act recognizes equal management rights and fiduciary duties—critical ingredients for the “ascertainable right” showing.

2) Put management and information rights front and center.
For member‑managed companies, the Act imposes duties of loyalty and care and protects access to company information; operating agreements typically echo and expand those rights. Cite 805 ILCS 180/15‑1, 15‑3 and 15‑5 and any contract provisions requiring managers to “keep and make available” company records. This combination supports immediate access orders.

3) Document the choke points.
Log every blocked login, revoked credential, and turned‑away facility visit; note who gave the directive and when. This contemporaneous record helps courts understand the urgency and scope of relief needed.

4) Don’t ignore personal guaranties.
If you guaranteed company debt, a freeze‑out can put your personal assets at risk. In appropriate cases, plead for equitable relief requiring the controlling member to refinance or otherwise secure releases of your guaranties. (Courts evaluate these requests in equity—frame the risk and the practical path to relief.)

5) Consider a fair‑value buyout path.
Oppression and fiduciary‑breach cases often end with a negotiated or court‑ordered buyout. Ask for “fair value,” and be prepared to explain why minority or lack‑of‑control discounts are inappropriate based on the conduct at issue and the statutory framework.

6) Lock down evidence.

Seek orders preserving financial systems, email, and text messages; forbid asset dissipation; and require full electronic production (bank statements, GL exports, merchant accounts).

7) Align the operating agreement with the Act.
Deadlock clauses, bank‑signature provisions, and record‑access language should dovetail with the Act’s default rules. Where the OA helps (or hurts) your position, lead with it.

8) Keep distributions and compensation in view.
Withholding customary distributions or unilaterally changing pay can be oppressive, especially when used as leverage during a freeze‑out. Plead patterns, not isolated events.

9) Propose a practical compliance plan.
Judges like workable, specific orders: who gets what access, by when, and through which systems (bank portals, accounting software, membership or POS platforms).

10) Stay outcome‑agnostic but relief‑specific.
Combine immediate access/injunction relief with longer‑term remedies like an accounting, governance fixes, and (if needed) a fair‑value separation.

Bottom line: In Illinois, freeze‑outs collide with statutory duties and management/information rights. Move quickly and ask for tailored, enforceable orders that get you back inside the business.

Continue reading ›

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The scenario we see: An employee resigns, lands a new role, and—right on cue—the former employer calls the new company or key clients, waving a non‑solicit or a boilerplate non‑compete that’s far broader than Illinois law allows. If that pressure campaign derails a known offer or triggers a firing, our firm files suit for tortious interference and seeks court orders to stop the meddling.

Illinois law gives you real defenses (and offenses):

  • Reasonableness + legitimate interest. Illinois enforces restraints only to the extent necessary to protect legitimate interests (e.g., near‑permanent customer relationships or genuine confidential information). Courts look at the totality of facts—not rigid formulas.

  • Non‑solicits must be narrowly tailored. Clauses that bar you from soliciting any customer—including those you never worked with—or that lack geographic or relationship limits are often invalid. Courts have declined to salvage them when they’re fundamentally unfair.

  • Income thresholds & notice rules matter. For agreements after Jan. 1, 2022, non‑competes are void for employees under $75,000 (rising over time) and non‑solicits are void under $45,000 (also rising). Employers must give 14 days to review and advise in writing to consult a lawyer—or the covenant is illegal and void.

  • Consideration is not a rubber stamp. Courts have rejected restraints supported by little more than a signature; the Fifield line of cases and the statute make clear that two years of employment or meaningful additional benefits are needed.

Continue reading ›

Contact Information
Chicago Office
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Chicago, IL 60603
Phone: 630-333-0333
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Phone: 630-333-0333 Please direct all mail correspondence to our Oakbrook Terrace address office.
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