Breach of Fiduciary Duty, Fraud, and Accounting Claims in Closely Held Companies

At the heart of many business ownership divorces are allegations that someone in control of the company has breached fiduciary duties or engaged in fraud. For over 40 years, DiTommaso Lubin, P.C. has represented business owners on both sides of these disputes in closely held corporations, limited liability companies, and partnerships.

We prosecute and defend cases involving officers, directors, managers, partners, and controlling shareholders accused of misusing their positions, as well as minority owners who have been harmed by such conduct.

Fiduciary Duties in Closely Held Entities

Owners and managers of closely held businesses often owe fiduciary duties of loyalty, care, and full disclosure. In some situations, courts treat closely held corporations and LLCs similarly to partnerships, imposing heightened duties among co-owners.

Breach of fiduciary duty claims may involve:

• Conflicts of interest and self-dealing transactions.
• Usurpation or diversion of business opportunities.
• Failure to disclose material information to co-owners.
• Mismanagement or reckless disregard of the company’s interests.
• Using control of the company to benefit insiders at the expense of other owners.

Fraud and Misrepresentation in Business Ownership Disputes

Fraud claims often arise in connection with:

• Inducing an owner to invest or remain in the business based on false financial information or promises.
• Concealing debt, liabilities, or losses.
• Manipulating financial statements, tax returns, or internal reports.
• Using forged or backdated documents to alter ownership or governance.

Our attorneys analyze the circumstances surrounding investments, capital contributions, buy-ins, and buy-outs to determine whether fraud or misrepresentation has occurred and to build or challenge the evidentiary record.

Accounting, Valuation, and Remedies

Breach of fiduciary duty and fraud cases frequently require detailed accounting and valuation work. We work with forensic accountants and valuation experts to:

• Reconstruct financial histories and trace transfers.
• Analyze compensation, distributions, and related-party transactions.
• Evaluate the impact of misconduct on the value of the company and on individual ownership interests.

Available remedies may include:

• Damages for losses caused by the misconduct.
• Disgorgement of profits or benefits wrongfully obtained by insiders.
• Court-ordered accountings and inspections of books and records.
• Injunctive relief to stop ongoing wrongdoing.
• Buy-outs or other structural remedies to separate warring owners.

Prosecuting and Defending Fiduciary Duty and Fraud Cases

Because we both bring and defend these claims, we understand how judges and juries view allegations of fiduciary breach and fraud in the closely held business setting. We use that experience to:

• Evaluate the strengths and weaknesses of each side’s case early.
• Identify key documents, witnesses, and expert testimony.
• Develop strategies aimed at achieving a favorable resolution through negotiation, mediation, or trial.

Talk With Our Fiduciary Duty and Business Fraud Litigation Team

If you believe a business partner, manager, or co-owner has breached fiduciary duties or committed fraud – or if you have been accused of such conduct – our attorneys can help you assess your options and develop a plan.

Contact attorney Peter S. Lubin or attorney James V. DiTommaso for a free consultation.

Call 630-333-0333 or reach us through our online contact form.

This page is for informational purposes only and does not constitute legal advice. Contacting us does not create an attorney–client relationship. Past results do not guarantee a similar outcome.