CASE STUDY Essay Example
Critical legal thinking
Civil fraud refers to the process by which another company takes advantage of an enterprise in which its primary intention is to receive funds in the name of aiding it financially. For instance, the Global Syndicate International (GSI) transferred the funds intended for the construction of the Ethanol firm in Manchester after convincing them they were going to extend a helping hand. The problem resulted from the financial problems which were affecting the companies partnering to construct the ethanol business with the sole aim of making some gain.
The doctrine of piercing corporate veil
The doctrine of piercing corporate provides that the shareholders of the company are held liable for the debts of the business. The court, in this case, awarded the Northeast Iowa Company a compensatory damage of $3.8 million which was to be made by the defendant to its shareholders. On the other hand, the debt of 7.6 million awarded as the punitive damages imposed upon the Drizin Company was to be contributed by all stakeholders in the associations. In summary, the distribution of the debt caused by one of the interested parties in the company is distributed collectively to the entire organization.
Question 1 did Drizin act ethically in this case?
No. It is against the codes of conduct for a well-established company such as the Global Syndicate International to make false promises of helping the Northeast Iowa to finance the ethanol project and later on steal from them through a single partner. Any corporate should adhere to the doctrine of utmost good faith in their endeavors since this form the basis for its growth and thus each member should learn about them.
Question 2 did the owners of Northeast Iowa have any they suffered in this case? Explain
Yes, being too open and trustworthy to a company regarding finances is very wrong in the event where judicial procedures such as agreement drafted and signed by the parties involved before the court of law are absent. Northeast Company is to blame due to their quick decision to deposit their finances to the accounts of the Drizin without involving the court of law. Therefore, they are partly to face blame for the bridge of law under scrutiny.
Question 1 Do you think that the plaintiff Northeast Iowa will recover its $11.4 million judgment in this case?
No. This case involves some companies with several independent shareholders such as Drizin. For such situations, the amount which was lost by the Northeast Iowa might not quickly recover because the defendant might not be able to raise the entire capital involved. Moreover, in the event whereby the doctrine of piercing the veil, the other stakeholders have the voice to demand that Drizin should pay for his debts just because the amount transferred to his account and thus other company members are not liable. Additionally, the court system has the evidence that it was Drizin alone who was involved in the fraud and thus the punitive action should be legislated on him. If this is applied, it is possible that this defendant could have lost large sums of funds through his malicious and outrageous actions which have caused hurt too many people. Consequently, the amount he may raise might not be enough to clear the debt and thus he may suffer imprisonment. As a result of such, the whole sum of money belonging to the Northeast Iowa will not be fully settled.
Ethanol v. Drizin (Feb. 7, 2006) N.D. Iowa, case No. CO3-2012
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