Entrepreneur

5k loss is a good lesson to remind you that you can't call everyone that you get close to as "friends"

Real friends are a fucking investment that pays dividends. This mothefucker isn't one of them. He fucked you from the start. He was never a friend to begin with.

5k is nothing in this climate. the legal fees arent worth. Consider it a cheap lesson and that you dodge a bullet. The longer you spend time with this cancer, the worse it gets. Go find new people. if you're a good enough software dev, you'll be fine.

If you can, lock him out of the website, shopify, or anything else you have access to that you're paying for.

$5k plus the cost of Shopify plugins is in small claims territory in a lot of states. The forms are easy to fill out and filing plus process server fees are cheap. You'd sue both him and the LLC and your argument is going to be that he completely defrauded you. You can renew a judgment for a relatively trivial sum, so even if you can't collect now, you can collect the judgment when he's less broke.

It's up to you whether rolling the dice in front of a small claims judge is worth the time and energy.

Where are you? Could try a small claims court. The claim hinges on them misrepresenting the situation - so did they do that? Were you aware, and was it possible, for you to know what you got yourself into?

Walk away. Study the contracts, lessons, and try again with a new partner.

FWIW: I lost 300K this way, in a similar situation, and the person I chased for years issued me shares and contracts FINALLY, that he later diluted by 10000x (meaning, now they are worth 32 dollars).

At the end of the day, unless you own a large percentage, the founder can screw you in about 1000 ways -- once they show they are willing to do this -- walk away.

Let this be an education for you. Only investment you should make is with yourself. Your friend was underfunded and had no chance to succeed. Besides, all he had to do is pay himself a salary and declare that there was no profits.

You got suckered. Move on to something better. Learn your lesson then forget about it.

Ask if getting his ass beat is worth five grand.

Lesson learned. You need to do your due diligence before writing a check next time

Walk away and avoid situations like this.

I am willing to give you the same deal without the money investment.

Don't get into litigation, but also loose such a friend, who caused you to spend 5K without any compensation.

Everyone here seems to love telling you should never do business with friends. But based on what you've written, it seems like you've already learned that lesson the hard way, and all the commenters reiterating that doesn't seem to be helpful at all.

What you need to do is apply serious pressure on this guy. You've said you are willing to lose this friend, so show him you are not fucking around. Call him and tell him in a very calm and collected manner that you are entirely fed up with the situation and you want out right now. You expect him to send you back all of your money immediately or you are taking him to small claims court. Do a little research and have some documents from the court ready to send over to him (even if it's just a bluff for now). He will hem and haw and come up with every little excuse in the book. Again, calmly tell him you are not interested at all in anything he has to say. Pay up now or we can do it the hard way.

The only other good idea I saw here was the idea of undoing all the work you did somehow like re-coding everything and/or re-routing the URL. That will also give you some leverage. This is not over. The people telling you to just forget about $5000 are silly, but for the sake of a thought experiment, let's use it to your advantage. The $5000 is gone but now you have an opportunity to earn $5000 with about what, 10 hours of work? Don't take no for answer.

Think of the LLC as a person.

Your formal business relationship is with the LLC. LLC closed down means good bye 5K. Proving intend to defraud is something you may want to discuss with a legal professional.

You stated that your friend has no business plan or strategy. So if you were to evaluate today what your friend brings to the LLC, what would you say?

As mentioned by others, 5k is more of a learning experience than an amount that is worth recovering unless there are intangibles that make it personally worthwhile for you.

Can you maybe expand on what he means by "if you quit the investment is lost"

Ouch. So basically instead of paying you to revamp the store he got you to pay him and do the work, and then shut down anyway after a few weeks?

Sorry you got hosed on this one. But here is where you may have something.

Since the company was dissolved: All assets and IP stay with the dead company, unless they are sold. All debts should be paid to outstanding balances. Any remaining funds must then we disbursed according to share percentages, in your case 5%.

You do not have any interest in a new company formed, nor does he have the right to use assets from the former company without reimbursing you, as you have a 5% stake in those assets.

If i were in your position, i would 1) not quit, just become generally unavailable except for when you actually have free time (an hour two a month) 2) i doubt you had a lawyer look at the original agreement, because that clause about you quitting and voiding the entire “investment “ doesn’t sound like it would be enforceable. 3) legals fees in the US make suing over this unlikely to bear any fruit.

My only reservation is that this all occurred within the period of a few weeks. Which is an amazingly short period of time to go from “this is worth making a profit share agreement” to “i closed the llc”. Which makes me think that maybe this isn’t the first time it’s happened and there may be other victims. I would do some research and if I find evidence of an ongoing scam I would file a police report And follow up with the local prosecutor’s office.

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If the LLC has no money, there's no point suing it. Forget about it, learn the lesson, and move on.

You knowingly took the risk. Now that it hasn't worked out, you're trying to blame yourself. Take responsibility for your own investments and do proper due diligence.

$5k is a small price to pay to save yourself $500k down the line from other ridiculous contracts. Don't waste your time and mental energy trying to collect this small sum. Learn from it and move on, spending your time in more productive ways. You'd probably make a lot more money doing development in the same amount of time you'd waste trying to extract $5k from his dead business.

Doesn't sound like "friend" is approved here, but I have seen that this word is used more freely in other parts of the world.

Cut your losses and draw your attention to work that is more promising.

Sueing is going to cost a lot more than 5k. He sounds like he's full of nonsense though, there's lots of people in business like that. Lots of pretenders that are basically just acting as middlemen while doing nothing. If it has cost you 5k to learn that experience, I would say that's pretty cheap. I've dealt with these kind of people many many times and it has sadly cost me a lot more than 5k and a lot more time as well. I think you're gonna have to brush it off as a learning experience.

If you get in a situation like that again, I would recommend not going faster than any of your partners, if they tend to slow down then just shift gears and pivot to other potential side businesses. The more eggs in your basket the better

Until I realised it's $

Considered a cheap lesson in private investing. Go read a book on how to do it right. These losers don’t always get weeded out and as FTX and other high profiles drama saw, can carry on fraud at a high level. You should either not be in the game or know how to due diligence and warning flags to look for.

At least you know that your friend will never ask you for money again. Take this as one of life’s most important lessons.

So you invested 5k into the business, and THEN you went to check the financials AFTER you put your money in?

It's an investment, there's risk involved. You knew that going in.

Unfortunately I'd consider this a 5k lesson learned. Even if you do get a judgement, good luck collecting.

? Did the llc buy the theme or you personally.? If not, you own the theme. Just stop using it.

You should sue him 100%. I had a deal where I had no paper work, my *friend* dragged on returning my money for 6-8 months, my attorney slapped him with lawsuit papers and the next day he wired the money back.

If he closes the LLC, then perhaps there is a way for you to recover the work you did by taking over the Shopify site, and operate it yourself. If you make it work, and wants back in, charge him $10K for a small minority share on your terms. Or not, tell him to get screwed. Your choice.

When you say that you "invested" $5k - are you a partner in the LLC and/or on the board of directors? If so, you may have a legal stance from which you can possibly take over the LLC from him, if you are interested and have the means to do so.

If you are not a member of the board or a partner, what sort of paperwork did you get for your investment?

If you aren't interested in taking it over and/or don't want to, either go the small claims route and ensure you do it in a way that he has to pay all of your court fees or walk away and wash your hands of the whole thing.

Best of luck making a decision - this sounds like a really frustrating situation.

Talk to attorney and calculate costs.

If the cost is equal to the gain and I end up at zero, I'd still do it to teach that guy a lesson.

If it's a loss, keep the lesson for yourself.

Doing business with friends is all about having real friends in the first place. Problem is that people do business with fake friends.

It's only $5k and a bit of time so ask yourself if it's really worth getting a lawyer and suing him. Your rights totally depend on the contract you signed so nobody here can really say without looking at that. Definitely don't work with him again. And next time do proper due diligence about any partner or startup (including requesting docs and financials if appropriate). Consider it a lesson learned.

It seems as if everybody here is missing the most obvious next step for you right now. Draft up a summary of events with times of messages, quotes from emails, and dates of events. Bring it to a lawyer, and get the lawyer to draft a letter notifying your ‘friend’ that they will be taken to court if X Y Z remedy is not taken. Send it certified mail.

Nine times out of 10 the letter itself will be sufficient and you won’t actually need to go to court. And if it isn’t remedied, you now know exactly where your ‘friend’ stands, and can use that information to decide your next move.

Could always just start breaking shit by accident shrug