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I was to receive 10,000 shares for $5,000 investment but never received any shares and its been almost 2 years now.

Costa Mesa, CA |

I have not received the shares and he is dodging me. I want to know what I can do. Sue? Is this a crime?

Attorney Answers 5


It's not a crime, but you need to contact a business litigator, now. I handle these matters regularly and can say from experience, it gets much worse with the passage of time. Further, if your business has no lawyer, getting stock issued and getting stock validiy issued are two different things, and hard to know how to do without a lawyer. Hopefuly you have been indicated as an owner on all tax filings.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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Mr. Doland is correct. You need to contact a local business attorney as soon as possible to get this resolved. Don't delay.

** LEGAL DISCLAIMER ** My response above is not legal advice and it does not establish an attoreny-client relationship. When responding to questions posted on Avvo, I provide a general purpose response based on California law as I am licensed in California. In reviewing my response, you are specifically advised that your use of, or reliance upon any response I provide is not advisable. I do not have all relevant background details or facts related to your issue / matter, thus I am not in a position to give you legal advice. Further, your review, use of, or reliance upon my response does not establish an attorney-client relationship between us nor does it qualify as a legal consultation for any purpose. For specific advice regarding your particular circumstances, you should consult and retain local counsel. For more information, you can reach my office at: or by calling: 818-279-2737.

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Corporate Securities Law of 1968 (Corporations Code § 25000 et seq.) requires persons offering or selling securities such as stocks or bonds to qualify (e.g., submit to the Department for review and approval) the proposed securities, and requires licensing and regulation of securities broker-dealers and certain investment advisers, except as specified; prohibits misrepresentations, fraudulent and deceptive acts in the offer and sale of securities; and provides administrative, civil (injunction, ancillary relief and appoint of receiver) and criminal remedies for violations of the law.

•§§ 25004, 25009 and 25019: defines “broker-dealer,” “investment adviser” and “security”
•§ 25110: prohibits the offer or sale of securities without licensure or exemption
•§ 25210: prohibits acting as a broker-dealer without licensure or exemption
•§ 25230: prohibits acting as an investment adviser without licensure or exemption
•§ 25401: prohibits misrepresentations or omissions in the offer or sale of securities
•§ 25404: concealing evidence or making untrue statements to Department is a crime
•§ 25540: violation of provision, rule or order is a felony/misdemeanor
•§ 25541: use of device, scheme or artifice to defraud is a felony

Based on the laws stated, there may be a crime that was committed, in addition to civil liablity and possibley punitive ddmages . Seek a consult with a business attorney IMMEDIATELY because the statute of limitations may be expiring.

Good luck!
Phillip M. Smith Jr.
Los Angeles Tax & Business Attorney
Licensed in the United States Tax Court
Call: 323-292-4116 or 562-505-1004

THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is

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As the above attorneys mentioned, you will need to speak with a business lawyer who can review any paperwork you have and offer some possible courses of action.

There are possible tax and other consequences here that may not be apparent until someone can evaluate all the facts for you.

Best of luck.

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Where to Turn for Help and Advice

If you suspect that you are being scammed or have lost money, the best place to start is with your home country securities regulator. Don't hesitate to call or email them at the first sign of impropriety. Use the International Organization of Securities Commissioners (IOSCO) website to find your country's official regulatory organizations: Call them if you have any questions about a regulatory organization. If official regulators have not heard of the organization, it is most likely fraudulent. In the US, major regulators include the SEC (, FINRA (, the exchanges and the States (see In addition, the University of Toledo Law School maintains a list of financial regulators at Don't simply click on links in a suspected email to access these regulators; the address in the email may look right, but may take you to a different location. Type the regulator Web address directly in the Web browser address bar or search feature.

Public Alert: Unregistered Soliciting Entities (PAUSE) is a new resource from the Securities and Exchange Commission to help investors avoid online and boiler room scams. PAUSE lists information the SEC has received through complaints from investors and others—including foreign securities regulators—about securities solicitations made by entities that falsely claim to be registered in the U.S., use phony U.S. addresses or provide fake endorsements from fictitious government agencies or international organizations.

A number of international sites make a point of publicizing unlicensed cold-calling firms. The following list of regulatory organizations comes from the SEC's Publication Worthless Stock: How to Avoid Doubling Your Losses:f you suspect fraud on the part of a U.S. firm or individual, or simply want to talk through an investment that seems a little too good to be true, call FINRA at (240) 386-4357 or file a complaint or question using FINRA's online Investor Complaint Center.

For additional information and recent alerts on international investor fraud see:
The SEC's Alert Investors Beware of Entity Calling Itself "U.S. Securities and Equities Administration."

The SEC's publications Fake Seals and Phony Numbers: How Fraudsters Try to Look Legit and The Fleecing of Foreign Investors: Avoid Getting Burned by "Hot" U.S. Stocks.

Australian Securities and Investment Commission's information on Fake Regulators & Exchanges.

North American Securities Administrators Association's Alert NASAA Warns Investors to Beware of Phantom Regulators.
To receive the latest Investor Alerts and other important investor information sign up for Investor News.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Howard Roitman, Esq. and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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