In 2004, a Colorado business owner began a gold mining operation that attracted investors with millions of dollars. Investors provided their funds for gold mining operations that involved drilling holes into Tenderfoot Hill in Colorado Springs. Investors are now concerned that the owner is not actually using investment funds for the operation of the gold mines but that he is instead using them for his personal gain.
The venture capital project now has investors concerned that they have lost their funds forever. When investors asked the business owner for audited financial data on the gold mine operations, he allegedly refused to provide such information. Investors wanted to make sure that he was using their funds for the mining operation. They have now instituted a lawsuit against the man in a Texas district court. Two manager-members filed the lawsuit on Sept. 24. Other plaintiffs involved in the lawsuit are prominent businesspeople in the Colorado Springs community who have chosen not to be named in the suit.
The lawsuit claims that the man has been involved in multiple instances of misconduct in taking funds from investors for personal use. Investors claim that he has shown a pattern of “self-dealing” and has “misappropriated” assets of the mining company. The business owner has allegedly paid himself a salary of over $1 million every year, and he is also accused of failing to pay company taxes and other obligations under the law.
Since the filing of the lawsuit, investors have been unable to get in touch with the business owner, but if the claim is successful, the investors may be able to recoup some of their funds. Civil actions like this can ensure that those who conduct business improperly and exploit their investors are held accountable.
Source: Colorado Springs Business Journal, “Mining venture disintegrates into legal action“, John Hazelhurst, October 25, 2013