Tom George was the sole owner of Turbine Component Super Market, LLC (TCSM), when its existence was terminated by the state of Texas. Turbine Resources Unlimited filed and won a suit in a Texas state court against George for breach of contract. The plaintiff sought to collect the judgment amount through a sale of George’s property.

Instead of turning over his assets, however, George tried to hide them by reforming TCSM. Without telling the court, he paid a different debt with $100,000 of TCSM’s funds.

George claimed that the funds were a loan and that he was merely an employee of TCSM. Is it more likely that the court will recognize TCSM as an LLC or a sole proprietorship?

Does the owner of a business have an ethical obligation to represent the organization truthfully? Why?