The case of Northeast Iowa Ethanol, LLC vs. Drizin
The case of Northeast Iowa Ethanol, LLC vs. Drizin aimed to determine whether the 'Corporate Vein Doctrine' applied. The Plaintiff, the members of Northeast Iowa Ethanol, LLC, sought reimbursement for the losses they experienced as a result of Drizin's questionable behavior. The case may be traced back to the establishment of Northeast Iowa Ethanol, LLC, when a local farmer decided to establish a firm specializing in the production of ethanol and feed grain. They were still short of the complete required sum after pooling their resources and seeking external funding. A member, Drizin, suggested that they put the money in a bank account and use it to get a loan. Instead, he went ahead and used the money, together with his personal funds, for unscrupulous deals. The resulting effect was the loss of the famers' money.
The court's ruling on the 'Corporate Vein Doctrine'
The court held that the 'piercing the corporate veil' applied in this particular case duet to a number of reasons. First, the doctrine holds all shareholders responsible for the losses and profits incurred by a company. Drizin was a shareholder of the Northeast Iowa Ethanol, LLC, which makes his liable for any losses incurred by the company. Secondly, the Northeast Iowa Ethanol, LLC was a close company due to its small number of shareholders. In accordance with the doctrine, the '' applies in close companies, which meant that Drizin would be held accountable as a shareholder. Finally, Drizin's fraudulent activities and defiance of the company's policies meant that he was not only liable as a shareholder but as an independent individual. As a result, the court awarded the plaintiff $3.8 million for compensatory damages and $7.6 million for punitive damages.
