Joe, Along with Two Friends, Bought a Peat Bog with the Idea

question 39

Essay

Joe, along with two friends, bought a peat bog with the idea of incorporating a corporation and reselling it to promote the development of the peat bog. Joe bought the bog for $40,000 and, when the corporation was incorporated, had himself and his two friends named as directors. They then held a meeting and on the first order of business, they bought the bog from themselves for $500,000. Then they voted to sell all of the shares of the business to five interested businessmen for $500,000, based on the value of the sole asset of the corporation, the peat bog. When the businessmen found out what had happened, they sued Joe and his friends. Explain the nature of the complaint and the likely outcome.

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Definitions:

Promotional Message

A communication aimed at informing, persuading, or reminding customers about a product or service.

Frequency

The rate at which a periodic event occurs, such as the number of waves passing a point in a given time period.

Specific Time Period

A distinct, defined duration marked by a start and end date or time, often used for analysis, planning, or historical reference.

Unaided Recall Test

A measure of memory where subjects are asked to remember information without cues or prompts, often used in marketing to assess brand recall.