AimRite Holdings Corp (AIMH)

[TORPEDO]

It works like this.

Let’s say John steals Mary’s ring (converts it to one of his possessions).
The ring is worth $500.
John then goes to the bar and sells the ring to Matthew for $500.
Mary discovers Matthew bought her ring and demands it back.
Matthew argues he is a good-faith purchaser.
The Court sides with Matthew and he can keep the ring.
The Court makes John make Mary whole – he has to compensate her for the value of the ring.

Now, let’s say, Morey converted AIMH.
Morey sold it to Marchi.
Marchi cannot claim he was a good-faith purchaser because the Court views him as a sophisticated businessman who had a duty to investigate the true owner of the company. Accordingly, in this case, Marchi would have to give AIMH back. Marchi then sues Morey for the money he gave him for the shell.