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Embezzlement is Theft
Many business partnerships must confront the issue of a partner unlawfully taking money from the company. Business partners have a statutory fiduciary duty to protect the business and the other partners. Embezzlement is a type of theft where the property, or money, is wrongfully acquired by a person in a position of trust within the company. If you believe that a business partner is currently stealing from your company and embezzling money, you must proceed cautiously and take steps to protect yourself and your company. A thorough review of any written partnership agreements, articles or by- laws, shareholder agreements, operating agreements or any other existing agreements between the partners along with the governing state laws is an important first step in deciding how you will proceed in this difficult situation.
Theft by a Business Partner
It is essential to gather real evidence to prove that the theft actually occurred, or is still occurring, and is not simply a mistake or possibly an innocent accounting error. This must be accomplished while also protecting the current operations of the business. There are many possible routes to obtaining such evidence depending on your business and the specific situation involved. Consider options such as placing controls on all business banking and credit accounts to track the flow of money and of business assets and to require detailed receipts for all business expenditures. You may also want to conduct an audit of the business inventory and of the bookkeeping. It could also You may even consider placing surveillance equipment on computers or cash drawers or to employ forensic accounting to help gather the necessary evidence.
Recovering Money and Assets from your Business Partner
You may wish to consider a civil action by filing a lawsuit. Filing one against your partner for fraud, embezzlement, breach of fiduciary duty or breach of contract could recover the lost assets and damages to your business. Additionally, you may also want to file an action to dissociate, or remove, your business partner from your company or possibly to dissolve the company. To further complicate matters, there may be resulting tax consequences and penalties if income and expenses were misreported along with the expenses of correcting the company’s bookkeeping which you may wish to recover.
If you are experiencing problems within your company and suspect one or more of your business partners may be embezzling money, please contact us at info@brumleylawfirm.com or call (253) 236-4079 with any questions.
If you have questions about your case, please contact us at Info@brumleylawfirm.com or (253) 236-4079.
