If you built a business with a trusted partner and then discovered they are stealing from you, the disbelief, anger, and betrayal can feel overwhelming. Once you recover from the initial shock, you need to act swiftly to protect yourself and your business.
Your partner has a fiduciary duty to the business, meaning they have a legal obligation to behave in a way that will financially benefit the business. If they breach this duty, you can take legal action against them. Some common examples of how they may breach this duty include:
- Creating fake invoices and expenses
- Engaging in payroll fraud by adding fake employees to the payroll
- Creating fake bookkeeping entries
- Stealing physical property, such as electronics or inventory
- Siphoning money from a cash register
- Receiving vendor kickbacks
- Misappropriating company property
If you suspect your business partner is stealing from you, don’t confront them or try to spy on them to secure more evidence – you could make the situation worse and find yourself in legal jeopardy. Your first step should be to call an attorney who specializes in business fraud to advise you based on the specifics of your situation.
Your attorney will likely ask you for a copy of your partnership agreement, which is a key document in winning cases of business fraud, embezzlement, and breach of fiduciary duties. They will also ask you for evidence of the theft, or if you don’t have solid evidence, why you believe your partner is stealing from you. Evidence of the wrongdoing could include screen shots, business records, or accounting records. Your attorney may recommend sharing the evidence with an accountant to have them verify that a pattern of theft is occurring. Any one instance of theft can likely be explained away. To win a civil or criminal case against your business partner, you will need to show that there is a long-term pattern to their behavior.
If there is sufficient evidence of theft, your attorney may contact law enforcement to formally open up a case to investigate. Your attorney or law enforcement may instruct you to change the passwords or remove permissions from the partner on company computers or specific files; however, don’t do this until instructed by your attorney or a law enforcement agency.
Your business partner may be subject to civil and criminal prosecution. An allegation of business fraud, embezzlement, or breach of fiduciary duty can be difficult to prove and will require a significant amount of evidence. If you suspect your business partner is stealing from you, don’t hesitate, contact Cutler Rader right away for advice on how to proceed while safeguarding your business as much as possible.
Rader Law Group, LLC
With decades and decades combined experience, the attorneys at Rader Law Group understand the meaning of Justice. Our one and only mission is to get each client the justice he or she deserves; our team of attorneys never back down when we know our client is right.
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