You may only have one or two partners if you own a small business. When a partner steals from the company, they also steal from you. You may blame yourself for trusting someone who didn’t deserve your trust, but you must move on for the good of your business and deal with this situation. Below, our friends at Focus Law LA discuss how business partners can breach trust and the legal steps you can take to address these violations effectively.
How Can A Partner Steal From Your Company? Let Us Count The Ways
Your partner may have not innocently, mistakenly misappropriated something. They may have committed a crime. Depending on the amount stolen, they may have committed a felony (a sentence could be more than a year in prison). They may have robbed the company at least in one way, and maybe multiple ways:
- Fraud: This is dishonest conduct with the intent to gain an unfair advantage. They may have abused a company credit card, taken company money to invest it elsewhere, or paid personal expenses. The money may have gone to buy your partner illegal drugs or pay gambling debts
- Theft: Your partner may have taken property belonging to you or the company with the intent to keep it permanently. They may take cash from a register, steal inventory, and use or sell it. They may have taken the company’s intellectual property and sold it to a competitor or plan to use it to start their own competing business
- Embezzlement: This involves the fraudulent taking of money or property entrusted to their care but owned by someone else (like you or the company). Examples include unauthorized fund transfers to personal accounts without permission, submitting fake or exaggerated requests for expense reimbursement, or creating a fictional employee on the payroll and pocketing their pay
How a person steals from a company depends on the person’s imagination and the opportunities to be dishonest. One type of theft may be easy in one situation but impossible in another.
Contact Your Attorney And Ask For Help
If you believe theft is happening but don’t have solid evidence, talk to your attorney or the one your company has retained. They should know what state laws may apply, what evidence they should look for, how to get it, and their legal options to force their partner out of the business while paying back what they stole. Your company’s accountant may also provide critical support for your efforts.
You should also discuss possible criminal charges and what evidence local law enforcement will want to see. Criminal charges are a double-edged sword. When word gets out there’s an investigation or charges are filed, customers and suppliers may wonder how stable and trustworthy your company is. If your partner denies your claims or blames you, they may support your partner – not you.
On the other hand, if your partner is stealing from you, they should be held accountable. If you go your separate ways, they may start a business with someone else and continue the process all over again.
If You’ll Accuse Your Partner Of Theft, You’ll Need The Facts To Back It Up
Your partner may be able to destroy evidence or cover their tracks. It may be wise to find out what’s happening as quickly but as quietly as possible. You may need the help of an employee, like the bookkeeper, or someone outside, like your accountant.
Potential evidence could be anything from copies of receipts to surveillance video. You should look at prior emails, texts, or Slack messages that may be untrue and help them set up their scam. You’ll need that paper trail that will lead to where your company’s stuff went, how, and when. You may also need to quietly interview employees without telling them what you suspect to see if they witnessed your partner saying or doing something incriminating.
If you accuse your partner without consistent, compelling evidence that adds up and word gets out, you’re the one who may be sued. Your partner may try to force you out of the company and sue you for libel or defamation.
Confronting Your Partner
Talk to your attorney about how to best do this. It may be a good idea for them to be at the meeting and present the evidence you found. This will allow you to focus on their reactions and excuses. Depending on state law, you may be able to secretly record the conversation without their knowledge and use the recording in a future legal proceeding.
If law enforcement is involved, such a meeting may not be a good idea. Once there’s enough evidence for an arrest, police should take them into custody before you tell them what you found. If you do this before an arrest, they may escape the area and never be seen again.
This situation can be highly emotional. You need to keep your cool and stay detached and professional, even though you may have known them a long time and considered yourself a friend before the thefts became known. You must also be wary of the fact your partner, faced with these allegations, may become violent, especially if they abuse drugs or alcohol and they feel cornered.
This is a challenging situation to deal with. Get your partnership dispute lawyer’s help to address it in the best way possible.