Are you upset about business fraud or theft involving a co-owner, business partner, member in an LLC, shareholder, financial officer or employee in your California business?  Business fraud involves false material statements or knowingly providing incorrect information which is relied upon you in the course of running your company and making decisions.  This can involve purposeful untruths or an intentional omission as well as an element of deception.

What Should You Do If You Suspect Business Theft or Fraud

There are many business disputes between partners or members in an LLC, investors, shareholders or owners in a San Diego small business or closely-held corporation.  When you become concerned about a business partner stealing money or commingling personal and business funds and/or assets these are substantial red flags which require immediate attention from an experienced business attorney.  The loss of trust between business owners puts many wheels in motion which can and ultimately might destroy your business. It can even expose you to financial, if not legal risk as well.

If you have concerns about how money or income is being handled you should trust your hunch and take prudent, well considered action.  This does not mean a knee-jerk confrontation, it means contacting the experienced business dispute attorneys at the Watkins Firm or calling today for a free consultation at 858-535-1511.

Why You Shouldn’t Confront a Partner Who is Commingling or Committing Business Theft or Fraud?

Why shouldn’t you just confront them if you are upset about business fraud or theft and/or commingling?  The first reason might be you don’t have enough facts to prove wrongdoing on the part of your business partner.  If your fellow owner is commingling personal funds with the business and then taking money out of the business to pay that back it is an immediate red flag.  Commingling of assets is the fastest way to destroy the protections of the corporate veil provided by your LLC or corporation.  This will open you up personally to any liabilities, debts or lawsuits that arise against your company.

The second reason you shouldn’t confront them is it puts them on guard and your partner is likely to stop the very behavior we are trying to document, at least for a little while till they perceive the “heat” is off.  We can help you to set up controls and to capture documentation that will prove what is or isn’t happening.  Perhaps the other partner simply needs a bit of education about the risks of commingling and the proper way to handle expense reimbursement and owner capital accounts.

Do You Wish to Continue Being Upset – Or Are You Prepared to Resolve This?

The bottom line question is this: do you just want to continue with your suspicions and being upset about business fraud or theft, or is it time to reach out to the Watkins Firm to resolve this?  If theft is occurring, you shouldn’t have to be the one to confront them.  Commingling may simply require education and guidance from an outside legal source.  If they are in fact stealing or attempting to use fraud to deceive you or manipulate money or control you will want all of the leverage possible to negotiate the most advantageous solution.

You will need a plan to document the situation, obtain evidence and ultimately to resolve it.  Our legal team will help you to organize the facts and we will confront your business partner or associate on your behalf.  Theft and fraud are criminal offenses and usually in these situations we negotiate a swift reimbursement and an even faster exit from the company.

Pro-Tip: “We’ve seen it all over 40 years! We have handled thousands of shareholder or partner fraud cases for closely held companies. And that’s just basically partners who are ripping each other off. You gather a bunch of money, you throw in $10,000, I’ll throw in $10,000, often it’s really kind of loose.  It shouldn’t be. We’ve had cases where a business has folded, and six months later one of the partners learns 3 of their former partners took the company overseas and that the company’s making millions of dollars a year and their former partner is driving a Rolls Royce and has a new huge house. And that same scenario alone has probably happened with our clients over the last 40 years, I don’t know, 50 times?  Countless cases of fraud and theft by a partner or co-owner. And so knowing how to handle those cases has become sort of an art form. I’ve had my own ideas, but I’ve also learned from other lawyers here about, you know, their experiences and handling those disputes.

A lot of accounting. That’s why we have forensic accounting experts. However,  before we even hire an expert, our team here knows when things are a bit “off”. Bring in your books and records. We’ll do something called the Spot Audit of our own and we’ll just look to see if things match or are randomly off by a penny. Off by a penny, off by a million. And we’ve gotten some very good results on behalf of people who would probably not have gotten anything from their investment when it turns out down the road they should be upset, they were ripped off.” – Dan Watkins, Founding Partner

If you are upset about business fraud or theft involving a co-owner, business partner, member in an LLC, shareholder, financial officer or employee in your California business we invite you to review our podcast Episode 11 – Resolving Business Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.  Each situation is unique, and we can provide sound counsel on the best options to document what is happening and resolve the questions in your mind.  Protect your company as well as your business and personal investments and interests.