Is your business partner stealing from your company?  How can you prove this and put a stop to it?  What actions can you take?  What impact will this have on the business and ownership interests?  There are unfortunately many ways in which a business partner, member, shareholder, co-owner or fellow member in an LLC can skim money or assets and take advantage of other owners in the business.  The Watkins Firm will help you to put a stop to it.

One primary strategy is the commingling of funds and assets.  If a partner or co-owner is using company funds to pay for a vehicle that is titled in their personal name, or to pay credit cards or other personal debt they are, in effect, stealing from your LLC or company.  They are also risking the integrity of the corporate veil that protects you and other members or shareholders from being held personally liable for business debts and liabilities.

If you are concerned about your business partner stealing from your company you can’t simply accuse them of theft.  There are strategies we can help you to deploy that will identify theft, document it and provide the evidence necessary to take action.  We will help you to organize and evaluate bank statements, company books and all financial activities associated with the partner or owner in question.  We will manage the process of organizing evidence and then actually confront the behavior, saving you from the uncomfortable and potentially damaging task of confronting theft.  Co-owners and partners who are stealing from your LLC or company are often family members or close friends.  The relationships are delicate, and you have decisions to make about how the process will be handled, and whether or not criminal charges are in order.

Pro-Tip: “Theft and embezzlement are also unfair business practices. This actually happens a lot. I mean, multiple times a year we’re dealing with issues where actual theft and embezzlement of assets will occur. And so if you are an investor in a company and it’s not doing well, then all of a sudden it’s doing well. But you’re not getting any money and you’re not getting any access to the corporate records. And when you do get access, your forensic CPA quickly tells you that there’s been theft going on. You are going to be bringing an action for theft and embezzlement, but you’re also going to want to bring an action for unfair business practices because in addition to paying you back all the money they stole, you’re going to get the attorney’s fees too.

But, it just makes more sense in a lot of these situations to have your attorney manage the process and the conversation. When it comes to people in business with each other, there’s an emotional content. So if you say, I’ll offer $20,000 to resolve this matter, then the other side will say, I want $200,000. But if an attorney tells your attorney who you have to pay, these are the reasons I think this is a good offer. And then that attorney tells the client, then the case is resolved. And if they can’t get that done because of the way people are, then we often go to a third party mediator who’s been doing this for a long time.  We have the parties, their attorneys and the mediator, it takes that many links of communication to get a deal done. The mediators we work with are very successful and resolve many cases.” – Dan Watkins, Founding Partner

There is also the matter of their ownership interest.  What becomes of this?  How is it valued, and what actions can you take to move them out of the company?  A concern about your business partner stealing from your company is a delicate matter, and 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.  In some cases these behaviors develop from a “run-and-gun” style of management and may not be nefarious or based upon criminal intention.  They are still a risk to the viability of the company and your own personal liability, and we can help you to put a stop to it.