Corporate Officer and Co-Owner Theft
What should you do if you suspect that a business partner, another member in your LLC or a corporate shareholder or officer is stealing from the company? What actions should you immediately take to protect the company?
If you suspect one of your business partners of theft, it is important to take immediate action. You have a fiduciary duty as an officer and owner of the business to do so. But what action(s) should you take? What action(s) are you required to take? The attorneys at the Watkins Firm have served the San Diego business community for decades, and unfortunately this situation is not as uncommon as one would hope.
Our first and best suggestion is to take a deep breath, and never confront or accuse a business partner, member in your LLC or fellow shareholder or officer of theft unless you are absolutely certain, and have the evidence to back it up. The relationships with co-owners are too important to the life of the business in the event that facts are mistaken. Partnership disputes exhaust corporate resources and distract the business form it’s primary focus. If theft is occurring, you don’t want to tip them off to your suspicions until they are well documented and you have genuine leverage.
How Do You Gather Evidence of Theft?
If you are concerned about the activities of a business partner or that they might be stealing from the company we invite you to contact us, or call 858-535-1511 for a free and substantive consultation. We will discuss your unique circumstances, and help to develop a strategy that will guide you through the process.
The first step is to gather evidence, and to put controls in place that make it easier to identify and document stealing or the misappropriation of corporate assets. Controls on corporate credit and debit cards should minimize purchasing authority, and require extensive and detailed receipts. One strategy the suspect may be employing is to combine legitimate expenses with personal purchases.
Forensic accounting strategies can help to identify and document corporate theft. It may be necessary to put physical surveillance equipment in place to record computer related activities, and cameras to monitor point-of-sale equipment and cash drawers. We work with our clients to provide resources that review and document abuses associated with:
- Bank statements
- Accounting Records
- Credit Card Usage
- Commingling of Assets
- Possession of Company Property
How Are These Partnership Disputes Usually Resolved?
Your business associate may very well be guilty of both criminal and civil offenses. Our attorneys will help you to identify primary and secondary goals for your unique circumstances. The leverage of potential criminal charges provides our attorneys with a strong negotiation position from which to recover stolen property, assets and money. It may not be in the best interests of the company to immediately pursue criminal charges, however this may be required downstream.
It is often easier to recover stolen assets and repayment of misappropriated funds when the suspect is not in jail, and is able to earn an income and make restitution. Protections must be put in place to preserve the succession of the company, which may include the creation of a new entity. These decisions are quite legally and professionally complex. Your company’s reputation with its customers may dictate one course of action, while fiduciary responsibilities and corporate realities may require other options to be considered.
Contact Experienced San Diego Partnership Dispute and Business Litigation Attorneys
Are you concerned that a business partner or co-owner is stealing from the company? We invite you to call 858-535-1511 for a complimentary and substantive consultation, or contact us to schedule an appointment to meet with us personally. The experienced legal team at the Watkins Firm will guide you through this unfortunate episode, and help you to put a stop to theft and abuse of corporate power while protecting your company and business interests.
We understand the complex emotions that you must be facing in these trying moments. It is important for you personally, as well as an officer of the company to reflect on what has happened, carefully document the theft, and work with seasoned expert professionals who will confront those involved and work to develop a settlement that accomplishes your professional and personal goals.