What If a Business Partner Is Stealing From an Account?
by Nathaniel McKenzie
When you form a partnership, the goal generally is to combine your talents and resources with another person so you can both make a profit. Sometimes, however, things don't go as planned. When a business partner gets greedy or loses sight of where his loyalty belongs by stealing from a business account, you may pursue various legal options.
You may have a case for fraud against your business partner. Fraud is both a criminal and civil offense, meaning it offends society as a whole and you personally. Accordingly, your business partner's theft could result in jail time and damages. To prove fraud, you generally must prove that your business partner knowingly lied, you reasonably relied on the lie and you suffered harm because of it. Evidence that you knew your business partner was untrustworthy could undermine your fraud case because your reliance may not be reasonable under those circumstances.
You may sue your business partner for breach of fiduciary duty if you know he's been stealing money from your business account. You and your business partner have a fiduciary relationship. According to Black's Law Dictionary, this is "a relationship in which one person is under a duty to act for the benefit of another on matters within the scope of the relationship." As a general rule, taking money that belongs to the business and using it for yourself does not benefit the business and goes beyond the scope of proper conduct for a business partner.
You can file a criminal complaint against your business partner for embezzlement. According to FindLaw, embezzlement is generally defined as "theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets." You likely formed a business relationship with your partner and made him a signer on your business account because you trusted him to act in the business' best interest. If your business partner stole money from the business, he violated that trust and may, accordingly, be guilty of embezzlement.
You may decide to cut your losses and dissolve the partnership after you learn your business partner has been stealing. Dissolution is the process of bringing your partnership to its legal end. The dissolution process is different in every state; however, it generally involves submitting dissolution paperwork to the state office that processed your business' formation. Once you dissolve your partnership, you generally may move on with another partner or as a different business entity, such as a corporation.
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Nathaniel McKenzie | 01/15/2018