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What to Do if You Suspect Your Business Partner Is Stealing Money From the Company

Business Partner

There is not much that is worse than discovering your business partner is a thief. Such an act of betrayal by a person you trust can be an extremely emotional experience. Do not allow them to take over. Now is a time to keep your head, so you will be more likely to recover damages and stolen property or money.

Helpful Definitions

business partner is a person or entity with an ownership stake or a contractual working relationship with you in business. As such, a business partner who is found to be stealing from the business can be prosecuted.

Business relationships can be:

  • Person-to-person
  • Business-to-business
  • Person-to-business

It does not matter; if an individual removes assets illegally from a business for personal gain, it is stealing.

5 Different Types of Theft

There are different types of theft.

  • Physical theft
  • Intellectual property
  • Fraud
  • Embezzlement
  • Breach of fiduciary duty

Physical theft is self-explanatory; the person took cash or items off the premises for personal gain without authorization and against the best interests of the business. You could consider intellectual property theft in this context as ideas or trade secrets are taken without permission, and their use is not in the best interests of the company.

Does your business have trade secrets you want to protect?

Consult an experienced intellectual property attorney today>>

  • Fraud

Fraud is defined as a partner taking money under the pretext of using it for the business but, instead, using it for personal reasons or diverting it to another business or venture. It is both a civil and criminal offense and can result in incarceration as well as damages.

To prove fraud, you must prove your partner intentionally lied; that you reasonably relied on the lie; and you suffered harm from doing so. If evidence is found that your partner was untrustworthy before this, it could damage your case.

  • Embezzlement

Embezzlement is also a criminal offense and is defined as theft or larceny of assets by someone in a position of trust or responsibility for the assets. Embezzlement most often occurs when a partner is a signatory on a financial account.

  • Breach of Fiduciary Duty

Breach of fiduciary duty occurs when you and your partner have a fiduciary relationship, which is where one person is under a duty to act for the benefit of another within the scope of the relationship. Taking money from an account that belongs to the business is both outside the scope of the relationship and against the interests of the business.

What to Do if You Suspect Theft

First, call an experienced Dallas litigation attorney to guide you through the rest of the process.

1. Gather Evidence

Evidence must be available to prove the act of theft and to rule out mistakes, accounting errors, or missed entries into the books. Theft most often follows a pattern; if you find one, you will have part of your evidence.

Put controls on all your accounts and require detailed receipts for any and all expenditures. Receipts should be from a merchant’s receipt form or automated printer with the business name and a list of purchases.

Watch all withdrawals through ATMs from a company credit or debit card and, if you have a cash register, install one or more cameras to record who is removing money.

2. Determine Type of Theft and Make a Decision on Prosecution

Determine the type of theft and whether or not to prosecute. Your attorney can help you decide whether or not to file criminal charges as well as negotiate with your (soon-to-be-ex) partner or the partner’s attorney. You are also entitled to civil financial damages for breach of fiduciary duty along with the recovery of stolen money or goods from embezzlement, fraud, or physical theft.

3. Dissolution and Recovery

Legally dissolve the partnership and recover stolen property or money. Criminal fraud and embezzlement are strong levers for property and financial recovery as well for removing a partner from the business.

Steps of Prosecution

Report the theft to create a record including:

  • Nature of the theft
  • How you discovered it
  • Scope of incriminating evidence

Law enforcement will then investigate to establish reasonable cause to pursue the case and verify the evidence.

The partner at fault will be arrested and arraigned in court:

  • Accusation of theft will be read to the defendant
  • Defendant enters a plea
  • Hearing dates are determined
  • Defendant will be held in custody or released on bail depending on the charges and progress of the investigation

The case will go to trial. The prosecution (you) must prove the accusations. Meanwhile, the defendant is innocent until proven guilty in court. Evidence will be substantiated to implicate the defendant in the incident of theft. If found guilty, the defendant is sentenced.

Never attempt to go through this alone; always call a litigation attorney. A criminal act is serious, and you need to be diligent and within the law for a positive outcome. Your attorney can maximize the amount of damages you recover as well as effectively negotiate and leverage the case to accomplish your goals.

Your trust has been betrayed because a business partner whom you trusted has broken faith with you. You deserve to recover what you can and move on with the assurance that your ex-partner is out of the picture.

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