What To Do If A Business Partner Is Stealing From the Business

Criminal Law, Litigation

Stealing or commonly referred to as theft is not uncommon in business. Now that you have realized the wrong doing by your business partner(s) you must act quickly, so you will be more likely to recover damages, stolen property and/or money.

4 COMMON TYPES OF THEFT

Physical and Intellectual Property Theft

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.

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.

STEPS TO FOLLOW IF YOU BELIEVE THEFT HAS OCCURRED IN YOUR BUSINESS:

Gather and Compile All the 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. Keep an extremely close eye on 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.

Determine What Kind of Theft it is

Determine the type of theft and whether or not to begin the court process. 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.

Begin to Recover Your Losses

Reach out to an attorney immediately to get ahead of this problem. These matters are very time sensitive. Your new team of attorneys will map out a detailed plan on how you will recover your losses and how the business should operate moving forward.