How Do You Prove a Business Partner Is Stealing?

Examine the company’s gross income, expenses, and net profit to prove that a business partner is stealing. Perform an accounting to determine if the business expenses are supported by receipts, invoices, and vendor statements.

Brad Nakase, Attorney

Email  |  Call (888) 600-8654

Signs Your Business Partner Is Stealing

Carrie and Shaun are partners in a business venture known as Road Runner Grill, a restaurant that specializes in southwestern cuisine. The business is extremely successful, but one day the company accountant approaches Shaun with disturbing news. For the past three months, the company has been losing money mysteriously. Taking his advice, Shaun installs controls on the company accounts and discovers that his business partner Carrie is stealing from the business. It turns out she has been taking large amounts each month to fund the purchase of a vacation home. Shaun is furious, and he wants justice. He wonders how to prove that a business partner is stealing from their shared company.

What To Do When a Business Partner Steals from the Business

Stealing, known formally as theft, is a common occurrence in the business world. When a business owner realizes that his or her partner has stolen from the company, the owner must act quickly to get justice. By acting quickly, the business owner makes it more likely that he or she will receive damages, as well as stolen property or money.

The Four Common Types of Theft

  • Physical and Intellectual Property Theft

Physical theft is when an individual, in this case a business partner, takes money, equipment, or other items off the premises for their own personal gain. They do so without permission and against the best interests of the company. An example of this would be a business partner taking a special printer home to use for his or her personal affairs, without the authorization of the other business owners. The theft of intellectual property is when a business partner takes ideas or trade secrets without authorization. In this case, their use would not be in the best interests of the company. For example, a business owner might take the secret formula for a sandwich sauce and sell it to a competitor.

  • Fraud

Fraud is defined as when a business partner takes money and claims that they are using it for business purposes. In reality, they are using the money for personal reasons or are putting it into another business venture. This action qualifies as both a criminal and civil offense which can result in jail time as well as damages. To prove a case of fraud, a business owner must demonstrate that his or her partner lied on purpose. The business owner must show that he or she relied on the lie, and as a result, suffered harm. However, if it is found that the partner had previously shown themselves to be untrustworthy, then the owner’s case may suffer.

  • Embezzlement

Like fraud, embezzlement is a criminal offense. It is defined as theft or larceny of assets committed by a person in a position of trust or responsibility for the assets. In general, embezzlement occurs when a partner is a signatory on a financial document.

  • Breach of Fiduciary Duty

Breach of fiduciary duty happens when a business owner and his or her partner share a fiduciary relationship. This is when one individual has a duty to act for the benefit of another within the bounds of the relationship. By taking money from a business account without authorization, a business partner is acting outside the scope of the relationship and is acting against the business’ interests.

What Steps to Follow If a Theft Has Occurred in the Business

  • Collect All Evidence of the Theft

It is necessary to provide evidence of the alleged theft in order to rule out potential mistakes, such as accounting errors or missed entries in the books. In general, theft follows a set pattern. Therefore, it is wise to put controls on all the business’ accounts and ask for detailed receipts for every expenditure. Receipts should be printed from a merchant’s receipt form or printer, listing the name of the business and the specific purchases. It is important to watch withdrawals from ATMs using the company credit or debit cards. If a business uses a cash register, then it may be necessary to install security cameras to catch who is removing money without authorization.

  • Figure Out What Kind of Theft It Is

It is necessary to figure out the nature of the stealing and whether or not the issue should be taken to court. An attorney can advise on whether or not to file criminal charges. He or she can also help negotiate with the partner or the partner’s lawyer. The victimized business owner is owed civil financial damages for the breach of fiduciary duty, as well as the recovery of stolen goods or money from fraud, embezzlement, or physical theft.

  • Recover Losses

It is a good idea to connect with an attorney as soon as theft is suspected. This kind of issue is very time sensitive. A team of experienced lawyers can help design a plan that will help a business owner recover his or her losses and move on with their business.

Please tell us your story:

0 + 1 = ?

See all blogs: Business | Corporate | Employment

When Was the Great Recession

When Was the Great Recession?

Delve into the Great Recession's timeline, an era of financial distress from December 2007 to June 2009. Understand the causes, including the 2007 housing bubble crash, and worldwide effects.
When Was the Last Recession in the US

When Was the Last Recession in the US?

Review discussions on America's most recent downturn, comparing the impacts and definitions of Covid-19 and the Great Recession. Analyze the significant effects of past economic crises on US policy and business approaches.
What to Invest in During a Recession- 4 Ideas

What to Invest in During a Recession: 4 Ideas

Uncover effective strategies for investing during a recession, assessing personal goals and current market situations. Examine four robust investment approaches to manage through economic declines effectively.
Will the US Get Hit with a Recession in 2024

Will the US Get Hit with a Recession in 2024?

Experts debate the likelihood of a 2024 US recession, analyzing factors like the yield curve and consumer confidence. Predictions vary, with a focus on interest rates and tech layoffs impacting the economy's future.
How Long Do Recessions Last

How Long Do Recessions Last?

Learn about typical US recession lengths and influencing factors, noting recent trends with shorter durations averaging 10 months. Investigate how external factors and government decisions affect recession timelines, comparing historical data.
When Will the Recession End

When Will the Recession End?

Economists predict a mild US recession with limited impact on employment and spending. The duration and impact of the recession depend on Federal Reserve policies and business cycle patterns.

When not to sign a severance agreement?

Do not sign a severance agreement if you do not understand it. By agreeing to a severance agreement, you give up your right to sue your employer. Remember, it is possible to negotiate the terms of your severance package. You are not required to sign a severance agreement.

How Do You Deal with a Toxic Business Partner?

Address concerns directly to the bad business partner; communicate openly and clearly. Consider mediation or seek legal advice from a business dispute attorney. Document disagreements, consider amicable separation if necessary.

How to Start a Corporation

How to form a corporation in 12 steps. This guide simplifies the process of starting a corporation in California, highlighting the benefits such as legal protection and tax savings for business owners. It covers key steps like selecting a business name, filing legal documents, and appointing directors.

What is a certificate of good standing?

A Certificate of Good Standing is a document issued by the government that certifies that a business has filed all reports and paid the necessary fees with the Secretary of State's office.

eBay vs Amazon

A comparison between eBay and Amazon on their pros and cons of selling online.

14 Best Self Employed Jobs

This article will give ideas for leaving your dead-end job or exploring self-employed jobs for extra income.

Community Involvement: Benefits and Ideas

Community involvement is consistent and meaningful participation in community activities that support and bring measurable positive improvements to the community in which your business operates.

See all blog: Business | Corporate | Employment

© Copyright | Nakase Law Firm (2019)