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 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.
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 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.
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.