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2 solutions when your business partner has started embezzling

On Behalf of | Sep 2, 2022 | Business Law

A cooperative business arrangement like a partnership reduces the direct pressure on an individual entrepreneur. After all, there are two people to share the responsibilities that come with starting a new business or taking over an existing one.

Your partner could provide half of the capital for your new business or come to the table with numerous industry contacts that help you find high-value suppliers or an existing customer base. They could split certain responsibilities with you or perform tasks that you simply cannot.

So long as the two of you remain honest with one another and keep focusing on what is best for the company, your partnership may be mutually profitable and lead to a successful business. Unfortunately, you may find yourself dealing with missing money, disappearing products or even inappropriate expenses charged to your business accounts.

When you have reviewed the records and determined that your partner has embezzled from the company, what can you do to hold them accountable?

You can confront them and demand compensation

If you have clear records of your partner misusing business resources or video footage of them walking out the door with office computers, you will be in a good position to talk with them directly about their behavior and the impact it has had on the company.

They may agree to cooperate with you and reimburse the business appropriately, especially if they want to continue sharing ownership of the business with you. If they deny their bad behavior or are unwilling to make things right, then you may need to involve the authorities.

You can seek prosecution and file a civil claim

Even when you have a partner that you have a contract with, they do not have the right to steal from the company the two of you started together. If they won’t take responsibility for their actions, you may have no choice but to take the evidence that you have of misconduct and seek prosecution.

The state can charge them with the crime of stealing from the company. Regardless of whether or not said prosecution is successful, you or the business itself may also be able to bring a claim against your partner for the damages they caused or remove them from the company because of their misconduct.

Properly addressing a partner’s misconduct may lead to business litigation or intense negotiations, but it may be necessary to protect the company.