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Question added to topic Legal Basics For StartupsNovember 6, 2007

Can a business partner be charged with embezzlement?

My husband owns a business along with a partner whom he went to school with. The are equal partners. We have discovered this year he had a $10,000 cashiers check issued to himself from a business loan that acts as a checkings plus account. He also has approximately $40,000 in exessive business expenses that are not legitimate which consists of buying himself lunch daily, liquor, pizza, dental, parts for a non-company owned car, down payments for unauthorized company car purchases, groceries, and etc. He has also been using company funds to make a payment on his personal car or RV. He also barely shows up to work. The most he shows up to work is about 15 hours a week. HOWEVER, they did not have a very detailed share holders agreement drawn up. So my husband has nothing in writing which states specific guidelines for expense or excessive spending.
<P>Business partners absolutely can be charged with embezzlement. Embezzlement is simply a form of theft, but one perpetrated by someone who had a relationship of trust to the company. A business owner clearly applies as a person "in a relationship of trust." The use of business accounts to pay personal expenses is a common form of embezzlement. Before you fly into a rage (even if deservedly so), consult an attorney who is familiar with this area for help in the proper way to gather evidence. A false accusation can cost you even more money in a lawsuit and possibly incur defamation charges.</P>

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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