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Surviving a Deadly Partnership

It's not likely your business partner will attempt to kill you like Phil Rouse's did, but you can still learn a lot from his story.

Entering into a business partnership is always a shaky proposition. Will you agree on the business's mission? Will you take equal parts in the actual operation of the business? What if your partner shirks his duty? Or mishandles money? Or...tries to kill you?

The last "or" probably sounds too far-fetched to be on your list of worst-case scenarios. And maybe it is awfully unlikely, but Phil Rouse never thought it would happen to him, either.

Ever since Rouse, 63, bought a 1930 Model A Ford when he was just 20 years old, he had one dream: to open a shop restoring antique cars. In 1997, he made it happen: He left his job and opened a shop. One day, his neighbor of 15 years stuck his head over their shared backyard fence and asked whether he could join in as a silent partner. He'd put up $5,000 and take care of the paperwork. "I thought, what a sweet deal," says Rouse. "If I don't have to worry about paperwork, that's gonna be great. Because, really, my fun was restoring the cars."

The business immediately did well, with two cars in the shop and 30 on a waiting list. But Rouse soon became mysteriously ill. He stopped working; his two employees kept the shop running in his absence. Twenty thousand dollars in medical bills later, doctors couldn't determine the cause. "I was just suffering like a dog," says Rouse, who lives in Memphis, Tennessee. "One doctor even suggested I go see a psychiatrist."

What happened next seemed too surreal to be true. Rouse discovered his partner was stealing money from the business after one of their employees told him two suppliers had put them on a cash basis because they weren't getting paid. He asked his neighbor about it, and he shirked the question. Rouse found canceled checks to an insurance company--and he recalled his neighbor once proudly admitting his knowledge of poisons. The clues came together. "It seemed like every time we ate together, I'd get sick," says Rouse. "It occurred to me that because he knew I was becoming suspicious about the theft, was it possible this guy was trying to kill me? It sounded as far-fetched to me as it did anyone else."

Rouse told his doctor the story and received a heavy-metals test. While awaiting the results, he was in so much pain, he even went to police with his story, asking for an autopsy in the event of his death. The test came back positive: He'd been poisoned with arsenic and mercury.

An investigation ensued, and slowly, all the partner's misdeeds surfaced. He had obtained a $100,000 keyman life insurance policy on Rouse and transferred all of Rouse's business assets into his name. Money was missing from the business. Revenues were underreported regarding sales taxes.

The neighbor is now serving 35 years--six of which are for theft-related charges--and Rouse is in a wheelchair, dealing with the physical and financial repercussions of these crimes and moving on with his life. "I don't want to sound like a hero, but there's nothing I can do but accept what's happened to me," says Phil. "And of course, I'm confined to a wheelchair, but I have to remember that I walked for 60 years. And there are a lot of people who never walked at all."

While Rouse laughs when asked about ever going into a business with a partner again, many would-be and current entrepreneurs like you are doing just that. And while it's highly unlikely your partnership will end as horribly as Rouse's did, you still need to enter into your partnership with eyes wide open.

Rouse never got his own attorney; he let his neighbor take care of that. He never did a financial background either; if he had, he would have discovered his partner was $90,000 in debt. What are some other things you want to make sure you do before you enter into a partnership? We've asked three of our experts for their advice.

Expert Advice

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