Recovering Business Losses From Criminal Activity
Your business is the target of a crime. Merchandise has been stolen in a burglary. A drunk driver has driven through the front of your store. An employee has embezzled money. The criminal has been apprehended. What is your recourse to recover your financial losses?
The first source of recovery is your own insurance policy, which likely provides coverage for most losses resulting from criminal activity. Make a claim under your policy, secure a police report and follow through with the requirements of your insurer to prove your claim. If your policy doesn't cover the loss or you're not insured, you can sue the perpetrator, especially if the perpetrator is insured, as might be the case of the DUI driver who smashes your store.
If the perpetrator is not insured, you can still sue him or her in civil court. This has at least two disadvantages. Your own legal expense might be considerable, and the defendant likely won't have enough money to pay you. The last thing you want to do is throw good money after bad and increase your own losses.
There's another source of recovery that involves little cost to the victim and is backed by the priceless punch of a social giant. In most states, the court where the perpetrator is being prosecuted can order restitution as part of any sentence. Whether the perpetrator is found guilty after a trial or takes a plea deal to avoid trial, the court has the power to make restitution a condition of the sentence or probation.
The restitution order has several advantages for the victim. First, the victim's effort to receive compensation is backed by the power of the state. Not only will the state enforce payment with the threat of jail time, but the money is funneled through the state agency from the perpetrator to the victim so that there is no direct contract between the two, and all at little or no expense to the small business owner.
Finally, in most jurisdictions, if the criminal court doesn't compel the perpetrator to make full restitution, the law generally provides that the restitution order may be automatically converted into a civil judgment. For example, the criminal judge may tire of seeing the perpetrator back in court over financial issues, or the perpetrator may convince the court that he or she can't pay. In this event, the victim can pursue collection of the restitution order as a civil judgment, with all of the rights and remedies of any creditor against a debtor. The small-business owner has avoided the expense of civil proceedings to obtain the judgment and can hire professionals to collect the civil judgment for a percentage of the recovery, saving the victim out-of-pocket collection expenses.
In appropriate cases, small business owners who have been victims of crime can use the power of the criminal judicial system to recover financial losses at little or no additional expense.