How Can Individuals Find Evidence of a Partner’s Theft?
Accusing a business partner, or co-owner of the business of theft will undoubtedly damage the friendship, not to mention the business. First, individuals must accept that stealing is not normally an issue that can be overcome, and that the business will now be irrevocably changed. Second, the individual who suspects their partner of stealing must be relatively certain that the transgressions have occurred.
Evidence that the crime has been committed changes peoples’ suspicions to assurances. When individuals have proof that stealing has occurred, they can move forward with the legal process. The question is: how can one find solid evidence that a partner is stealing money from the company?
The first goal should be to identify the person who is stealing. No one should make accusations without facts that support their concerns. Sometimes, partners or owners suspect cheating or stealing occurred, yet it turns out to be an honest mistake. Often, a single incident can be explained by an error in accounting, or a missing number in the financial books.
However, when a pattern of missing money occurs, or profits are repeatedly skewed by a wide margin, an employee, partner or owner may be stealing.
The next goal is to ensure that all banking and credit transactions are documented and recorded. Individuals should make sure that they:
- Monitor all accounts
- Track the record sales and expenses paid
- Require receipts for all expenses with no exclusions
Many dishonest employees exploit company debit cards or credit cards. They withdraw small increments repeatedly from the ATM, or charge one large sum on the company card. Embezzlers have many strategies for stealing from a business, and it is impossible to know exactly what their scheme is. Therefore, it is crucial for not just the owners or partners, but everyone at the business to stay vigilant.
Some companies that use cash registers decide to install a camera nearby to document the action. Although this may seem intrusive, installing a camera to document employee behavior does not break any laws.
It is not possible to successfully identify, target and prosecute a company thief without direct evidence of their wrongdoing. Individuals who suspect their partners or co-owners of stealing from the company cannot break the law in their search for evidence, but they should be diligent in their pursuit of solid proof.
For example, Carl is one of the co-owners of Sandwich Hut in Mountain View, California. Though Carl makes $37 per hour, he isn’t satisfied, nor is he a hard worker. Carl begins to pocket small amounts of money during each shift, about $10-20 per day.
Carl isn’t a very shrewd thief, however, and his partner and the other co-owner of the shop, Rick, quickly becomes aware of Carl’s scheme. However, Rick also knows that an empty accusation will not work in his favor and could make the situation worse.
Rick knows he must gather evidence, so he pretends that everything at work is fine while collecting proof on two fronts:
- One, Rick tracks an entire month of sales, and counts the register each day. He also keeps track of credit and debit sales. Based on these records, it becomes clear that money is missing from Sandwich Hut’s profits.
- Two, Rick places two cameras near the register without Carl knowing. After a few weeks, he has indisputable proof of Carl’s thievery.
Because Rick was patient and acted strategically, he was able to obtain the proof he needed. Ultimately, Rick met with his attorney first, and then met with Carl with his attorney present. Carl resigned, apologized, and paid the money back all at once.
There is no room for error when a director, partner, co-owner, or employee steals from their company. One must act quickly, locate evidence, and contact an experienced business attorney for assistance and advice.
Is Fraud the Same Thing as Stealing?
When an individual commits a fraudulent offense, their actions must be taken seriously not only by the company, but by a court of law. Fraud can take various forms in the business world, including:
- Use of company funds for personal reasons
- Use of company money for a different company
The key to identifying fraud is that the partner or director takes the money under false pretenses. While the individual might contest that they are using the money “for the business,” they are in fact using it for their own personal gain. When one person observes dishonest motives behind the other partner’s actions, they or their business may be victims of fraud.
Fraud is both a criminal offense and a civil offense, and it can result not only in penalties from the business, but legal repercussions such as arrest and imprisonment.
Similar to stealing, business partners must have evidence to build a fraud case. If the aggrieved individual can document deception or misrepresentation against them, the business, or both, they may have enough evidence to build a strong fraud case. When fraud is suspected, we suggest contacting an experienced attorney for a consultation. The attorney will ask about the amount of money taken, the conditions, and the proof that the wronged partner has collected, and build the case from there.
While stealing from the company and behaving fraudulently are similar, they are separate offenses and are treated as such. However, individuals who attempt to defraud their companies often steal from the business as well. Embezzlement, fraud, and stealing are fueled by greed, dishonesty and corruption, and each offense can seriously harm your business.
How Can Disputes Over Stealing Be Resolved Legally?
It is essential for business owners to understand the differences between the criminal offenses that can damage their companies, their relationships, and their livelihoods.
Embezzlement happens when money or business assets are stolen by one of the company’s trusted individuals. Though it can take many forms, embezzlement often occurs when the money that belongs to an employer is misappropriated and used for other reasons. Employees and other company insiders are much more likely to embezzle than those outside the company, and often it is the most trusted employees or partners who take advantage of the company in this way.
Embezzlement falls under the definition of fraud, which implies that an individual takes money under the condition that it is “for the business” and then uses it for themselves. When business partners act fraudulently, they feed the other partners lies and cause deliberate damage to the business for the sake of their own greed and egos.
Finally, if a partner steals from the business, they are also violating their “fiduciary duty.” Fiduciary duties are violated when one partner does what is best for themselves as opposed to doing what is best for the company. Business partners pledge that the business comes first when they come together to sign a partnership agreement, yet sometimes they decide to . place themselves before the business. When partners prioritize themselves, usually their actions are bad for business. These actions can become extreme, and include stealing.
Business partners must be able to rely on one another to support the business and each other. If a partner damages the company in any way, they are violating their fiduciary responsibility and violating each other’s trust.
If it is provable that an individual acts fraudulently or embezzles from the company, then the person should not only be removed from the business, they also may face criminal charges. When business partners suspect each other of stealing, they should remain calm, document the fraudulent actions, and schedule a consultation with an attorney. The wronged parties may be entitled to recover financial damages for the violation of fiduciary duty, as well as damages for the stolen funds or assets.
An experienced attorney will also be able to advise clients regarding filing criminal charges, and how to communicate and negotiate with the guilty partner or director.
Get in Touch with Nakase Wade Today
Finding out that a shareholder, business partner or even employee is stealing from the business is alarming. Once the shock wears off, however, individuals must proceed rationally with knowledge that the law is on their side.
Chances are that the dishonest party has not only stolen from the company, but violated your trust as well as their fiduciary duty.
At Nakase Wade, we have helped many business directors and owners deal with company theft. We know how important it is to plan out the course of action and execute. Our skilled attorneys communicate with our clients every step of the way, and we will maximize the amount of damages to be recovered.
Our California business lawyers and corporate attorneys know how important your business is to you. We also know that greed and dishonesty have no place in the business world. Together, we will successfully deal with the problem so that you can move on with not only your corporate career, but your life.
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