Legal Question in Business Law in California

Re: set up

If what you did is a crime at all, I guess it would fall into the category of embezzlement.

Over the years there has been controversy as to whether a partner can be guilty of embezzlement of partnership property, since a partner is an owner of the partnership, and yo can't steal from yourself. The current state of the law seems to be that yes, it is possible to be charged and convicted of embezzlement of partnership funds, even though as a partner, you are part owner of the funds. You aren't the whole owner, and in any event your ownership is indirect, though your partial ownership of the partnership.

Still, if both partners were regularly using their partnership credit cards to buy personal things or pay off personal debts, I think you would have a very strong defense that the partnership had consented to this practice and therefore there was no criminal intent and no crime.

Furthermore, your ex-partner cannot charge you with a crime; that is the role of the district attorney after receiving and reviewing a complaint made to the police by or on behalf of the victim. If this is really a business card and there really was a partnership (and I assume there was), then the partnership is the victim, not necessarily the individual partner, though this is kind of a technicality. In any event, unless the amount involved is huge, the D.A. is probably going to look at this as a civil matter and not waste his staff's time of filing and prosecuting it as a criminal matter. This is particulaly likely if the partnership is solvent and has sufficient funds and profits so it can absorb the partners' occasional indiscreet and improper use of the credit card without bringing down the roof.

In any case, even in the unlikely event you were prosecuted, and in the also unlikely event you were convicted, your sentence would almost certainly be probation (if this were a first offense) and if you could make bail you would never spend a single day behind bars.

If you are charged with a crime and cannot afford a lawyer, the court will appoint one, probably a public defender, at no cost to you.

Keep in mind that there are limits on the power or one partner to eject another from a partnership, and that even where this is permissible, the ejected partner is probably entitled to being bought out based on her capital account. If there are any claims by the partnership against the expelled partner, these can be deducted from the buy-out payment. Ask whomever does the partnership books for your capital account and the card charges, and demand the balance as your entitlement upon being removed from the partnership.