Legal Question in Business Law in California

Re: Unauthorized withdrawal of Corporate funds

Criminal complaints are the province of the district attorney. You should assemble whatever evidence you have and make an appointment to see your local DA's white-collar crimes specialist. You will probably be asked about your willingness to appear as a witness. This is what is usually meant by the phrase 'pressing charges.'

It is useful to recognize that the most directly victimized party here is the corporation itself, and that the directors (as a group and pursuant to the bylaws) have both the power and the duty to look after its affairs, including pursuing the civil and criminal remedies available to it.

This puts a burden on the OTHER directors to act. Are you a director as well? Are you a shareholder?

If the other directors fail to act, several things can happen. First the non-acting directors may incur liability for their laxity.

Second, any shareholder may institute a derivative action on behalf of the corporation, to enforce the corporation's rights and to oblige the corporation to act despite the board's refusal or neglect.

Board members have a fiduciary duty to handle corporate affairs and property with a high degree of fidelity and integrity, and the civil and criminal penalties for disregard of such duties can be severe. It would be interesting to know more of the facts of the situation, the quality of evidence you have, and what defenses the suspect director might have.

If you are in Northern California I would be interested in discussing this matter with you; I have prior experience in both criminal and corporate law matters of this type.

Re: Unauthorized withdrawal of Corporate funds

Do you want the guy in jail or do you want your money back or both?

If you just want him in jail file a report with the district attorney and/or police.

If defending a criminal action is going to bankrupt him and leave him without the ability to pay back the money you can file a civil lawsuit against him.

However, in the interim you should take immediate steps to make sure he is no longer in a position to do the same, i.e., remove him from office/take him off all financial authorizations.

I would be happy to discuss your options.

J. Caleb Donner

805-494-6557

web site: www.donnerlaw.com