Legal Question in Business Law in New Jersey

Embezzlement of funds from LLC by the CEO.

A partner in a closely held company has converted and used loaned corporate funds for his own benefit without the knowledge and consent of the other partners. He and the two other partners are guarantors of the company loan. The partner is a foreign national and intends to leave the US and not to return. Payments on the loan are not due until 2004. The partner does not have assets in the US except for

some stocks not of significant value and not enough to repay the loan.

What recourse if any do the other two partners have to have the funds returned and to protect themselves? Is there a crime involved and what can be done to expedite any possible proceedings? Do the partners have a legal way to stop their partner from leaving the country and how they can secure rights over whatever assets their partner has for repayment of the loan. The partners have prepared a

promissory note for the partner to sign. Is that a step in the right direction?


Asked on 9/16/02, 2:28 pm

1 Answer from Attorneys

Re: Embezzlement of funds from LLC by the CEO.

You really need an atty on-board here! Someone to ask all the necessary questions, and help you formulate an action plan to address the situation and your needs.

General comments: This may be a criminal as well as civil violation. Confront him. Tell him what you want - money back, sufficient security to assure payment, another guarntor with assets here, etc. You may need to file embezzelment charges or theft charges depending upon the facts, and his cooperation. The prosecutor will likely demand his passport as he is a flight risk. Then you may need to file a civil suit. You CAN get restitution in a criminal prosecution settlement, but you may need discovery of his assets, etc., and a judgement. He MAY have assets you are unaware of... hell he might win the lottery in 2 years.

Good luck.

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Answered on 9/19/02, 8:08 pm


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