Legal Question in Business Law in Texas

How to deal with an expected Embezzeler

I have a friend who is in an S Corporation. Two of the partners supposedly put in the money, and two run the business. One of the money partners keeps the books and will not let anyone else see them. My friend knows the company should be making money, but is being told they are not. We investigated some and found, through bank statements, and check copies, that the money partner is paying loans to the bank that the company never took out, as well as writing checks to himself, despite the fact he has stated that the investors have not taken any money out. This also affects the bonuses for the two working partners. We know he is embezzeling. How do we approach this? My friend wants to buy out the other partners. Should this be leverage? Certainly we don't want to blackmail, but how should we go about making sure what is going on?


Asked on 11/13/02, 1:14 pm

2 Answers from Attorneys
Peter Bradie Bradie, Bradie & Bradie

Re: How to deal with an expected Embezzeler

Embezzelment is a form of theft. I suggest approaching the District Attorney concerning the pressing of criminal charges, if it is actual embezzelment. If he's simply keeping the company as his own piggy-bank, you can bring suit against him for an accounting and breach of fiduciary duty.

Unfortunately there's no nice way of getting someone's hand out of the cookie jar.

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Answered on 11/13/02, 1:20 pm
Robert Forrester Gibson, Ochsner & Adkins

Re: How to deal with an expected Embezzeler

tell your friend to get a lawyer immediately. Your friend has every right to see the books.

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Answered on 11/13/02, 3:09 pm


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