Discovering that a business partner has stolen company funds can be a devastating blow. Depending on the amount of money involved, it may be difficult to maintain operations, pay bills, or compensate employees.
More importantly, it may be impossible to maintain the trust and confidence of clients and investors, and it could potentially damage the reputation and future of the business. If the level of theft is significant, it may be necessary to pursue legal action against the partner in question.
This can involve a lengthy and costly process, which may further disrupt the business’s operations and cash flow. In addition to legal action, it may be necessary to implement stricter financial controls and to review the company’s accounting practices to prevent similar situations from occurring in the future.
It is crucial to take swift and appropriate action when you discover that your business partner has stolen company funds. If left unchecked, the situation could escalate and cause irreparable damage to the business. Seeking the advice and guidance of a qualified attorney can help you understand the legal implications of the theft and the best course of action to take. Additionally, it may be necessary to inform key stakeholders, including employees, clients, and investors, of the situation and what steps are being taken to address it.
Transparency and honesty are essential in these situations, as they can help to preserve trust and demonstrate a commitment to ethical business practices. Ultimately, while the fallout from such a situation can be difficult to manage, taking swift action can help to mitigate the damage and position the business for a more secure and sustainable future
My business partner has stolen money from our business account
When a business partner is caught stealing money from the company bank account, it has substantial consequences that, unfortunately, can jeopardise the company’s future. Stealing is a serious offence, and your business partner faces criminal and/or civil consequences.
The consequences for you as a business partner could include investigations into your own financial affairs as well as those of the firm, a loss of reputation both individually and as a company, a probable inability to pay suppliers, and, in the long run, insolvency.
What steps can you take initially?
The first step in dealing with the matter is to seek expert professional advice. This is a delicate combination of conditions that necessitates careful planning in order to effectively deal with them and collect the clear evidence that may be required later on.
Cancelling cheque books and cards for the business account, as well as altering the mandate so your business partner cannot withdraw money with their sole signature, may be necessary.
It may be recommended that you perform an objective internal examination at your company, including auditing accounts. You and your professional adviser will need to agree on a process for gathering and recording any evidence you find so that it may be passed on to the police or the Serious Fraud Office (SFO) if necessary.
You should also notify your insurance carrier about the issue, as they may be able to provide additional information on filing claims and will collaborate with the authorities in this regard.
Criminal and/or civil proceedings
The circumstances determine whether your spouse committed criminal fraud, but there must have been a ‘intention’ to commit deception for personal gain. If there is evidence of this, the police may opt to prosecute because it is a crime. Individuals may also bring private prosecutions in criminal courts in certain circumstances.
Depending on your goals and priorities, as well as the gravity of the case, you may be able to take action through the criminal court, the civil court, or both. The amount of proof required to successfully pursue a civil case against your business partner is lower than that required in criminal court. A civil court demands proof based on a “balance of probability,” whereas a criminal prosecution requires proof based on “beyond reasonable doubt” that the accused committed the offence.
Taking civil court action
You will have more control over the proceedings if you take action in civil court, and your main goal will be to recover some or all of the stolen money or to receive compensation.
If your evidence against your business partner is strong and persuasive, a judgement could be issued promptly, which is one of the advantages of bringing action in civil court.
You must pay the court fees unless you obtain an order compelling your business partner to do so. Another disadvantage of initiating action in civil court is that your business partner is not subject to formal punitive actions.
Criminal court action
If you decide to file criminal charges against your business partner, or if the police file charges against them, the verdict will be decided by a jury. If convicted, a judge will impose a fine, jail for up to ten years, or both, depending on the seriousness of the case and where it is tried.
While investigating suspected fraud charges, the police and SFO have broad powers, which can be useful if you suspect your business partner of other fraudulent or illegal activities.
Another benefit of pursuing a case in criminal court is that you will not be accountable for court costs. But, there are drawbacks, such as the fact that, while restitution can be sought if your business partner is convicted, it is not certain that you will obtain any compensation in the long run.
Ramifications of theft by a business partner
The shock of realising your business partner has stolen money from your company account is enormous, and it could have serious consequences for both your organisation and you personally.
Depending on the extent of theft and the financial status of your company, insolvency may become an issue. If suppliers have not been paid owing to a lack of funds, they may decide to sue you and your partner, or the firm itself.
Frequently asked questions
The first step if you suspect your business partner is stealing from your company is to gather evidence and consult with a qualified attorney. An solicitor can help you understand the legal implications of the situation and advise you on the best course of action.
One way to prevent a business partner from stealing from your company is to implement stricter financial controls and review the company's accounting practices regularly. It is also important to maintain open and transparent communication with your business partner and ensure that they are held accountable for their actions.
The potential consequences of a business partner stealing from your company can be significant. Depending on the amount of money involved, legal action and criminal proceedings may need to be pursued. The fallout from such a situation can also damage the reputation of the business, affect ongoing operations and cash flow, and make it difficult to maintain the trust and confidence of clients and investors. What should be the first step if you suspect your business partner is stealing from your company?
What are some ways to prevent a business partner from stealing from your company?
What are the potential consequences of a business partner stealing from your company?
Conclusion
If your business partner is stealing money from your company business account, it is crucial to take immediate action. The first step is to consult with a qualified attorney to determine the best course of action. Depending on the amount of money involved, legal action and criminal proceedings may need to be pursued. In addition, it is important to implement stricter financial controls and review the company’s accounting practices to prevent similar situations from occurring in the future.
Transparency and honesty with key stakeholders, including employees, clients, and investors, are essential to maintain trust and demonstrate a commitment to ethical business practices. While the fallout from such a situation can be challenging to manage, taking swift action can help to mitigate the damage and position the business for a more secure and sustainable future. Ultimately, protecting the interests of the business and its stakeholders must be the top priority.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.