Providing Personalized Attention And Skilled Legal Representation

What to do when your business partner embezzles funds

On Behalf of | Jun 7, 2023 | Criminal Defense

Embezzlement can be a devastating experience for any business owner. Discovering that a trusted business partner has misappropriated funds is financially damaging and emotionally challenging. Embezzlement occurs when a person entrusted with handling finances or assets within a business unlawfully misuses or steals those funds for personal gain.

Unfortunately, embezzlement is a form of financial fraud that can lead to significant financial losses and legal repercussions for all parties involved. Furthermore, detecting embezzlement can be complex, as perpetrators often employ various tactics to conceal their actions.

Identifying the signs of embezzlement

Recognizing the signs of embezzlement is crucial for promptly addressing the issue. A common red flag is unexplained irregularities between reported income and available funds. Review your financial statements regularly and conduct thorough audits to spot such inconsistencies.

Another indicator of embezzlement within a business is missing documentation. If crucial financial records, such as invoices, receipts or bank statements, suddenly go missing or cannot be accounted for, it may be a sign of fraudulent activity.

You can corroborate your suspicions by looking for unusual financial transactions. Frequent transfers to unfamiliar accounts, suspicious payments to individuals or entities unrelated to the business or sudden large withdrawals highly indicate embezzlement.

Finally, drastic lifestyle changes are a glaring incentive to investigate your business partner for embezzlement. If they’re buying expensive assets or taking lavish vacations beyond their means, without any justifiable source of income, they could be stealing funds from the business.

Reporting the embezzlement

Upon discovering embezzlement by a business partner, it is important to act swiftly. Gather all available evidence of the embezzlement, including financial records, bank statements and receipts. Try to ensure that these materials are stored securely to help preserve their integrity.

You should then report the embezzlement to the appropriate law enforcement agency. Provide them with all the evidence you have collected, and cooperate fully with their investigation. This will help establish a formal record of the crime and may increase the chances of recovering the stolen funds.

A partner who’s engaging in embezzlement or other illegal activity may try to make it look like you were the guilty party or at least involved in criminal actions. That’s why it’s wise to seek your own legal guidance to help protect your rights and your business.