Q: Business partner has raised $$$$ for our biz. But spent it on personal, without putting into company account. Need help!
Me and my business partner together met people interested to loan money in our company. He later received money from them and spent it away on his personal stuff. He later setup the business account in the bank with just 10% of the money. He claims his expenses were legitimate, but not giving any receipts or explaining the nature of expenses. The lender also didn't directly deposit in the company account. How valid is the loan contract? How liable is my partner? Because he seems to be effecting me, the company and the lender too. What should be my course of action?
A: There are a few facts missing. How is your partnership structured? Are you also liable for the loan?
Assuming you were partners and you are also liable for the loan you would have a cause of action for conversion, fraud, breach and possibly breach of fiduciary duty.
A: Do you have a partnership agreement? What is your share of ownership? You may be able to sue for breach of contract, fraud, fiduciary violations, or embezzlement, depending on the facts. More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and Education Law. This answer does not constitute legal advice; make any predictions, guarantees, or warranties; or create any Attorney-Client relationship.
A: Consult a business lawyer for an exit. The information presented herein is for general purposes only. It is not intended to, and may not be construed as legal, tax or accounting advice. Neither is it intended for solicitation purposes. For specific advice, please consult an appropriate attorney in person. Good luck. Zaher Fallahi, Business and Tax Attorney, CPA.
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