Q: I am a member of a North Carolina LLC. One of seven members. Five of us think our funds are being embezzled.
What is our recourse in determining if funds are being used for personal use by the sole financial manager. If true, how do we determine if this is embezzlement and what is the best course of action to rectify.
A: Members of an LLC have a right to inspect the books and records of the company upon request, subject to certain restrictions that may be included in the operating agreement or articles of organization. You should consult your operating agreement and articles to determine whether either restricts your ability to obtain any of this information, and if so, to what extent. In fact, as a member or manager of the LLC, you likely have a duty to investigate and stop any embezzlement that is taking place, under your duty of care. You will likely wish to hire an outside party to conduct an audit of the financials once you have them and consult with either a business or employment attorney about your legal options.
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