How do I know if someone committed embezzlement? 36 Answers as of July 08, 2013

I, along with a 50% partner own a consulting firm. We landed a deal with a local company and took a down payment of $4500. However, rather than writing the check to the company, the check was made directly to my partner. All subsequent checks for the project have been made out to the company. Since that initial payment went directly into his pocket and not the business, could this be considered embezzlement?

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Law Office of James A Schoenberger
Law Office of James A Schoenberger | James A Schoenberger
That's kind of a gray area. Ordinarily embezzlement is taking money out of a company or partnership improperly. In this case the money never went into the partnership's coffers. It's really a civil matter and at the very least you need a new partner and the partnership can sue the one you have for damages.
Answer Applies to: Washington
Replied: 1/23/2012
Edward  D. Dowling IV Attorney at Law
Edward D. Dowling IV Attorney at Law | Edward D. Dowling IV
I would need further details such as is the business a corporation, a partnership, an LLC, an LLP or other business entity. If a partnership generally acts of one partner are binding on other partner except if partner engages in criminal activity which may or may not be the case here. You should consult an attorney and disclose all details.
Answer Applies to: New York
Replied: 1/20/2012
Robert Valles and Associates P.C.
Robert Valles and Associates P.C. | Robert Valles Jr.
You must contact the local police to file a report to file charges on your partner, although they may tell you it is a civil matter.
Answer Applies to: Texas
Replied: 1/19/2012
Cornish, Crowley, Rockafellow, & Sartz, PLLC
Cornish, Crowley, Rockafellow, & Sartz, PLLC | Jacob Peter Sartz IV
I'd recommend you retain a lawyer to assist you with this matter. If you need specific legal advice for your particular circumstances, you should retain a lawyer to assist you. Most attorneys provide free initial consultations. Speaking generally, people in business have a couple of options when they suspect an employee or partner may be embezzling money. One route is through civil litigation. There are potential civil claims ranging from breach of contract/partnership agreements to intentional torts such as conversion or other claims that have a lower burden of proof than criminal litigation and if successful, could result a judgment for money or other forms of relief. However, there also a choice to potentially pursue criminal charges. For certain businesses that have insurance policies, they will need to file a police report prior to submitting any claim with their insurer. Investigations are usually conducted by your local police department; however, occasionally, the feds or other agencies such as the Michigan Attorney General will get involved. If they suspect that a crime was committed, they will conduct their investigation into the matter and potentially forward it to the prosecuting attorney for charges. Financial theft offenses such as embezzlement are potentially very serious criminal charges and could have significant consequences on the lives of everyone involved. However, if a partner or employee suspects that this behavior is going on, they should be proactive and report it to someone. The worst they can do is nothing. These types of situations put the entire business at risk.
Answer Applies to: Michigan
Replied: 1/19/2012
Law Office of Phillip Weiser
Law Office of Phillip Weiser | Phillip L. Weiser
It could be, if he did not forward the money to the business.
Answer Applies to: Kansas
Replied: 1/17/2012
    Mark Thiessen, Attorney at Law
    Mark Thiessen, Attorney at Law | Mark Thiessen
    Not necessarily. Is he writing it off as a payment to him? Is it earned? You need to just keep track of this payment and make sure that you aren't hiding it under the table. Make notations that the $4500.00 is payable to him for services rendered on the deal. But that being said, as a 50% you should get your own 4500 payday. It's only embezzlement if you lie about where it is going and didn't earn it.
    Answer Applies to: Texas
    Replied: 1/17/2012
    Thomas J. Tomko Attorney At law
    Thomas J. Tomko Attorney At law | Thomas J. Tomko
    It sounds like you should approach your partner about it. If unsuccessful, then you can consider reporting it to the police, however, it seems as if it is more of a civil claim. You may want to consult an attorney about filing suit against the partner. I assume, of course, that the partnership will or has dissolve/ed, and that the business will be finished. Otherwise, there could be some stressful times, and more litigation.
    Answer Applies to: Michigan
    Replied: 1/17/2012
    Reeves Law Firm, P.C.
    Reeves Law Firm, P.C. | Roy L. Reeves
    Yes, unless there is some justification. You could also look into a claim for breach of fiduciary duty, misappropriation (though that claim is not easy and even more so when it involves money).
    Answer Applies to: Texas
    Replied: 1/17/2012
    Myles Hahn III Attorney at Law | Myles Hahn III
    There are variety of possible actions which you could choose to take. You should consider retaining an attorney (for which you must pay). One possible tactic would be to confront your partner directly. What if he says that it was an honest mistake, and transfers money back to the company? This would lessen the possibility of him ever being found guilty of criminal theft or other criminal law offenses. You can also consider a lawsuit. Speak to an attorney.
    Answer Applies to: Illinois
    Replied: 1/17/2012
    Jules N. Fiani, Attorney at Law
    Jules N. Fiani, Attorney at Law | Jules Fiani
    Yes. Check with your accountant.
    Answer Applies to: Michigan
    Replied: 5/30/2013
    Law Office of Christopher G Humphrey PC | Christopher G Humphrey
    It could be considered "larceny by bailee," if he breached his fiduciary duty to the company. Depending on your articles of confederation you drafted and submitted to your state agency when you created your company, he may have breached a duty specified in the company. Read your company bylaws and articles. You should consult a business lawyer.
    Answer Applies to: Wyoming
    Replied: 1/17/2012
    Law Office of Peter F. Goldscheider
    Law Office of Peter F. Goldscheider | Peter Goldscheider
    Only if he pocked it for his own benefit without permission, with no accounting to the business or any partners.
    Answer Applies to: California
    Replied: 1/17/2012
    Craig W. Elhart, P.C.
    Craig W. Elhart, P.C. | Craig Elhart
    The elements of the crime of embezzlement include: 1. The money belongs to a principal (i.e., the company) 2. The defendant had a relationship of trust with the company because he was the _______ 3. The defendant obtained possession or control of the money/property because of the relationship 4. The defendant either, dishonestly disposed of the money, or coverted the money to his own use, or took or hid the money with intent to convert to his own use, 5. The defendant did this with intent to defraud or cheat the principal. It seems that you should speak with your partner regarding the money and request that it be returned to the firm. If he refuses, you could contact your local police and ask that they investigate.
    Answer Applies to: Michigan
    Replied: 1/17/2012
    H. Scott Basham, Attorney at Law, P.C. | H. Scott Basham
    Have you confronted him directly about this? Before you accuse him of embezzlement, you may want to see if he will pay the funds in question over to the business.
    Answer Applies to: Georgia
    Replied: 1/17/2012
    Law Office of Richard Staff | Richard Staff
    Yes, that's embezzlement. Penal Code section 503 Embezzlement is the fraudulent appropriation of property by a person to whom it has been intrusted. You would have to prove that the payment was for consulting firm business and not your partner's separate business.
    Answer Applies to: California
    Replied: 1/17/2012
    Law Offices of John Carney
    Law Offices of John Carney | John Carney
    It is not embezzlement but it is Grand Larceny and you should not have a partner that steals from you. If you cannot trust a wife or business partner then it is time to dissolve the partnership unless it is something that is so lucrative that you do not mind a little cheating and you cannot find a better partner.
    Answer Applies to: New York
    Replied: 1/17/2012
    Timothy J. Thill P.C.
    Timothy J. Thill P.C. | Timothy J. Thill
    Could be! you never bothered to confront your partner about this? You must be a trusting person, to say the least. But before making baseless accusations you cannot back up, it would probably be a good idea to contact the client, find out if he could provide you with a copy of the endorsed check, and if this seems to be the case, contact the police to conduct a professional investigation. You fail to say when this alleged activity occurred, if a long time ago, you may be out of luck. The police or a private indestigator shopuld be able to better answer this question.
    Answer Applies to: Illinois
    Replied: 1/17/2012
    Myles A. Schneider & Associates
    Myles A. Schneider & Associates | Myles Albert Schneider
    It sounds like your partner is doing what we call "self dealing" or "usurping corporate opportunity" and is most certainly a breach of his fiduciary duty to you as a partner. However, most cops don't care. That does not mean you should not try to report it. My guess is that they will tell you it is a civil matter.
    Answer Applies to: Arizona
    Replied: 1/16/2012
    Lawrence Lewis
    Lawrence Lewis | Lawrence Lewis, PC
    What is your goal? Take control of the company all by yourself? You are too silly to be in business. You and your partner, which I assume means that you both contributed money to the company, won an account. He knowingly takes the first $4500 and pay himself or his bills or some other emergency, and you want to know if he has committed embezzlement. Please write back and tell me what business you are in so I can become rich and successful as a competitor. If you have not figured it out yet, that is not embezzlement.
    Answer Applies to: Georgia
    Replied: 1/16/2012
    Andersen Law PLLC
    Andersen Law PLLC | Craig Andersen
    It would depend on whether he deposited the check in his personal account or your business account. If he took the money, it may be a violation of his fiduciary duty to you as his partner. At this point, your situation appears to be civil in nature. The police and prosecutors would likely prefer that you settle the dispute in civil court or through Alternative Dispute Resolution. You could also sue to dissolve the partnership and for an accounting if it's a huge deal. But you would want to weigh the pros and cons about that.
    Answer Applies to: Washington
    Replied: 1/16/2012
    Law Office of James E. Smith
    Law Office of James E. Smith | James Smith
    The District Attorney has been known to charge one partner for embezzling from another partner or from the legal entity which they both belong.l
    Answer Applies to: Nevada
    Replied: 1/16/2012
    Klisz Law Office, PLLC
    Klisz Law Office, PLLC | Timothy J. Klisz
    Yes it could. You should speak to your local police detective unless you want to try and work it out first with your partner.
    Answer Applies to: Michigan
    Replied: 7/8/2013
    Beaulier Law Office
    Beaulier Law Office | Maury Beaulier
    It is more likely going to be considered a civil issue and one that must be resolved between the Shareholders or litigated in Court as a breach of fiduciary duty.
    Answer Applies to: Minnesota
    Replied: 1/16/2012
    Robert Mortland
    Robert Mortland | Law Office of Robert Mortland
    It is possible that this could be embezzlement but this could be a tough jury trial issue. You should attempt to settle this civilly before getting into a messy criminal situation.
    Answer Applies to: California
    Replied: 1/16/2012
    Dennis Roberts, a P.C.
    Dennis Roberts, a P.C. | Dennis Roberts
    Would be really hard to prove. Why not confront him and demand half or tell him to transfer into the business account.
    Answer Applies to: California
    Replied: 7/2/2013
    Law office of Robert D. Scott | Robert Scott
    It's not embezzlement because the check was made out to him. However, the company may have a civil claim against your partner for half of the $4500.00.
    Answer Applies to: Maryland
    Replied: 1/16/2012
    Furlong & Drewniak PLLC
    Furlong & Drewniak PLLC | Thaddeus Furlong, Esq.
    The best way to prove (or disprove) embezzlement is to have a forensic audit of your records. That way you'll know for sure.
    Answer Applies to: Virginia
    Replied: 1/16/2012
    Law Office of Richard Southard
    Law Office of Richard Southard | Richard C Southard
    Embezzlement is a very serious charge. Have you spoken to your partner about this? You should speak to your partner about the payment before jumping to the conclusion that a crime was committed. It sounds like something more is going on here.
    Answer Applies to: New York
    Replied: 1/16/2012
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