Five Things You Should Do if You Suspect Your Partner Is Embezzling

 Posted on February 07, 2025 in Business Law

Discovering that your business partner might be embezzling money from your business is a serious and stressful situation. Embezzlement — the theft or misuse of money entrusted to someone — can threaten your company’s financial stability, damage your reputation, and even lead to serious legal issues.

If you suspect your partner is stealing from the business, taking the right steps is crucial to protecting your interests. A Texas business litigation lawyer can help you get through this difficult situation and choose the best course of action.

Do Not Confront Your Partner 

It may be tempting to confront your business partner as soon as you suspect he or she is taking money, but acting too quickly could backfire. An accusation without solid proof could lead to legal disputes, retaliation, or even the destruction of evidence. Instead, consult with a business litigation attorney before taking any direct action. A lawyer with experience in handling these kinds of situations can advise you on the best way to proceed while protecting your legal rights and business interests.

Get Together Financial Records and Look for Red Flags

If you suspect embezzlement, start by reviewing your company’s financial records. Look for unusual transactions, missing funds, altered documents, or unauthorized withdrawals. Discrepancies in bookkeeping, excessive personal expenses charged to the business, or unexplained vendor payments may also indicate fraud. Make copies of relevant documents, including bank statements, payroll records, and expense reports, as this evidence may be critical in proving misconduct.

Conduct a Formal Internal Investigation

Once you have gathered preliminary evidence, consider launching an internal investigation. This may involve hiring a forensic accountant to conduct a thorough audit of financial records. A professional investigation can provide clear documentation of any wrongdoing and strengthen your case if legal action becomes necessary. If your business has a board of directors, inform them of the situation and follow proper corporate governance procedures.

Talk to a Lawyer

Embezzlement cases are complex and require a strategic legal approach. A Texas business litigation attorney can help you:

• Determine whether the financial irregularities constitute embezzlement
• Understand your legal options, including civil lawsuits or criminal charges
• Take steps to recover stolen assets and minimize financial losses
• Protect your business from further harm

An attorney can also help you navigate partnership agreements, company bylaws, and fiduciary duty laws to determine the best course of action.

Take Legal Action

If evidence confirms that your partner has embezzled funds, you may need to take legal action. Depending on the circumstances, you could:

• File a civil lawsuit to recover stolen funds and damages
• Petition for the removal of your partner from the business
• Report the crime to law enforcement for potential criminal prosecution
• Negotiate a settlement to resolve the issue outside of court

An experienced business litigation attorney can help you evaluate the best path forward, whether that involves litigation, mediation, or another resolution.

Speak with a Comal County, TX Business AttorneyToday

If you suspect your business partner is embezzling, do not wait to talk to a lawyer. Acting quickly can help protect your company and financial future. Contact Geoff Mayfield, Attorney at Law at 210-535-0870 to schedule a free consultation and learn how an experienced San Antonio, TX business litigation lawyer can help you address the situation effectively.