Minority owners of closely held businesses are often shocked to learn what their business partner \u2013 usually the majority owner \u2013 has been doing with the company\u2019s money. In some cases, an investigation reveals that your worst suspicions are true, and your partner has actually started a competing company on the side. But diverting assets and resources can often have results other than an active, competing business. Sometimes embezzlement is as simple as company funds being used to purchase assets \u2013 such as real estate \u2013 in which you, of course, have no ownership interest. This can be done by having the jointly-owned company purchase the land outright, or make the mortgage payments on property your business partner has cut you out of. Either way, joint money is being used to subsidize your partner\u2019s solo venture.<\/p>\n\n\n\n
I have had clients come to me believing that because they do not have an ownership interest in an asset, they cannot possibly have any rights to it, or in it.\u00a0 But that is not necessarily true.\u00a0 For example, in New Jersey, if you are a 1\/3 owner of a company, and the 2\/3 majority owner uses company money to buy real property, you may have an excellent argument that you should be legally recognized as a 1\/3 owner of the property, or at least be entitled to 1\/3 of any profits or proceeds from it. Similarly, if company monies are used to start a competing company, you may be entitled to be awarded 1\/3 ownership of that competing company, or at least damages equaling 1\/3 of that company\u2019s profits.<\/p>\n\n\n\n
The logic is obvious \u2013 1\/3 of the money improperly used effectively belongs to you.\u00a0 However, many business owners suspect something like this for years but fail to act, usually because they think it\u2019s too late once the money is gone.\u00a0 If you believe money is unaccounted for in your own company, you are entitled to answers.\u00a0 If you can\u2019t understand why your business partner is suddenly devoting time to other business ventures, but will not explain to you what he is doing, you are entitled to answers.\u00a0 If you do a search and learn that your business partner owns real estate, and you can\u2019t understand how he paid for it and want to know if any of your money was used, you are entitled to answers.\u00a0 You can get those answers in court \u2013 but the fact that you are entitled to do so should help you get them without resorting to a disruptive and expensive judicial filing.<\/p>\n\n\n\n
When, exactly, you learned of the embezzlement will impact how long you have to take action before it is legally too late.\u00a0 So if you have suspicions, don\u2019t wait to seek legal advice.\u00a0 You just may have more rights than you realize. If you have any questions about this post or any other related\u00a0business law<\/a>\u00a0matters, please feel free to contact me at\u00a0dcroberts@norris-law.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Minority owners of closely held businesses are often shocked to learn what their business partner \u2013 usually the majority owner \u2013 has been doing with the company\u2019s money. In some cases, an investigation reveals that your worst suspicions are true, and your partner has actually started a competing company on the side. But diverting assets […]<\/p>\n","protected":false},"author":17,"featured_media":440,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[85,2],"tags":[20,25],"coauthors":[],"acf":[],"yoast_head":"\n