A business partner can have different relative meanings, with the most frequent being two or more persons who play a significant role together owning, managing, or creating a company. Another form of a business partnership is two entities or businesses that cooperate together with a contractual working relationship. Regardless if it’s person-to-person, business-to-business or person-to-business, if an individual removes any assets illegally from a business for their own personal gain – it is stealing. In this blog, we address different types of business theft and what to do next if you suspect a business partner is stealing from you.
Business theft can take the shape of many forms including:
- Intellectual Property & Theft of Trade Secrets: Trade secrets may include customer lists, product designs, business plans, computer software, technical know-how, manufacturing processes, formulas, or other. When trade secrets or other types of intellectual property are taken without permission, and their use is not in the best interests of the company, this is considered misappropriation of trade secrets. Texas law provides remedies to businesses that can help them take civil legal action. Additionally, Texas enforces laws which subject misappropriators to criminal penalties, should they obtain trade secrets through dishonest or wrongful means.
- Fraud: Fraud occurs when a partner or entity deliberately presents facts in which they know to be false in order to deceive other parties involved. When a party enters into an agreement as a result of material facts that were falsely represented, the latter may be liable for any and all damages suffered by the former.
- Embezzlement: Embezzlement is the act of wrongfully appropriating funds that have been entrusted into that person’s care, but which are owned by the business or someone else. Embezzlement is a specific type of fraud, which is defined as "knowing misrepresentation of the truth or concealment of a material fact”. An example of embezzlement that could occur from a business partner is manipulating accounting records to hide theft of funds.
- Breach of fiduciary duty: Within the scope of the relationship, business Partners are under a duty to act for the benefit of one another. Since business partners are considered fiduciaries, a breach of fiduciary duty is when a fiduciary abuses or falls below the standard imposed on them when they are acting from a position of trust. For example, taking money from an account that belongs to the business for personal or other use is both outside the scope of the relationship and against the interests of the business.
What to do next if you suspect a business partner is stealing from you.
If you believe a business partner has stolen from you or your company then the next step is to contact an experienced business litigation attorney who can guide you through the process. With any form of business theft - the welfare of your business is at stake, both in terms of actual money, assets, confidential information and possible damages to your business and its performance. By retaining a business attorney familiar with all the appropriate legal maneuvers and recourse option, you better position yourself and your business to maximize the amount of damages you recover as well as effectively negotiate and leverage the case to achieve your goals and prevent theft from happening in the future.
At Hendershot Cannon Martin & Hisey, P.C., our legal team has exceptional credentials and an impressive track record of success in litigation over intellectual property infringement, trade secret violations, non-compete agreements, breach of fiduciary duty claims, fraud and misrepresentation and other related shareholder and partnership disputes. When applicable, to immediately put an end to the business theft at question, our experienced business attorneys take prompt action by seeking a temporary restraining order or injunction as we prepare the case for mediation, arbitration or trial.