I am 1/3 owner of an LLC manufacturing company. I run operations, my partner runs administration, one partner is silent. I have had absolutely no involvement with our companies accounting or finance. We are 12 years old and do about 4 million a year in sales, employee 20 people. My partner's wife is our book keeper. Our silent partner's accountant brought to our attention an error our book keeper was making and he got very concerned. Because of this error she has been making in our records over the past several years, I now owe the company $40,000 and they owe the company $50,000. This is because we have over spent our retained earnings, as they were using them to pay our estimated taxes, personal health insurance, etc. We have since started paying our own insurance and taxes, but I'm left owing $40,000. They are in the same boat, but because I had no involvement with the accounting, do I have the right to sue my partner for the $40,000? I know I have the right, but would I win? I really feel cheated and seem to have no recourse. We have a professional accountant do our taxes and she has been telling my partner's wife for years that she was doing it wrong, but she never changed until the silent partner stepped in a say STOP IT.
Also, they have taken undocumented loans from the company (and paid them back I think) used company money for personal vehicle repairs, home repairs, etc. If a professional audit was done, I think it would be discovered that they used company funds for personal expenses without anyone else knowing it. She would probably classify these expenses as personal expenses and put them under their members draw, but does that make it legal? I know i'm leaving a lot of information out, but I'm trying to get to the point without rambling.