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  1. #1
    Join Date
    Aug 2009
    Posts
    2

    Question Verbal Agreement and Partnership Embezzlement

    My question involves business law in the state of: Texas
    Ok, I am going to not bore everyone to death, I am going to make this is short as possible.

    I was approached by an old boss and his partner 8 years ago to come to their company and help build product lines and increase revenue. There are no provisions in the articles of incorporation to allow anyone more stake in the profits or ownership than the other and they are 50/50 shareholders. Our agreement was verbal to increase workflow by 50% and raise profitability by 10%. We achieved both of those numbers 5 years ago and the business has now grown 430% since that time. I have always been called an owner, made the same salary they did and got the same bonus at the end of the year. When I did check all the numbers years past, the numbers all matched up and everything was above board. Both owners have admitted to our verbal agreement to many people, passed employees, current employees and various other people we have dealt with in the industry including consultants also know of the agreement. I also have emails confirming our agreement. I have been told twice a year for 5 years, we need to work on it and get it done blah, blah, blah.

    Last month we finally all go to the lawyers and start the process, we discuss things with the lawyers about our options but don’t get real far into it before I find out the old boss added some items to our agenda to deal with, they needed to update the corporate minutes, it seems as though they haven’t done them in 4 years. SHOCKER!!

    We get back to work the next day and the other partner comes to me so I am aware of what is going on. He showed me that the old boss had paid himself $50,000.00 a year more in bonuses, he pays himself $250.00 more week than the both of us, he bought a $80,000.00 car for himself and put it on his tax documents that it is a corporate car… neither myself nor the other owner has ever even seen the car, no one employed by our company or any of our customers has ever seen the car. He uses his corporate card for private use buying dinners for family, travel for his girlfriend and 3 season tickets to a local pro football team. He also has the company pay his cell phone, medical insurance and car payment… none of which we get. There is much more we haven’t even found out about yet I am sure. He has been hiding all of this from everyone he knows. The lawyers are divulging this information as he releases it to them. I am of the understanding he is just getting the attorneys to write up the minutes for the company, include everything that he has done and get the other owner just to sign off on things and get away with everything he has done.

    I have an LLC with the old boss(crook) and we have purchased 6 acres to move our business to, I noticed today when I signed an extension on the pre-construction loan and noticed my name, his name, the LLC listed and a signature for our main company as a Guarantor on the loan. The main company is not even affiliated and the other partner even told the attorneys he wasn’t interested in owning the land or be a part of the LLC.

    I am getting out of the LLC, he knows this, I can’t trust him. I can’t just walk away leaving behind my interest in the company. I guess need to tell the other partner about the signature on the LLC land. We can’t have the partner go to jail, everyone will lose including our employees and their families. He is integral to keeping many of our customers but we can’t go on like this and we can’t have this happen again!

    What do I/we do know????

    Thanks for any help with this matter!

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Verbal Agreement and Partnership Embezzlement

    You apparently have a lawyer advising you, and you haven't stated a clear question. Your best bet is to work with your lawyer.

  3. #3
    Join Date
    Aug 2009
    Posts
    2

    Default Re: Verbal Agreement and Partnership Embezzlement

    My only question I guess is a moral and ethical question, should I bury him or let him off with restitution. I can't trust him to be in business with him and my partner isn't sure what he is going to do either. I haven't worked with a lawyer yet and was really wondering if I should or not. I am just trying to figure if we have the leverage to get control of the company to make sure this doesn't happen again.

  4. #4
    Join Date
    Mar 2009
    Location
    Key West, FL
    Posts
    2,350

    Default Re: Verbal Agreement and Partnership Embezzlement

    This is too complicated for anyone here to give you any meaningful advise. You need an attorney. More importantly the partner in the LLC who is being screwed needs an attorney. You really don't have any standing to enforce any aspect of the LLC agreement.

    You should also have had a written contract. Now that you have done what was promised without any agreement, you are really setting yourself up for a major shafting.

    If there is any illegal activity it should be pursued. However I doubt any law enforcement agency will care. They will tell you it is a civil matter. The exception being if fraud can be proved or there is forgery, so some other discreet crime that can be proved.

    You need an attorney skilled in business/LLC law.

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