Hi guys, what would you do in my shoes?
So my former business partner “accidentally” wrote 2 checks from the corporate account of my other brokerage business. The checkbook is new and there’s no name/business on the checks so he thought they were his. This is how I discovered he has a side-business account and has been making deals without my knowledge.
I essentially caught him red-handed doing business behind my back, because the checks literally showed up in my account. One of the signatures is his and one appears to be a forged replica of my own. The account he stole from is registered to my legally incorporated corporation.
The 2 checks were:
- $xxx= Paying rent to himself from the corporate account of another broker: me
- $x,xxx = Signed a year-long contract w/ deposits, with my stolen funds
Upon calling him on his error he immediately deposited the missing money. Without any doubt, the relationship is over between me and him. However I would like to continue operating the property-management side of the business. It is lucrative and substantially profitable.
Summary
He is a licensed California broker and has been comingling client funds between his personal, checking, and business account. He has written 2 fraudulent checks with stolen funds of another broker (me) to enter into a 1-year lease contract, as well as deal stolen funds to himself in the form of “rent.” He is also employed by KW and has been accepting checks w/o the checks passing through KW as commission.
What exactly is he guilty of and what would you do? Is this enough leverage to force him out?
-Michael
IMPORTANT SAFETY TIP: Any change in 50% or greater of a partnership’s ownership results in a “technical termination.” This is a very specific IRS term and has significant tax consequences. I’m not saying don’t do it, just be aware that when you do, you need to address the technical termination immediately.
A technical termination results even if the partnership continues in business. It results even if you replace the partner with a new one. Obviously you can’t continue to have a partnership with only one partner.
Guilt/innocence and/or leverage are outside my area of expertise. However, if you do elect to “buy him out” or otherwise remove either him or yourself from the partnership, you should look to whatever mechanism is provided in the partnership agreement.
You DO have a partnership agreement, don’t you?
From my experience:
- I would speak directly to him and communicate (in writing) that you would like him to resign immediately due to fraudulent activity and behavior that puts you financially at risk with the communication that you have knowledge of commingling of funds and fraudulent checks being written which are all crimes.
The Keller Williams issue maybe a issue that you contact Keller Williams about directly if he doesn’t budge. But definitely speak to a qualified attorney for a initial interview to see if you have a case. If you have one, i think that is leverage enough to buy out or possibly buy out at a discount your former partners stake in the business.
Seems like you have enough leverage to force him out, but that depends on much he wants to put up a fight.The best move is for you to consult an attorney and look at the options you have.
Your former partner, being licensed and an employee of KW, operates under a bond or liability insurance. I would give him an opportunity to resolve the issue privately, if he does not, give him a second opportunity with witness, then if not, then drag this into the public arena. The bible clearly shows this design about how to clear issues up in commerce; see Matthew 18: 15, 16, & 17.
First Step is an administrative remedy where you would write an Affidavit of Truth, publish into public record, send a copy to other party, then give them an opportunity to respond ONLY via Affidavit, under penalty of perjury, with full and unlimited liability. When he does not answer, certify his non response. An un-rebutted affidavit stands as truth in your agreement in commerce…you have then won. Send a Notice of Fault giving opportunity to cure his dishonor and include in the default provision ‘his non response’ is agreement to a commercial lien and counter claim in a certain amount (tacit agreement through acquiescence). Then a Notice of Default and Administrative Judgment.
Second Step is taking the documents you perfected in step 1 and have a third party send all copies with one more chance to come clean (Notary Protest). Certify non response.
Third Step could be taking Steps 1 & 2 and using as an affidavit pleading to get the court to issue a judicial judgment in your favor to match the administrative judgment. Personally, as I do not like what happens inside courtrooms, I would take the first two steps, record them into public record, then go to KW insurance carrier for their bonds and liability coverage and request a claim form. Submit the claim with copies of your paperwork leading up to the administrative judgment and you will force the insurance carrier to send out an adjuster to negotiate and write you a check.
This will work…I know from experience and have successfully brought predators back into honor in commerce by forcing their hand through their wallets. When your adversary learns that staying in dishonor will cost him his home, savings, kids college funds, etc., they somehow find a path back into honor. Seek your remedy with administrative procedures with surety to support your procedure from your predator’s insurance/bond carrier…that is why the insurance is required for their licenses.
Hope this helps.
Rob