LLC Bank Account: A Partner Committing Fraud

LLC Bank Account: A Partner Committing Fraud

Suppose someone connected to a limited liability company is engaging in fraudulent activity. In that case, it is important to consider the possible actions available to ensure any non-offending party is legally protected. When there is suspicion of a crime, gathering as much evidence and details as possible for a potential arrest is crucial.

Owners or partners of an LLC may need to investigate the activity of the other if there is a suspicion that one is engaging in fraudulent activity. This could implicate the entire organization and lead to financial or criminal ruin. If the corporation faces vicarious liability, both the entity and the partner responsible for the illegal acts are accountable for them in court. The penalties alone could bankrupt the LLC and lead to a dissolution of the business after everything clears. This could also lead to both partners facing a prison sentence and fines large enough to cripple them.

Suspected Activity

When someone suspects that a part of the LLC, even if someone as high as a partner, is engaging in fraud or fraudulent-like actions, it is important to first gather evidence. Before contacting the legal authorities, a lawyer may need to become part of the proceedings as well to protect any innocence parties. If the partner is responsible for these acts, it is necessary to ensure the crime occurs before pursuing any other activities including a business dissolution. It is possible to seek civil damages if the fraud affects the LLC negatively. This is usually possible when the individual commits fraud through banking methods.

Forming the LLC and Funding

In many instances, partners in an LLC may have different purposes. One may have the skills or talent in creating products or services while another has the money to back the venture. Others could have knowledge of running business transactions or administrative skills necessary to ensure certain tasks complete on time. When forming the LLC, the owners are often part of the paperwork with their names on letterhead and in the bylaws. Any power granted to one to create a bank account is usually equally shared with the other partners. A person may open an account or add to a preexisting account with a financial institution when he or she presents the documentation.

The Bank’s Involvement

When an LLC owner or partner opens a bank account for the company, he or she may do so in only one name. However, if another owner or partner of the entity wants to add to the account, he or she would have the same power to do so as the original person if the account is in the name of the LLC. If any complications arise with the bank, it may become crucial to hire a lawyer to communicate with the financial institution to ensure no illegal activity occurs. It is possible for one partner to transfer company funds from the LLC account to his or her own personal account. To counter these possible actions, the other partner may need to have a lawyer either lock down the account or close it.

If the bank is unwilling to work with another member of the LLC, even if the account is open under the business name, it is possible someone is working with the partner to attempt to commit a crime. This is not usually likely, but many banks want the money of clients, and the larger the amount, the more enticing it is to participate in the illegal activity. For proof against fraud, embezzlement or a breach in fiduciary duties of the business partner, the affected individual may need to implicate the bank as well if it appears to only work with the person suspected of committing a crime.

Legal Recourse against the Partner

Once enough evidence gathered proves that a case could exist, it is time to contact a lawyer. This should usually include someone not already involved in the business to ensure a nonbiased third party. A case of fraud against the business partner may arise through these actions. Because this is both a criminal and civil violation of the law, the partner taking part in illegal activity could face criminal justice and civil action. Damages owed to the innocent partner could cause a problem. But, the lawyer may explain all possible action and consequences of seeking legal recourse against him or her in these circumstances.

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