Business parter (and friend) is a theif....

[shaunatsf]

Hi,

So a long time ago I was put in contact with this woman who was supposed to be very good at her job and I needed some work done so I contacted her. We became friends as a result and three years on she asked me to put up the money in a new venture. I agreed and put up the £3500 needed to get the first batch of product bought. My agreement was with her.

All went well and the products sold really well and within 4/5 months we had made quite a bit of profit. After the first 5 months they asked to buy me out and as I had a list of all the product sold and the profit made (and to make life easier) I said they could buy me out for 20% of the profit currently in the company. It was all agreed.

Then as she was pregnant my friend decided that she was going to give up her job, as she had to try and "find herself" as she was not happy doing what she was doing. I asked how they suggested to provide for them and the kids they already had as they now had no income (he is a stay at home dad) and I never really got a straight answer.

Well I now have an answer. Basically one way or another they have managed to take every penny out of the company and left it with a value of £80! The profits were well into five figures!

My agreement was with her but the company is in her husbands name (but she is a shareholder). I have spoken to my solicitor and he has given me some suggestions but I wanted to know what you guys would do in a similar situation.

I am annoyed, very annoyed. We were supposed to be friends and then after a while they stopped taking my calls (when I was asking for the money), and I am being treated like the one that did something wrong. They are the ones who took every penny out of the company and as I said to them, they didnt have a bean, i gave them the money to set it up and they take all the profits, hardly seems right. When I finally figured out what was going on I was ringing them at the office and at their home and guess what the office number was disconnected so was the house number, the only number I had was his mobile which he never answered. They moved house, closed the office, and shut down their websites and email addresses. So all I had was his mobile number and his email address, neither of which he answered.

So what do you think, if it was you what would you do? I dont want to say too much as she was on this forum. The other thing that is annoying me is I got her work and now people are calling me (customers/suppliers, etc of mine), people I put in contact with her and they are saying that their emails are bouncing back, her website is down and I am getting the calls because she wasnt professional enough to call or email these people to tell them she was taking a 12 month break. I have had to find a new supplier and direct them to him as I am not sure what else I can do.

So over to you, what do you think?

 

[Salt & Paper]

I think you need to see a solicitor.

Not trying to be smart, but there is a lot more information needed than what you have given here for people to be able to help much.

Was it a Ltd co.? Did you have a shareholder's agreement in place? What was the share split?

 

[shaunatsf]

Hi,

Thanks for the reply. I dont want to give to much info as they are on this site. It was a limited company, and I had a 20% share in it.

Thanks

 

[Philip Hoyle]

Hi,

Thanks for the reply. I dont want to give to much info as they are on this site. It was a limited company, and I had a 20% share in it.

Thanks

So what do you mean when you say the company was in her husband's name?

What proportion of shares did he have? What proportion of shares did you friend have?

If there are three shareholders, how can it be in her husband's name?

 

[shaunatsf]

Hi,

Basically the company had three shareholders. I had 20%, my friend had 20% and her husband was the sole director and had 60% of the shares. I suppose I should really point out that all three of us were friends it was just my initial contact all those years ago was with her. I was supposed to stand for the child they just had and she was being named after me. Obviously that did not happen after it became obvious that the money had been taken.

They did not have the money to start the company and so approached me to fund it. I did and I have a list of all the products that were bought, what they were sold for, the costs involved and also what profit was made.

I am waiting for the full set of accounts to arrive, I have been waiting for them for three weeks to no avail, but apparently they will definately be here this week (not holding my breathe). The information I have so far was downloaded off the companies house website!!!!

 

[RickieSee]

Did she withdraw the cash out? Or blow it on unprofitable ventures under the company name?

What line of business are you in?

 

[shaunatsf]

Hi Everyone,

Thank you for your responses. I cant really say to much as they are on this forum and I dont want any backlash although they do keep threatening me with slander (not entirely sure they are aware of the term means) but I am not going to give them any actual ammo.

If I say what the business is I would say must people would figure out who is is so if you dont mind I would rather not say what the industry is.

They basically took all the money out of the bank account.

In the beginning we all decided that as it was a side line business, none of us would take a salary, so at first they said they took it out as a directors loan, now they have said that they have taken a salary, going by how long the company was operating and the profit that was generated they are going to be paying themselves nearly £4000 a month!!!! That is the only way I can see them getting the money out, although I still dont know if they have paid corporation tax, and they weren't really in a position to get paid due to other monies they were getting so I am not sure how they have taken it out.

I wont know exactly what is going on until I get the books.

 

[Alan R Price]

If you suspect fraud or theft, do what I always advise people to do - go to the police. Even if they say it's a civil matter, if there is dishonesty involved - forged documentation/hidden payments/lies about what has happened to money or other assets, it is criminal and should be investigated. Don't be put off - you want the matter investigated - but you will have to show at least some documentary evidence of dishonest conduct to justify your allegations. The fact there may have been "unauthorised" transactions or stuff done without your knowldege does not necessarily mean there has been criminal activity. For example if they have paid themselves "excessive" salaries but recorded the amounts in the books it is unlikely you could prove dishonesty.

 

[shaunatsf]

Hi Alan,

I am going to have to wait until the full books arrive. I have all the sales and purchases and I have already done a mini profit and loss, balance sheet,etc so it should not be difficult to match them up to what they have submitted.

I am just not filled with confidence in them. We only sold about 30 items but yet we apparently only bought 28 for example, I kept asking if they thought what the had was right and they started to get quite snotty at the end saying things like, if you feel they are wrong show us how they are wrong.

I explained that it is fairly difficult to sell 30 items if you have only bought 28 and they shut up then, but in fairness it was in an excel document so it was a pretty simple thing to pick up especially was those shockingly handy numbers down the side

 

[Alan R Price]

As they say, "the devil is in the detail". Your inspection of the records may throw up some issues that need explaining so you can confront the other two with your findings and decide then what to do when you have heard their responses.

 

[logicaljackSEO]

Did you ever get any resolution to this?

I am thinking about starting a blog on shady business practices in the UK, and hopefully naming and shaming a few of the top perpetrators. I have heard similar stories to this so it would be interesting to find out what industry you are in, maybe you can PM me?

 

[smo]

Did you ever get any resolution to this?

I am thinking about starting a blog on shady business practices in the UK, and hopefully naming and shaming a few of the top perpetrators. I have heard similar stories to this so it would be interesting to find out what industry you are in, maybe you can PM me?

I think you would end up in some hot water with a blog on that subject!! I know of a great one though, dodgy dealings, appalling service, lies, sexual harrasment, expulsion from business networkign groups.....all the same person!

 

[Moneyman]

Hi Everyone,

Thank you for your responses. I cant really say to much as they are on this forum and I dont want any backlash although they do keep threatening me with slander (not entirely sure they are aware of the term means) but I am not going to give them any actual ammo.

If I say what the business is I would say must people would figure out who is is so if you dont mind I would rather not say what the industry is.

They basically took all the money out of the bank account.

In the beginning we all decided that as it was a side line business, none of us would take a salary, so at first they said they took it out as a directors loan, now they have said that they have taken a salary, going by how long the company was operating and the profit that was generated they are going to be paying themselves nearly £4000 a month!!!! That is the only way I can see them getting the money out, although I still dont know if they have paid corporation tax, and they weren't really in a position to get paid due to other monies they were getting so I am not sure how they have taken it out.

I wont know exactly what is going on until I get the books.

Dont worry about the slander it never works in practice.
this is a common thing to happen in my line of lending. Owning less than 30% is always a risk and i always put limits to saleries as that can kill off any profit.

If they were making a decent income and then decided to just drop and run there is a problem for them as this would indicate that they have not been doing a salary but taking money out and then calling it back pay after the fact.... quite easy to show up as wrong doing.

time to search your emails for clues and proof of "the deal." as in hints of no salary etc. he with the paperwork wins.

It bloody hurts when someone does it to you after you have helped them...benn there done that and want to kill some ungrateful bar stewards

 

[billycan]

Did you ever get any resolution to this?

I am thinking about starting a blog on shady business practices in the UK, and hopefully naming and shaming a few of the top perpetrators. I have heard similar stories to this so it would be interesting to find out what industry you are in, maybe you can PM me?

The UK banks?

 

[Jet Virtual]

Plenty of solicitors on this forum so get all the free advice you can