we are a 2 member NJ Llc 5 days back my partner text ed me on some issue where he refused to perform his duties, we do not have an operating agreement, at which time he texted " I cant take this any more, I quit, sell this place ,I am leaving " I sent him" What happenned, he sent back " I am turning lights off and leaving" then he did not respond,
I arrived at store in Half hour and found lights out all the electronic Menu boards and company sign Dark he ripped out software USB's and threw it out, Cash missing from registers and all food products and Inventory and equipment lying all around, which I cleaned and then secured the store, I sent him an email confronting on his actions at about 11 PM, next morning at 5.46 Am he call the bank an transferred all the funds to his personal account?
Whether or not there is a written Operating Agreement, there is in fact a statutory one, which designates both partners as managing partners. It also gives you member units in the LLC, but does not entitle either of you, without the consent of the other, to take the property of the LLC.
If what you indicate is true, your partner has breached the law and can be compelled to return the assets of the LLC/company. He has also breached his fiduciary duty as a partner to the partnership and committed an act of vandalism and theft. This is NOT fraud.
Most of these types of disputes are resolved in a civil forum rather than the criminal courts.
I would immediately seek the aid of an attorney to protect your business.
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It doesn't take a law degree to know that the actions you describe were wrong. In Illinois, where I practice, someone who is running (managing) the LLC has what are called "fiduciary duties" to the company and the other member(s). Those duties include the duty to care for the business and its property, and to refrain from stealing from the company. No member has the right to take cash from the company cash register, or from the company bank account. There needs to be official action approving a distribution to make that proper.
You have a right to file an action requiring your "partner" to return the property he took. You probably also have a right to require him to make good any losses that occurred as a result of his wrongful behavior.
Usually the kinds of events you describe don't happen in a healthy, prosperous business. If the business has been "limping along" or perhaps even losing money, You need to consider whether enforcing your rights will be good money after bad - Will the funds you spend on hiring a lawyer, and pursuing your remedy(ies) be likely to result in a gain or a loss? How many times have you heard "You can't get money out of a stone." If, in your judgment, that is the situation you're in, then perhaps you should ignore your right to pursue your "partner" and instead spend your time, effort and money on trying to save the business.
Does it have a lease? Did you personally guarantee the lease? What about bank loans, supplier debts, etc.? What about taxes? Are you up-to-date on sending in withholding taxes to the IRS? How about sales taxes, etc.? Are you likely to be personally responsible for these if the business fails? You will be personally responsible for withholding taxes. If this is a real concern, perhaps that should be your focus.
But do NOT ignore your partner. Be sure to eliminate his/her interest in the business - get an assignment of his/her membership in return for your agreement not to pursue him/her. What's worse than letting someone get away with this behavior? Ans: letting them get away with it, then, months or years later after you've saved the business and put it back on its feet, having him/her come back and claim to still be a half owner.
You absolutely need to get an attorney in this situation, perhaps a CPA as well, to assist you in planning your strategy and then carrying it out.
Answering your question on AVVO, does not create a lawyer-client relationship between us. I am not licensed to practice in New Jersey, and I don't practice law in New Jersey. You need to confirm my answer with a New Jersey attorney.
I do not like using the crimial courts to resolve "civil' matters. but in this case I agree with my colleagues and a "crime" has been committed. Speak to the Woddbridge Police. They may call and put some pressure on. Hopefully they will sign a complaint but if not you can sign one for theft of the property. He stole from the LLC mind you.
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