The CFO of my start-up company stole $3,600 directly out of the business bank account to "pay himself" without proper authorization. He has ...

Question

The CFO of my start-up company stole $3,600 directly out of the business bank account to "pay himself" without proper authorization. He has admitted guilt, saying what he did was completely wrong, and has since paid back the money he stole.

He was also supposed to be a majority owner in the firm as well with 3 other executives. Originally the 4 executives agreed to 25% ownership in the firm, but no Operating Agreement has ever been created nor signatures written.

He is demanding that he still has 25% ownership and demands that he receives compensation.

I want to fire him and possibly press charges. Any advice or suggestions?

Thank you.

Answer

Without relevant agreements showing that the CFO is just an employee rather than a co-founder with equal equity to the other three co-founders, I'm not sure you can simply "fire" him. It also makes a differences if the company is a corporation or an LLC and the state it was incorporated in.

It would be best if you can convince the CFO to leave the company willingly as you may not be able to "push" him out (depending on the type of company and state of incorporation) and may need to consider dissolving the company and regrouping.

If he willingly leaves make sure you have a signed waiver agreement with him. Under both scenarios (him leaving and regrouping) certain additional tax and equity and intellectual property issues exist, so I think you need to get an attorney's consult on this one.

My practice is devoted to start-ups and unfortunately I do come across similar cases all the time. My suggestion would be to have an initial consult so that the existing paperwork can be reviewed under an attorney client privilege and suggestions can be given as to the available courses of action.

My consult for this is a low fixed fee and I believe you will come out much more educated and empowered to take the next necessary steps. Please contact me at your earliest convenience.

Roman R. Fichman, Esq.

www.TheLegalists.com │ @TheLegalist

email: Info (@) TheLegalists (dot) com

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