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A Bad bit of family Business partners caught stealing.
Noah, You need a Lawyer on your side (or your mom's side).
People can go to jail for stealing.
Good luck, LUCKIEST
Since the books have been cooked it's a good bet that the tax returns have as well. She should go to the IRS immediately and file a complaint with the State Attorney Generals Office as well. The local, state and federal government entities will be more than happy to help her.
First of all, our heartfelt empathy for your situation. Seems like a disease these days (family against family, lying, cheating, stealing, wow). We recently discovered that the party behind the destruction of our hugely successful online business was a jealous family member who took it upon himself to slowly, methodically and maliciously sabotage our Google results until we had no business or livelihood. This happens without knowing it, until it is too late.
Number one ... tell your mom she is not the victim. That mindset alone will disallow her from seeing the opportunities present within the current situation to benefit and prosper in a way that may not first seem obvious.
For example, in an attempt to revive our business we redesigned our sites, streamlined and improved our terms with vendors, and scaled back expenses. These are all things that will catapult a business or investment as soon as one clears the obstruction.
Although we are not familiar at all with California law, etc., we would just like to offer a different way of looking at the situation so that, upon learning greater details about your mom's options, you guys will not only see the forest through the trees, but perhaps a whole new opportunity to prosper in ways you both may have only previously dreamed of (this is usually how your deepest desires present themselves...within the greatest challenges, through which, if handled with positivity, can earn you the skills and perspective you need to have the things/situations you most wanted!).
Number Two ... Tell as many people as you can about your mom's situation including a good lawyer, of course (there are some who may even take the case on contingency, and collect a portion of the settlement), the media, local organizations, other family members, neighbors, etc. You'd be surprised how public conscience can turn a collective tide against individuals who have broken the most sacred of all trusts (children to clergy, citizen to police officer, brother to sister, etc.) and effect the end result towards the resolution of immoral, unethical and plain out illegal behavior.
The greatest challenge is to convert feelings of anger and self-pity into a feeling of excitement that the situation has, within it, the opportunity to bring you and/or your mom to a whole new level of perspective, understanding and possibly prosperity, (warning: this is the hardest part!). Once you can achieve that, the answer and help will come, no doubt. It has worked beautifully for us.
You have truth, justice and the universe on your side - now just go out, round them all up and win.
BRAVO sirenstill! I apluad you for your reply!
But as everyone is posting in their replys, there are two things needed. A good lawyer, and the IRS!
Many years ago I was sub-contracted to sell merchandise, though when I quit selling for the dealer, he continued to sell merchandise but under my name, and SS#. Needless to say the IRS was more than happy to investigate, then discover the dealer was not only using my name but several other sub-contractors as well that no longer dealt with him. By doing this he was able to record a minimum amount of income in his own name.
Wow! I am speechless. This is so sad. If you can't trust "family", who can you trust? I wouldn't even know where to begin or what to suggest but I hope it will all work out peacefully and fairly. Some people have mentioned on this thread that legal counsel is necessary and that would make your mom educated and give her respect and power to have the law on her side. It's important to know what your options are and the best amicable decision. Your mom has to decide if she wants to continue this venture or bow out and at what price? I am so sorry to hear this. It's not something I hear every day. I guess this is why I am sometimes approached to collaborate on a jewelry line and my red flags and skeptism sets in right off the bat. It's a shame, good luck!!!!!
Collaboration works only when both sides are committed to being honest and ethical. Moral intelligence is a waning commodity these days.
A lot depends on the operating agreement. If they are designated to manage the affairs of the business and allowed (or not expressedly prohibited) compensation, they could argue that the personal expenses were part of their compensation and in aggregate all of the benefits inured to them were reasonable.
I hate to say it, but an attorney is the way to go. Maybe she can get one on a contingent basis.
The authorities won't likely have the resources to commit to pursuing what could in their eyes turn out to be a family squabble where the offending parties will redeem themselves in some way and the charges are dropped after they have put time and money into it. In addition, the burden of proof for them is much higher than in a civil case.
You might have a chance with a report to the IRS. If the LLC was deducting their personal landscaping for example, those amounts should be included in the taxable income of those partners. In that case, their taxable income would go up, but the LLCs income would not. However, if there is more to it and they find underreported income or overstated deductions, that will affect all of the partners including your mom.
The BEST advice (consult an attorney, etc.) has already been offered, but here's another approach: If you and your mom can stand the attention (and everything she has done is above board), consider taking this to the media. Not to make light of a situation that I'm sure is very serious and painful for you, but you've described a story that involves millions of dollars, crime, deception, and family. There's an investigative journalist somewhere who would eat all that up with a spoon.
As I said, it wouldn't be my first or preferred course of action, but when you're the "underdog" in a situation and your actions and behaviors can withstand public scrutiny (and the other party's can't), media attention is a wild card you can play when the issue is a major one. Plus investigative reporters have friends and contacts in the DA's office, AG's office, and at federal agencies -- so they can often get someone they know to start "poking into" something that wouldn't have enough priority to warrant investigation if you reported it.
You might also consider the services of a private investigator (an attorney will likely suggest that, too). If your uncles are cheating family members, they're cheating other people, as well. Those people may be potential allies for your mom. Besides, the more evidence you can gather and the bigger case you can make before you do anything, the more leverage you'll have when you do it.
I wish you the best, and hope there's a satisfying resolution soon.
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My mom is a 25% partner in a California LLC of a family shopping center, She found out after requesting to see the books and bank statements in whitch she was denied that her two brothers were stealing money. They were having shopping center pay for landscaping on their houses etc.... for the last 10 years. Now she has requested to be bought out and they agreed but then offered her a laughable offer.....She said no and requested they raise the offer to save themselves from an audit and does not want any legal issues for them. They just laugh and said now we dont want to buy you out no one will buy into a family business and now we wont sell. So now she has been stolen from, threatened, and now she is loosing out on other business opurtunities because they are black balling her. She does not have the money to fight them up front, what can she do? Property is owned free and clear, 25% equal shares she recorded 4 or 5 threatening, belittling messages, even blackmail attempt to get her to drop her price, now they are saying no ones getting in trouble for stealing so go ahead because they have money to wait, the one brother says I apologised for taking the money thats good enough. We live in california does anyone no what we should do? can do when we dont have the money upfront.....Property is worth 4.5 - 6 million they offered her $400,000 to be bought out she gets 4000 a month for her parts but their is alot more issues of missmanagement of funds, can anyone help?