Embezzlement/fraud issues

[dingdong]

Hi all,

Currently co-owning a business, which is quite successful and ongoing for several years now. But whilst going through bank records I noticed a payee I have never seen before with substantial amounts going to this entity. I have confronted him about this and was told this was a specific marketing purchase in a well-known location that requires ongoing payment. A very thorough search shows no business with the payees title linked to the supposed purchase.

Obviously I wasn't told of this purchase, which isn't real the issue here (though it is a problem), but the fact there is no evidence or record of receipts. I have requested for the bills for this service, but he has not provided one yet as he usually does. As substantial cash is going into this account, I have investigated the account name further and strongly suspect that the account that the cash is going to is a discretionary investment family trust account that is based in his home postcode (not a verified link to the payee name to trust account name however, just a very strong suspicion due to the names being exactly the same).

Of course this is pretty airy fairy stuff at the moment, but my question is - what is my next step? And what can I do to attain solid evidence of these suspicions if I am not given records to verify the purchase/transactions. Personally, the reason for my suspicions is that I know my business quite well with the pays going out and money going in, plus I am aware that my partner has had recent personal financial issues, although I was not aware he could potentially stoop to this level.

It is not strapping the business, but it is a substantial + obvious amount so recovery would be nice or at least make sure he knows he can't just take money from the business willy nilly. Currently we have a good working relationship so I can bring this up again and see how it goes, but it would be nice to know what legal steps I can take if this can't be resolved personally.

Any follow up help or recommendations would be greatly valued and appreciated

Regards,

 

[Rob Legat - SBPL]

What is the method of payment and type of account? (E.g. BPAY, direct debit, cheque, EFT, credit account)

 

[dingdong]

What is the method of payment and type of account? (E.g. BPAY, direct debit, cheque, EFT, credit account)

Hi Rob,

The method of payment has been internet banking transfer from our business account (joint unit trust) to this particular account.

Regards

 

[dingdong]

Hi Rob,

The method of payment has been internet banking transfer from our business account (joint unit trust) to this particular account.

Regards

Apologies I didnt fully answer. The account which this is being taken out of is a cheque account.

 

[Rob Legat - SBPL]

Okay, so it's a transfer of funds that has been initiated on your 'side' of the transaction (as opposed to the payee obtaining the funds from their side via some authority).

Your first course of action, then, should be to speak to everyone who has access to the internet banking for that account and question them about the transactions. If someone admits to them, start your inquiries there. If no one does, immediately change your internet banking password and dispute the transactions through your bank.

 

[Rod]

I suspect the person making the payments is a co-business owner.

I'd be confronting the co-owner with no notice, but with records of all payments in my hand, and suggesting:

1. I need <person> to confirm here and now if payments are a legitimate expense or not
2. If the person waffles or cannot produce evidence, then proceed to step 3. Do not allow this person wriggle room at this time. Be firm and insistent.

• Have a draft letter prepared and fill in the blanks at the meeting.
  • Consider agreement removing person's access to the bank account.
  • Any other operational details that will need changing

3. Say money needs to repaid in full. Talk and agree on timeframe and amounts. Consider a repayment plan. Maybe person forgoes profit distributions/ gives up ownership/takes out a loan/etc.
4. If no agreement at step 3 state consequences of not agreeing:

• Police will be involved
• Civil court action will be initiated
• Lawyer will be engaged and costs orders sought when successful

I would not flag everything you will do in case the person moves very quickly to hide themselves and or assets.

eg Subpoena bank records of payee's account, with special note of the balance as of 9 am on the morning of the meeting. (ie before the person has an opportunity to dispose of remaining money). Request to have passports forfeited/cancelled. Subpoena/search ASIC records/accountants records.

The extent of what you do will depend on how much money has disappeared.

 

[dingdong]

Okay, so it's a transfer of funds that has been initiated on your 'side' of the transaction (as opposed to the payee obtaining the funds from their side via some authority).

Your first course of action, then, should be to speak to everyone who has access to the internet banking for that account and question them about the transactions. If someone admits to them, start your inquiries there. If no one does, immediately change your internet banking password and dispute the transactions through your bank.

Hi Rob

Thank you very much for your reply. I am currently working with my partner today so was able to ask him about the transactions(it is just me and him that has access to account). He did say that he paid that transaction and it was for a particular external advertisement sign. But upon requesting for the corrospondence and information regarding the purchase he was not able provide a clear answer, which was quite a peculiar interaction. I am quite confident this is not an internet or banking security issue.

 

[dingdong]

I suspect the person making the payments is a co-business owner.

I'd be confronting the co-owner with no notice, but with records of all payments in my hand, and suggesting:

1. I need <person> to confirm here and now if payments are a legitimate expense or not
2. If the person waffles or cannot produce evidence, then proceed to step 3. Do not allow this person wriggle room at this time. Be firm and insistent.

• Have a draft letter prepared and fill in the blanks at the meeting.
  • Consider agreement removing person's access to the bank account.
  • Any other operational details that will need changing

3. Say money needs to repaid in full. Talk and agree on timeframe and amounts. Consider a repayment plan. Maybe person forgoes profit distributions/ gives up ownership/takes out a loan/etc.
4. If no agreement at step 3 state consequences of not agreeing:

• Police will be involved
• Civil court action will be initiated
• Lawyer will be engaged and costs orders sought when successful

I would not flag everything you will do in case the person moves very quickly to hide themselves and or assets.

eg Subpoena bank records of payee's account, with special note of the balance as of 9 am on the morning of the meeting. (ie before the person has an opportunity to dispose of remaining money). Request to have passports forfeited/cancelled. Subpoena/search ASIC records/accountants records.

The extent of what you do will depend on how much money has disappeared.

Hey Rod,

Thank you for your reply and the listed out steps thus far. I will certainly keep that in mind. I do believe he will have a very hard time hiding as I know him quite well and yes you are right he is the co-owner. I think I may need more hard solid evidence do you think? I am hesitant in confrontation until I can attain indisputable evidence? Not sure what you think about this. I have been documenting our interactions regarding this matter as well.

Thanks again

 

[dingdong]

He has provided me an invoice before he left. I have tried to call the mob number on invoice multiple times but does not connect. Address and business name does not exist and no websites pertaining to this marketing compant. No sign of any email correspondence or records leading up to purchase of services. For the record it is monthly payments of over $6000AUD each month for a year.

 

[Rod]

Keep the invoice safe. May well be evidence of fraud. Diarise all discussions regarding these payments as well. What you asked, what partner replied, date, time, location.

Looks like size of possible fraud/misappropriation is a size worth chasing.

Refer to my steps above. If it was me I'd be putting the pressure on. I don't like being ripped off by dishonest people and would get to the bottom of the issue very quickly. Based on what you've found so far it is not looking good for your partner.

It will be up to your partner now to prove he is innocent, at least in your eyes. You have enough information to demand repayment. You have enough evidence to approach the police as a starting point, and enough to see a lawyer and start a civil case.

BTW, what State are in?