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Dwayne B.
Dwayne B., Attorney
Category: Legal
Satisfied Customers: 33147
Experience:  Began practicing law in 1992
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My business partner is threatening to have me arrested for

Customer Question

My business partner is threatening to have me arrested for embezzlement claiming that I sold company products on the internet and pocketed the proceeds. All these sales were actually done through my personal eBay account and payments for product made to my personal Paypal account since the company does not have either. All the money from these sales was either transferred to our business account or is still in my Paypal account. He says I have kept the money for myself. I am 67% owner of the company whilst he is 33% share holder. He says he wants his original $20,000 investment back or he will file criminal charges against me. Is this legal?
Also I asked that if I paid him the money he asked for would he sign a non-complete / non-solicitation agreement and he refused.
The company's balance sheet is less than $2,000 which taking into account all assets, liabilities, accounts receivable, accounts payable and bank balances.
I look forward to hearing from you.
Submitted: 1 year ago.
Category: Legal
Expert:  Dwayne B. replied 1 year ago.
Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today. If at any point any of my answers aren’t clear please don’t hesitate to ask for clarification. Also, I can only answer the questions you specifically ask and based on the facts that you give so please be sure that you ask the questions you want to ask and provide all necessary facts. If you are asking if it is legal for him to threaten you with criminal action, then yes, although the way that you describe it certainly borders and could possibly slip over the line between a threat and extortion or blackmail (which is a threat combined with a demand for some type of benefit). The exact language makes a huge difference in whether it is or is not a criminal act for him to do this since it is possible to use phrasing that is legal and to use phrasing that is illegal, each asking for the same thing. I'm sure you have additional questions so please feel free to ask them in this thread.
Customer: replied 1 year ago.
The questions is two fold....
1. Is what I have done with regards ***** ***** sale of our product on the internet illegal constituting embezzlement?2. Is it legal for him to threaten me. Below is his actual email wording.
"I got the documents and forwarded to the attorney. Just to make things clear, I will not sign a no compete form!! Just got off the phone with him and basically is ready to take full action in pursuing the law suite if you don’t cooperate. This is what’s going to transpire. The first thing he is going to do is file criminal charges at the Lexington police department and put out an arrest warrant on you. Secondly you will end up paying me a lot more then $20,000 for court, lawyer fees and money that was rightfully mine in the 5 years in business. Also he will report you to the IRS and have a forensic accountant review the mess you have created. In till I get the $20,000 deposited in my account the shop equipment will not leave my property. Just to make it clear (Mark Playdon)you are restricted on coming on my property for now on, if you do I will get you for illegally trespassing. Alec and Joseph and chris are allowed to come on my property to move the shop when I receive the money. I will meet you sometime next week at the ups office to sign the purchase agreement when I get the okay from the lawyer"RegardsMark
Expert:  Dwayne B. replied 1 year ago.
1) If the money was turned in to the company then no, it wouldn't be embezzling, if it is still sitting in the PayPal account then you need to have a reason why it is there rather than being transferred into the company. One reason would be that eBay and PayPal allow 30 days for a dispute to arise and in which they will "freeze" the money so you may have been waiting to transfer it until after that time, just as an example.Your explanation as to why it was sold the way it was is perfectly reasonable for a small company although you really want to set up your company PayPal account ASAP for a number of reasons. 2) Threatening to turn you into the police for embezzling is perfectly legal as I pointed out above. His action in demanding that you buy him out to prevent him from turning you in may have crossed the line into extortion but the wording you use above isn't as clear as it could be and, in addition, he is indicating he is relying on what his attorney told him was going to happen so I don't think it is likely a DA would file criminal charges. Your lawyer can certainly threaten him back with extortion charges based on this but in reality I don't think the DA is likely to pursue either case. What you did is also no reason to pay him $20k if the business is not worth it. At this point you probably want to get your own local lawyer to fire a letter back to him and then see how it plays out.

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