What recourse do I have if a business partner stole my investment capital?

I created an LLC to buy cars to scrap with a gentleman that owned a towing company. He secured a deal to buy 50 “u-haul” type trucks. I had a cashier’s check drawn off my home equity line (100% my cash) and made out to the company that he said was holding the trucks. Long story short, I found out later that he somehow got the money cut back to himself. He has since filed Chapter 7 bankruptcy but did not show me as a creditor. His home was foreclosed. He has lost his business and opened another towing company. It seems to me that what he did was criminal. Embezzlement?

Asked on January 5, 2011 under Business Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

1) What he did does indeed sound like it may well have been embezzlement. If you haven't already, contacdt the authorities (e.g. police; state AG office)--there's no cost to you to do so, and they can tell if this looks like a  criminal case and then pursue it if it is. Note that this may not help you get any money back.

2) To get your money back, you'd have to sue your former partner. This is complicated by his bankruptcy, but if you were not given notice of the filing it may be possible to avoid it; also, if he's already been discharged and you were not a scheduled creditor, it may be possible to now sue him. You should discuss this matter with an attorney with experience in collecting debts of this type.


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