What actions should we take if the CEO using is company money for personal use?

UPDATED: Oct 1, 2022

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What actions should we take if the CEO using is company money for personal use?

I am an investor of a small business and we found out that the CEO also one of the investor has been taking out company money for personal uses casino, bars, Uber, etc. It’s a small business so we do not have an employment agreement with the CEO. We are researching if the money that he took out at casinos were deposited back to the company account, but we don’t think that the full amount has been

deposited back anyways. I know that it’s a crime to use company money for personal use, however is it still a crime even if the money that he took out at the casinos is deposited back to the bank account?He never informed any of the investors that he’s taking out money at the casino, and never informed anyone that he will

Asked on August 22, 2017 under Business Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Even if money is later returned, it is still wrongful to take it of company accounts for personal purposes; e.g. it is still theft, the same way a car is still stolen if the person who took it simply uses it for joyride and returns it undamaged. Your options are:
1) To file a police report and look to press charges. Be aware that even though they should, the police do not always take matters like this seriously (they focus on what to them are more important crimes: major frauds, drug crimes, violent crimes, etc.), so while you can report this and the police *should* address it, there is no guaranty that they will.
2) Sue him for theft of company property and breach of fiduciary duty: in the lawsuit,  you can seek reimbursement of any lost (not returned) amounts and also for a court order barring this behavior. The matter could be settled by his resignation and reimbursement.
3) If even a fraction more than 50% of the ownership wants him out, he can be fired: a majority of ownership can fire executives or other employees.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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