Can I force my business partners to show and justify all expenses?

UPDATED: Feb 15, 2012

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Can I force my business partners to show and justify all expenses?

I’m an equal partner in a hotel business; I have a 25% stake (sleeping). One partner is “secretary”and one is “president” the other has no title (sleeping). They are self elected following a buyout of another partner. They pay a manager to run the business but I now know they are also paying themselves large amounts of money as well. From the bank I have got hold of statements which show they have cut checks for themselves as “management” fees and there are checks for “consulting” costs. They have ignored my requests for them to disclose all expenses, I fear fraud. What can I do?

Asked on February 15, 2012 under Business Law, New York


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you feel that your busienss partners have been dishonest with you, I recommend that you consult with a business attorney to go over what documents you have so that the attorney can write a letter to them seeking a detailed explanation for all discrepancies demonstrated in writing.

Your business partners owe you a fiduciary duty and are obligated to justify all expenses incurred. If they refuse to do so, I would be suspicious that you have been taken advantage of.

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