Illegal or just a conflict of interest???

My jurisdiction is: pa

My roommate and his fiancée are considering starting a business that she would be the owner of. He heads a department of a publicly traded company; when he has a job that his department needs completed, he contacts a vendor and tells them what they need, and then vendor completes the project and gets paid. He feels that they can start a business and provide better services at a competitive price. She would be the owner of the company, and he would hire her company to provide the services needed. Would this be illegal, or just a conflict of interest?

It all depends on the company's policies when it comes to vendor relations. Have him check policies to see if he is allowed to direct business to people that he is related to. Many companies forbid that from happening. Good luck!

Does anyone know it there are any laws against this? If they got caught, could they be prosecuted and face jail time? Or if it's just a matter of company policy, would he just lose his job and be dismissed?

I can't see jail time arising from this under any criminal statute.

If he's considered to be an officer of the company, it may be a breach of his fiduciary duty to the company under your state's Corporations Act (or equivalent). The punishment is not jail time, it's probably a fine and having to return whatever gains he realized.

People who work for companies are often allowed to do business with their company provided they fully disclose their relationship and interest. I would encourage your friend to tell the company what his plan is to see if they object. Does the company he works for have in-house counsel? If he wants to avoid potential jeopardy, he could consult with them.

you might get charged with being unethical....lol...get that money.

Just look into contracts and realisticlly if you provide better service at better prices no one can really even come after you civilly. If you are providing what the customer supports and wants there isn't much validity from any competitor or recent companies you've taken business from.

Criminally you have no worries...civil wise like I said its hard to prove. I've been thru it where I went over top of a middle man. The middle man wanted to recoupe monies for a contract we signed, but he also has to prove that the company above him doesn't want my services. Its hard to prove a company doesn't want my services, whether I solicited or not when they are paying me for them. It happens everyday...take advantage of the opp in front of you....

not a legal professional...