Corporate Law majority stockholder stealing from partners

[dandoe]

majority stockholder in my friends engineering firm is using his position to do rennovations on his house, take lavish (and i mean lavish to the tune of 15000/day) vacations, buy football tickets then sell them back to the employees and pocket the cash, etc. etc. etc. all on the company credit card. some expenses are written off from the irs, others are just buried in the business so that the company not only absorbs the cost but also the taxes thereafter. when approached he just blows it off saying he is the 'owner' (51%) and there is nothing anyone can do. anyway to rectify this situation???? the rest of the staff are working 70+ hrs/wk to make up for it.

 

[army judge]

I suggest the minority stockholders hire a CPA and/or an attorney and conduct an audit of the firm's financials.

Or, have your attorney contact the firm's auditors to discuss your revelations.

If this behavior is being engaged in by the majority owner, it is criminal.

So, one can anonymously tip off the IRS and they'll investigate any irregularities or illegalities.

 

[dandoe]

army judge........i thank you for your quick response. apparently (this is all coming from the bookkeeper btw) the accountants are well aware of the situation and look the other way. they only write off legitimate business expenses and allow the others to pass thru with the company apparently paying the taxes. my question after reading your response; is it illegal for a company to pay a person's expenditures when it is also paying the tax and what exactly is this owner of the company doing that is criminal???? thanx for your response in advance as this is very important to my friend. if she proceeds, it will obviously affect her futrue at the firm. (she is a minority shareholder)

 

[disagreeable]

The problem is it appears there is no Board of Directors designated to oversee operations. Therefore, the 51% owner can essentially declare himself whatever perks he wishes. It appears the only laws he is breaking are tax laws on the fringe benefits he is bestowing on himself.