If you are a Houston business owner, you know that any accusation of criminal wrongdoing, such as embezzlement, can spell disaster for your business.
Embezzlement means fraudulently taking assets that someone has entrusted to you and using them for your own personal use. A simple example of embezzlement is a grocery store cashier taking money out of the cash register and spending it on themselves.
Business embezzlement usually involves much more complicated scenarios. If you believe someone in your business is embezzling business funds or property, you need to act fast to protect your business assets from seizure.
Fortunately, there are some steps you can take to protect your assets.
Transferring or selling assets
Moving or giving up your assets could protect them from seizure. Business assets can be moved to a blind trust, which is a trust managed by a trustee who does not know the identity of the beneficiary.
A blind trust helps protect business assets because the trustee cannot disclose any information about the assets to law enforcement if they do not know the beneficiary’s identity. It is important to note that the trustee could still provide information about the assets if they believe they are being used to commit a crime.
Another strategy involves transferring your assets to someone else, such as a family member or friend. Law enforcement can only seize your assets, so if they no longer belong to you, they are exempt from seizure. Be careful because the assets could still potentially be seized if they can be linked back to you.
Filing for bankruptcy
Filing for bankruptcy could protect your business assets in some cases but bankruptcy should typically be considered a last resort. There are several negative consequences to bankruptcy including potential loss of other assets, such as real estate and personal property and damage to your credit score.
Additionally, you are probably already concerned about your professional reputation if you are embroiled in embezzlement litigation. Filing for bankruptcy could cause your professional reputation to further suffer. You may also have trouble purchasing new business assets in the future after filing for bankruptcy.
Developing an asset protection strategy
It is best to have an asset protection strategy in place before you are facing litigation. Lengthy investigations are usually conducted before litigation, such as embezzlement litigation, begins.
If you do not already have one in place, you should start creating your asset protection strategy as soon as you learn you are the subject of an embezzlement investigation. This requires a detailed assessment of your business assets to learn what needs to be protected.
Waiting until litigation has already started to implement these asset protection strategies could be a big problem, specifically when it comes to asset transfers. You could be accused of making fraudulent transfers.
However, there are exceptions to these general rules, which is why having accurate guidance is necessary.
The specific strategy and steps you take to protect your assets during embezzlement litigation depend on your particular circumstances.
However, these general guidelines can help you get started and increase your chance of keeping your business secure and financially healthy while you get through this challenging time.