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My husband owns a s-corp in florida with his brother as 50/50 owener. It is a construction company. His brother was responsible for sales and my husband who is the licensed contractor builds the homes. They have been waiting on 3 contracts to be signed since October. My husband found out about 2 months ago that his brother stole about 85,000 from the company. They worked it out that the brother would pay him back once the next home sold. Several days ago they were discussing what they needed to do as no contracts had been signed at that point. His brother told him he had not heard back from any of the three clients. He then told him that he was starting a metal framing company and would buy my husband out of the company for 2000 a month for the next 3 years if my husband would sign the company over to him. We knew something was going on found 1 signed contract in the trash can and the brother started an llc with the same name as the s-corp. Any advice or legal steps we can tak

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Jacksonville, Florida

Customer (name blocked for privacy)

Hello,

I am amazed and the audacity. There are so many things wrong with this picture it is hard to organize them and see what the best step to start with is

Firstly the brother is in breach of his fiduciary duties as a shareholder, and a officer of the company. This is a significant breach, and he is very liable for what he has done thus far.

Further there are criminal charges for the embezzlement of the funds he took, which may be able to be placed even after an agreement has been made.

He is also liable for using the name, without license. He may be in breach of a competition or confidentiality clause of the shareholder agreement as well.

At the end of this, your husband will own the entire company, and the brother may be in jail, with a huge judgment against him.

First thing you need to do is talk to a specialist in corporate law. Here is a link of a list of lawyers from Jacksonville that might be able to help. HERE

The corporation would sue the brother, not your husband. All the legal expenses would come out of the company not your husbands pocket.

Your husband can sue him personally as well, but it is best if the S-Corp does this.

The lawyer will then advise on how to protect the assets in the corp now, how to gather the evidence for charges against him (criminal if that is being considered), and how to protect the name and integrity of the company from misuse.

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Regards

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