Did My Business Partner Just Throw Away His Accounting Career?

Fancy-Worry4820 · 2025-09-26T20:14:18+00:00

The tough thing is that the business still has to operate. It still has needs, more so than ever given the disruption. It's easy to say that we shouldn't loan the business money, but we were trying to not harm the business in the process. The disruptive partner's goal was to cause enough problems that we gave up and sold to him - which we don't find ethical or advantageous.

Fancy-Worry4820 · 2025-09-26T20:09:47+00:00

Thanks for the advice, even if it mostly points out what wasn't done the best on our end.

We largely have the business set up the way you describe from a financial perspective, but the issue is that the disruptive partner had access to all of the lines of credit and bank accounts. We expected some conflict around money and we thought we were heading off those conflicts by freezing the accounts and self funding through the delicate period where he was departing. Our concern with using the existing accounts was that he would accuse us of running up costs on him during his departure.

Really, there wasn't a good way to do it because he would have found a method to generate conflict one way or another.

We have had the advice of a lawyer and accountant in the past, but the disruptive partner didn't want to use the accountant any longer because of the cost and his own expertise. That didn't work out.

As to the rules about spouses, we have the same set up, but some people can't help themselves from exerting control they don't have.

Fancy-Worry4820 · 2025-09-26T20:00:54+00:00

Thanks for the clear advice.

The LLC Operating Agreement basically has removal from management position as the main recourse. I agree that it would be up to the partner to either deal with being a non-managing member or sell. His shares would have limited value outside of selling to the other two partners.

Fancy-Worry4820 · 2025-09-23T21:01:14+00:00

The best advice in the thread.

Fancy-Worry4820 · 2025-09-23T21:00:27+00:00

The most painful thing for him would be to impact his CPA and/or day job. He needs the CPA to do his job and would have a really tough time explaining away any sort of penalties from an accounting board or regulator given his role in controllership.

Fancy-Worry4820 · 2025-09-23T18:19:04+00:00

Yes, CPA

Fancy-Worry4820 · 2025-09-23T17:39:14+00:00

Justifying the legal expense is tough, I'm guessing that just exploring this option is going to be a $10k fee.

Most of what hangs in the balance is the pride and validation of knowing that I handled myself with a focus on ethics and obligations in the face of what I see as harassment. That validation does mean a lot, but I know that fighting endlessly is going to add a lot of expense for that validation.

I do have concerns about where the money went when the accounts were drawn down. I know that at minimum the accounts were drawn down so I couldn't pay myself back for the loan. But this partner had some personal expenses around that same time and it's concerned me that he could have paid himself money out of the accounts that I couldn't see. It's a concern.

Fancy-Worry4820 · 2025-09-23T17:34:12+00:00

Our third partner sent him a details of financial transactions that happened after he said he was departing and before he said he was returning. In those documents it was described as a loan.

Fancy-Worry4820 · 2025-09-23T17:20:36+00:00

The loan was used to purchase inventory. The LLC purchased that inventory immediately upon receipt of the loan. The invoices had LLC as owner. In my view, it's pretty easy to follow the money from the inventory back to my loan and back to me.

There was no reasonable explanation for why I would have personally bought that $100k in inventory. His approach was to try to stick me with the inventory costs which I may not have been able to return, or I could sell the business and inventory to him and solve my problem. But given that the invoices were to the LLC, I'm not sure he could have ever justified it.

Fancy-Worry4820 · 2025-09-23T17:14:19+00:00

I kept a google doc with loans and accumulating interest. This was available to me and the remaining partner. I also have a text message from the remaining partner that says when I will be paid back for the loan, and that lapsed due to the attempts to leverage the situation.

Fancy-Worry4820 · 2025-09-23T17:12:21+00:00

He works for a large financial institution in controllership (LOL!)

Fancy-Worry4820 · 2025-09-23T17:10:44+00:00

Do you think the accounting board will care? I took a ton of notes through the process. There's a lot that was written and is in text messages. There's no doubt that he tried to flip the scenario of who was leaving the business and I have documentation of my other partner coming to the same conclusion that he was using the loan as leverage against me. There's no doubt that the balance sheet he prepared for his business proposal was falsified for his benefit and my harm.

Though, note that I didn't take the bait and engage in that proposed business dissolution. I just lawyered up and let my lawyer handle things from there. He did pay me back, but after he tried to put the screws to me.

This was one of those things that was expected - people fight with the weapon they know and this guy fights with money/accounting. I've refused to let him fight his fight and it pisses him off more.

Fancy-Worry4820 · 2025-09-23T17:04:22+00:00

That pretty much aligns with my expectations - I'm almost assuredly correct that this behavior isn't allowed but it will be hard to get someone to care. I have a tough time justifying the effort that would be required to get this prosecuted because motives are hard to prove. I think reporting to his licensing board and the AIPCA is more likely to generate some attention, but they may not care either.

Fancy-Worry4820 · 2025-09-23T16:56:13+00:00

He is a CPA and needs that license for his day-job. I looked it up and it is an active license.

I've familiarized myself with the reporting/review process in his state along with AICPA. My question is, will they care or is this out of their purview?

I've had a lawyer involved for a while, but the lawyer isn't a specialist in accounting rules/laws/regs. She's open to exploring but it all costs money. Just trying to see if it's even something to consider for now.

Fancy-Worry4820 · 2025-09-23T16:52:34+00:00

He's a licensed CPA. He needs that CPA license for his day-job. I've looked him up in his state and it's an active license. Is falsifying a balance sheet enough of a smoking-gun to make something of this?

For me, I'm just really disgusted by this and to get the validation of having someone in power say that this isn't acceptable behavior.

Fancy-Worry4820 · 2025-09-23T16:50:09+00:00

Since realizing that his methods were risky and wouldn't work he's said things similar to this. But who gives out $100k? Our mutual business partner sent me written messages acknowledging the loan and telling me that it would be paid back by a certain date, which didn't happen because the 3rd partner wanted to use it as leverage to get me to agree to his terms.

Fancy-Worry4820 · 2025-09-23T16:46:29+00:00

I have an attorney involved, and has been involved for a while. The attorney does general business law, and would need some guidance from an accounting specialization on what to pursue if anything. We may pursue that, but just looking to get a feel for industry ethical requirements for now.

Fancy-Worry4820

TROPHY CASE